Background

In April 2013, the government changed the way in which assistance is provided to council taxpayers on low incomes to provide financial assistance to pay their Council Tax.  This change meant councils had to develop a local scheme to support low income working age household and had less funding to do so.
The locally-agreed changes we are consulting upon generally only affect people of working age.  The LCTS rules for people of pension age are set by the government.  There is just one proposal where there may be a positive impact on people of pension age which is detailed under proposal 4B. 
The scheme we introduced in April 2013 mirrored the previous support provided by Council Tax Benefit offering up to 100% support for households with the lowest income.  The funding provided to local councils by the government to support the scheme has reduced each year.
The current scheme supports 8,194 local households, 5,293 of these are of working age and 2,901 are of pension age.  The scheme costs approximately £6.5m annually.
The council are facing a range of financial pressures and are considering making a number of changes which will make the scheme more efficient to administer and reduce the costs of the scheme. 
 
Why is a change to the Local Council Tax Support Scheme being considered?
Our current scheme is complex and difficult for customers to understand.  We have to work out LCTS to the penny, so if you pay your council tax on a monthly basis, then constant changes to your payment plan may increase budgeting difficulties. 
In addition, Universal Credit customers may have the amount they receive reviewed each month and this means the number of changes we must make to your LTCS is increasing, and as a result the scheme is becoming more costly to run. 
The traditional link between Housing Benefit and LCTS won't exist anymore and it is essential the scheme is changed to assist those affected.  It is hoped this can be simplified for those in receipt and to help them with budgeting. 
As government funding continues to decrease, we need to strike a balance between a revised scheme that is fair and affordable for those who receive support, and also for all city residents who receive council services.  We remain committed to providing support to our residents with low incomes.
We are putting forward the following options for consultation.

Proposal 1 – Introduction of a minimum payment of Council Tax
Proposal 2 – Introduction of a minimum income change value
Proposal 3 – Changes to the treatment of Universal Credit awards in the assessment of Council Tax Support
Proposal 4 – Changes to the treatment of non-liable resident adults
Proposal 5 – Revise the level of non-dependant deductions
Proposal 6 – Withdraw Second Adult Rebate from the scheme
Proposal 7 – Withdraw Extended Payment Periods from the scheme

We have also looked at alternatives to the options under consideration; summarised below:
Alternative 1 - Keeping the scheme the same which will not allow the council to make savings and will incur additional administrative costs as Universal Credit is rolled out
Alternative 2 - Introducing a minimum entitlement level which would reduce the level of entitlement for households currently receiving the lowest amounts of support
Alternative 3 - Increasing the level of Council Tax to take into account the current cost of the scheme against reduced government funding
Alternative 4 - Maintaining the current scheme and reduce the funding available for other council services

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* 1. Currently households receive support of up to 100% of their Council Tax liability.  We are proposing to introduce a minimum contribution so that all households pay something towards their council tax.

If we set the minimum contribution level at 10%, the cost of the scheme would reduce by approximately £400k.  This would reduce the level of support for around 3,950 households who would on average, receive £1.94 per week less support than they do now

If we set the minimum contribution level at 15%, the cost of the scheme would reduce by approximately £610k.  This would reduce the level of support for around 4,050 households who would, on average, receive £2.89 per week less support than they do now.


Do you agree that a minimum payment should be introduced and all residents should contribute something towards their council tax?




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* 2. IF a minimum payment was introduced, how much do you think the minimum payment should be?

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* 3. IF a minimum payment was introduced do you think it should be introduced over two years with part of the minimum payment withheld until 2021/22?

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* 4. IF a minimum payment was introduced the council may consider providing protection to some of the most financially vulnerable households.  If protection was provided it may mean that the minimum payment required from households - those who are not protected - has to increase.  The council is not proposing any particular group is given protection, but is seeking your views, as part of the consultation, whether any protection should exist in considering the proposal to introduce a minimum payment.

Do you think that any of the following groups should be protected from having to pay any Council Tax and remain eligible for up to 100% support?

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* 5. To reduce the impact of frequent changes and revisions to schemes the council is proposing that households in receipt of Universal Credit do not require their claims to be updated for small changes which have a low level impact on the overall household income.  This will give more households a degree of certainty in terms of the amount of council tax they will have to pay and avoid issuing a new bill every month for earnings which fluctuate regularly.

As incomes go up and down during the year, by not applying small changes it is expected that over the course of the year the overall level of Council Tax will be the same for most households.

This proposal would only affect households who are claiming Universal Credit and in paid employment (currently there are approximately 350, though this will increase as more households move onto Universal Credit)  

Households who are NOT working would NOT be affected by this change.


Do you agree that a minimum income change level should be introduced for households who receive Universal Credit?

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* 6. IF a minimum income change level is introduced what amount do you think it should be set at each month?

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* 7. When the Local Council Tax Support scheme was first introduced in 2013 very little was known about Universal Credit, which itself has changed several times since 2013.  There are several known changes due to take place during the next 2 years.
Now that more is known about how it works and the impact it has on the administration of Local Council Tax Support, the council is proposing amendments which will make administration simpler and procedures easier to understand for those who claim Universal Credit.

Proposal 3A is that the Universal Credit notice of an award sent by the Department for Work and Pensions (DWP) to the council can be used as a claim for council tax support, in the same way as similar communications for someone who has claimed Income Support or Job Seekers Allowance are used to award council tax support.


Do you think the council should use information passed to it by the DWP to determine awards of LCTS without the requirement for a separate claim form to be completed where the communication from the DWP contains all of the required information to determine whether an award should be made?

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* 8. Local Council Tax Support (LCTS) is means tested, this means that awards are considered on the basis of the minimum level of income the Government sets that each household needs, called an applicable amount.  A applicable amount is then compared against the income the household actually receives.

Under current rules there are two methods for determining a household's applicable amount depending on whether or not they claim Universal Credit.  It is proposed that the same applicable amount is used in the assessment of council tax support for anyone who has an assessment of Universal Credit, regardless of whether they are actually entitled to, or receiving Universal Credit.  This will mean claimants are treated consistently when determining any level of support available through the scheme.


Do you agree that the same applicable amount should be used in the assessment of LCTS whenever a household has had a determination of a claim for Universal Credit?

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* 9. The council is committed to reducing fraud and error within Local Council Tax Support and the welfare benefits system.  Currently the Local Council Tax Support scheme dictates that when an LCTS claimant or their partner is in receipt of Universal Credit the council must use the income and capital figures provided by the Department for Work and Pensions (DWP) - this includes even when fraud or error is suspected.

The council is proposing that where it suspects or has a valid reason to believe there is fraudulent activity relating to a claim for Universal Credit, or there is an error made in the Universal Credit award based on additional information known to the council, then the council may use its discretion to substitute its own figures instead of those supplied by the DWP, or refuse the claim to avoid an incorrect award of LCTS being made which has to be removed at a later date.
 

Do you agree the council should not use data provided by the DWP in the assessment of LCTS where evidence is held which indicates that information is incorrect or there is a suspicion of fraudulent activity?

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* 10. Awards of Local Council Tax Support may be reduced if there is a non-dependant living in the property.  A non-dependant is another adult resident (not the partner of the claimant) e.g. an adult child of the claimant.  The reduction is called a non-dependant deduction.  The rate of deduction varies depending on the gross income of the non-dependant adult as there is an expectation that they should contribute to the expenses of the household.

Under current rules non-dependant adults who are liable to pay rent to the Council Tax payer on a commercial basis (such as lodgers or boarders) will not attract a deduction.  It should also be noted that Universal Credit awards are not reduced by any rent the non-dependant adult may pay for living in the property.

It is proposed that an adult resident in a property - who is not liable themselves, and is not the partner of the person who is liable for paying the Council Tax at a property - is considered a non-dependant for the purposes of calculation for any non-dependant deduction under the scheme.

The alternative is to exclude commercial boarders and lodgers from non-dependant deduction charges being applied.


Do you agree that all non-dependant adults should be considered as part of the household for the purposes of calculating a non-dependant deduction?

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* 11. Within the current scheme non-dependant deduction charges increase as the gross income of the non-dependant adult increases, provided with the added condition that they have to be employed for at least 16 hours.  This means that two non-dependants with the same gross income could have two different charges if one was working less than 16 hours and one was working more than 16 hours.

The proposal is for the 16 hour employment condition to be removed from the scheme so that all deductions are applied equally only taking into account the level of earnings, not the number of hours worked to realise that income.  This would mean that the contribution of the non-dependant adult would be solely based on their income without the need to establish additional conditionality.

This change will affect approximately 100 households and enable simplification of the scheme administration.

If a similar rule was introduced for pensioners the level of deduction could not be increased as a result, which would mean to achieve the simplification, the scheme would need to be made more generous to pensioners.  Approximately 50 pensioner households would benefit from the change and cost an additional £14k to the scheme.  In conjunction with proposals included under proposal 5 there would be a net saving to the scheme of £40k in addition to reduced costs of administration.  

Do you agree that the level of non-dependant deduction applied should be calculated on the level of earnings and not be affected by the number of hours worked for working age LCTS claims?

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* 12. Do you agree that the level of non-dependant deduction applied should be calculated on the level of earnings and not be affected by the number of hours worked for pension age LCTS claims?

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* 13.
 Current circumstances
of the non-dependant
Existing
Weekly
Deduction from LCTS 
Proposed
Circumstances of the
non-dependant
Proposed Weekly
Deduction from LCTS* 
 Not working or working less than 16 hours £0 or £4** Not working £0 or £4**
 Working over 16 hours with gross income below £207.70 a week £4  Working (any hours) with gross income below £360.10 a week £8.10
 Working over 16 hours with gross income between £207.71 and £360.10 a week £8.10 Working (any hours) with gross income over £360.11 a week £12.20
 Working over 16 hours with gross income between £360.11 and £447.40 a week £10.20    
Working over 16 hours with gross income over £447.41 per week  £12.20    
*subject to deduction uprating changes announced by the government for 2020/21
**subject to entitlement to certain welfare benefits a deduction of £0 or £4 may be applied

The current level of non-dependant deductions is linked to being uprated in line with the prescribed CTS scheme for Pension Age.  It is proposed to adopt a revised schedule of deductions (as shown above) which would continue to be updated in line with the annual prescribed scheme increases.

For example, in the current scheme if a non-dependant works over 16 hours and earns gross income of £400 a week, any council tax support to the household is reduced by £10.20 per week.  From April the proposal is that the weekly deduction for a non dependant earning £400 gross income per week (regardless of the hours they work) would be £12.20 per week.
 
There are some circumstances where a non-dependant deduction would not apply, for example, if the liable person receives certain disability benefits or the non-dependant is under 25 and not working. 
A deduction may also not apply if the claimant is severely disabled and is reliant on other adults living at home to assist with their care.

This change would affect approximately 250 households and potentially save £52K from the cost of the scheme  

Do you agree that the level of non-dependant deduction should be changed to the amounts in the table above?

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* 14. Second Adult Rebate is an additional element to the Council Tax Support scheme which allows a reduction in the Council Tax Bill where a non-liable resident adult is on a low income.

The award is not based on the income or capital of the person who is liable to pay Council Tax.  The reduction may be up to 25% of the Council Tax liability and is based solely on the income of the resident non-liable adult.
It is proposed to withdraw this part of the scheme so that any reduction is based solely on the income and capital of the person(s) who are responsible for paying the Council Tax Bill.

There are currently 82 working age households who receive Second Adult Rebate.  Withdrawing this element of the scheme would save £20.3k.

The alternatives are to keep Second Adult Rebate within the scheme or to make it less generous.

Do you agree that Second Adult Rebate should be removed from the scheme?

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* 15. Extended payment periods are payments of Council Tax Support for a period of four weeks at a higher rate for households who meet specific qualifying criteria which is complex to identify and administer.  It should also be noted that extended payments are not means tested or based on a household's ability to afford their council tax liability.

Out of work households moving into work cannot receive this payment under existing rules.  In 2020 the government are introducing a range of support for households moving onto Universal Credit which includes a two week extension of benefits including Housing Benefit, Job Seekers Allowance, Income Support and/or Employment and Support Allowance.  These payments would be in excess of the amount of the extended LCTS award for a person forced to migrate to Universal Credit as a consequence of starting work.

Any household who remains on a low income will remain eligible to claim LCTS based on their individual circumstances.

There is no evidence to suggest this part of the scheme has incentivised any household to move into work. 

This change is likely to affect less than 20 households per year.

The alternative is to keep Extended Payments in their current format or to extend or reduce the period they are awarded for.

Do you agree that Extended Payment Periods should be removed from the scheme?

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* 16. The council are committed to ensuring our services are delivered fairly.  We are asking the following questions which will be kept confidential. 

YOU DO NOT HAVE TO ANSWER THE FOLLOWING FOUR QUESTIONS

Are you

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* 17. What age are you?

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* 18. Ethnicity - do you consider yourself to be

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* 19. Do you consider yourself to be disabled?

0 of 19 answered
 

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