briefing on local support for council tax david magor obe irrv (hons) chief executive institute of...
TRANSCRIPT
Briefing on Local Support for Council Tax
David Magor OBE IRRV (Hons)Chief Executive
Institute of Revenues, Rating and Valuation
Introduction
Council tax rebate reforms risk repeat of poll tax disaster, says IFS
Context
DEFICIT REDUCTION
Government’s top priority.
Taxpayers were paying almost £120 million a day (£43 billion a year) in debt interest - more than council tax, stamp duty and inheritance tax combined last year
WELFARE REFORM• Reforming the welfare
system - to make it fairer, more affordable and better able to tackle poverty, worklessness and welfare dependency
LOCALISATION• Coalition principles of
increasing freedom and sharing responsibility by localising power and funding.
• De-ringfencing of funding, abolition of top-down targets and inspection regime
Background Spending Review 2010 Localise support for council tax and reduce the
subsidy by 10% from 2013 -14 Abolition of council tax benefit provision in the
Welfare Reform Act Part of wider policy giving councils increased
financial autonomy Enabling power for the new scheme to be contained
in a finance bill now before the current parliamentary session
Why localise support for council tax the CLG view
Give local authorities (LAs) a greater stake in the economic future of their area
Give LAs the opportunity to reform the system of support for working age claimants
Reinforce local control over council tax Give LAs a degree of control on the impact of the
10% reduction Give LAs a financial stake in the local support for
council tax (LSCT)
Overview Broad parameters of LSCT
Reduce subsidy by 10% Existing subsidy to be replaced by a new grant Create a local scheme Statutory provision of a default scheme Protection for eligible pensioners and locally determined
vulnerable people Scheme should support incentives to work
LAs encouraged to collaborate to reduce costs LAs to consider how system can be simplified for working age
claimants LAs will seek to integrate arrangements for providing support within
council tax system Local mechanisms to manage financial pressures
Localism and Council Tax Support
Council Tax and Localism
The Localism Act 2011 More scrutiny on levy Just how far does the proposed power of
competence go? Referendum on levels of council tax above stated
thresholds Neighbourhoods, Community Councils and Parishes
– a new power base? How does all this impact on local support for council
tax?
A Recent Report
Paragraph 32
The LSCT Documents
The Initial Consultation
Consultation Response
Local Government Finance Bill
Impact Assessment
Statement of Intent
Equality Impact Assessment
Funding Arrangements
Vulnerable People
Taking Work Incentives into Account
Governance of LSCT
The Reference Group
Challenge Risks and opportunities Identify interactions Consideration of specific policy issues
through the use of networks Act as a sounding board Membership
The Delivery Group
Timetable Model Schemes Data sharing LA Software Forecasting Finance Issues Membership
Establishing a Local Scheme
Establishing a local scheme (1)
Analysis of existing caseload Impact analysis Developing a scheme Factors to be covered by schemes Consultation Adoption of the scheme Revisions to schemes Default schemes
Establishing a local scheme (2)
Likely to be a minimum of central criteria. Information from the Universal Credit (UC)
system to be available to local authorities for use in the administration LSCT
The rules relative to changes of circumstance should be identical for both schemes any change in entitlement to UC should automatically trigger a recalculation of LSCT
Developing the Local Scheme
The Link with Universal Credit
• Universal Credit will provide a new single system of means-tested support for working-age people who are in-work or out-of-work.
• Support for housing costs, children and childcare costs will be integrated in the new benefit. It will also provide additions for disabled people and carers
• Under Universal Credit, couples living in the same household will make a joint claim for the benefit payment.
• Ordinarily the benefit will be given in a single monthly payment to a household. It will be for the family to decide who receives the benefit
• No entitlement if capital of claimant or couple exceeds £16,000
• Transitional protection which will ensure that there are no cash losers at the point of change as a direct result of the migration to Universal Credit, where circumstances remain the same
Personal Independence Payment
Universal Credit
The Changes
Child Benefit, Carer’s Allowance (will remain)
Income related JSAIncome related ESAIncome Support (including SMI)Working Tax CreditsChild Tax CreditsHousing Benefit
Disability Living allowance
Current system New system
Contributory JSA and ESA (DWP still considering how these will work)
Council Tax and Rate Support ( schemes being considered)
… will include support for housing and children
Pension credit
The Universal Credit Award
The standard allowance The child responsibility element The housing cost element The limited capability for work element The limited capability for work element and
the work related activity element The carer element Childcare costs element
Treatment of Income
Calculation of monthly income Earned income Unearned income Income disregards Deprivation of income and income foregone Income treated as yield from capital Personal injury Compensation
Treatment of Capital
The capital limit, this appears to be £16,000 with similar derived income rules
The calculation of capital Jointly held capital Valuation of capital Deprivation of capital
Capital treated as income Capital of a company Disregarded capital
Treatment of Housing Costs
When an award is to include a housing cost element
The payment condition (Category A,B,C, or D payments)
The occupation condition The liability condition The calculation of the amount Restrictions on the amount of the housing
costs element
Universal Credit - Key stages in the UC calculation process
Localised Council Tax Support and Universal Credit calculation data
OBJECTIVES
Show the stages of the Universal Credit calculation
Highlight which figures may be available for transmission to Local Authorities for the purposes of LCTS assessment
Explain which elements are still subject to design and/or Policy activity
CONTEXT DWP currently transmits data to LAs for
Housing and Council Tax Benefit LAs require Universal Credit data to be
transferred for LCTS purposes The UC calculation process is markedly
different from existing legacy benefits We are working with DCLG, Devolved
Administrations and LAs to clarify requirements for LCTS
This presentation is intended to facilitate further discussion
SUMMARY – THE KEY STAGES IN THE UC ASSESSMENT PROCESS
STAGE 3 – CALCULATE UC ENTITLEMENT(APPLY ANY SANCTIONS, ADD ANY HARDSHIP PAYMENTS)
STAGE 2 – CALCULATE THE ADJUSTED UC AWARD (DEDUCT EARNINGS, CAPITAL, INCOME, BENEFIT CAP)
then
STAGE 0 – IDENTIFY WHO IS IN THE BENEFIT UNIT(ADULTS, DEPENDENT CHILDREN AND NON-DEPENDANTS)
STAGE 1 – CALCULATE THE UC MAXIMUM AMOUNT (TOTAL ALLOWED FOR LIVING AND HOUSING COSTS)
then
then
STAGE 4 – CALCULATE THE UC PAYMENT (ADD ANY ADVANCES, APPLY ANY DEDUCTIONS)
then
STAGE 0 – IDENTIFY THE BENEFIT UNIT
One or two ‘eligible(and connected ) adult claimants,
and relevant child dependents=
The UC Benefit Unit
Identify (for Housing
Element purposes only)any
non-dependants
STAGE 1 – CALCULATE THE BENEFIT UNIT’S ‘MAXIMUM
AMOUNT’ BY ADDING UP RELEVANT AMOUNTS COVERING……
Childcare Element
Carer Element
Housing Element
L
CW Limited capability for Work Related Activity,
or Work Element
C
arer
Child Element/Disabled Child Additions
Standard Allowance
Ad
ult
sC
hil
dre
nH
ou
sin
gC
hil
dca
re
Tick indicates available for LCTS
STAGE 2 (a) – CALCULATE THE UC ‘ADJUSTED AWARD’
Any earnings (subject to any disregards and taper)
Other applicable income
minus
UC MAXIMUM AMOUNT
Tariff income from applicable capital
minus
minus
And then......
Tick indicates available for LCTS
STAGE 2 (b) – ‘CALCULATE THE UC ‘ADJUSTED AWARD’ BY APPLYING FURTHER CRITERIA
Any increases necessary (where Cap does/will not apply) to take account of Transitional Protection
minus
ADJUSTED AWARD stage 2(a)
Any reductions necessary to take account of the Benefit Cap
plus
UC ADJUSTED AWARDequals
Tick indicates available for LCTS
STAGE 3 –CALCULATE THE ‘UC ENTITLEMENT’
minus
UC ADJUSTED AWARD
Any conditionality sanctions (plus anyhardship payment amounts)
equals UC ENTITLEMENT
Tick indicates available for LCTS
STAGE 4 – ESTABLISH ANY DEDUCTIONS TO BE MADE TO UC ENTITLEMENT TO WORK OUT THE ‘UC PAYMENT’
Any short-term or budgeting advance
UC ENTITLEMENT
plus
The UC Payment equals
and
Any agreed deductions
e.g. child support, third party
rent payments)
minus
Tick indicates available for LCTS
What will not be available
The actual amount included in the net payment for housing costs (although the amount included in the “maximum award” is available)
Net earnings for each member of the Benefit Unit – a total for the household can be provided
Elements not yet finalised
Treatment of non-dependantsHow any potential payments to third
parties could be shown
Using existing Parameters Building on existing approaches The existing structure
Personal allowances Premiums Non-dependant deductions Resources Disregards Second adult rebate Taper Excess benefit
Forecasting Formulating the scheme
Constraints
System Funding Limitation and referendums Protecting vulnerable groups Setting aside a sum for extraordinary events Political dimension Timetable Adverse consultation Collection issues
Administering Local Schemes
Initial transition The application Calculation and award Notification Excess LSCT Appeals
To the local authority To another body
Arrangements for individuals subject to immigration control or are not habitually resident in the UK
An Approach to Modelling
Stages in Scheme Creation
Stages in Scheme Creation
Profiling
Available Data Sets
SHBE Benefits system data Council tax system Electoral register Other internal data sets
Profiling requirements
Understanding current demographics Identify older people Identify vulnerable groups Identify claimant groups Identify the financials Identify potential saving areas
Stages in Scheme Creation
Model Structure
Approaches to modelling
Cap Minimum and maximum benefit Claimant type and/or status Percentage Needs and/or resources Family Flat rate Council Tax band
Forecasting
One to five year forecasts “ What if ” reporting Impact Population movement Forecasting across several data sources
Stages in Scheme Creation
Stages in Scheme Creation
Monitor and review
Budgetary control Shortfall or surplus Scheme impact Need for additional data sets Standard, comparative and regular reporting Preparing for year two !
Vulnerable People
Key Local Authority Duties
The public sector Equality Duty Equality Act 2010
Duty to mitigate the effects of child poverty Child Poverty Act 2010
Duty to people with disabilities Disabled persons (Services, Consultation and Representation)
Act 1986
The Armed Forces covenant Duty to prevent homelessness
Housing Act 1996
The Public Sector Equality Duty
The duty Relevant protected characteristics Requirements of the Equality Duty Welfare needs of disabled people Equality information and engagement
Duty to mitigate the effects of child poverty
Co-operate Understand needs Develop and deliver a strategy Equality information and engagement
The Armed Forces Covenant
Redress disadvantages Recognise sacrifices The obligation of the
Whole nation State
Treatment of War Pensions and the Armed Forces Compensation Scheme
Duty to Prevent Homelessness
Families with children No blame People at risk Vulnerable The Equality Duty
Equality Impact Assessment
Fit for purpose Data and circumstance driven Cannot be subordinated, “going through the
motions” Published as part of the consultation process Adverse outcome? Potential for Judicial Review
Work Incentives
What are the key aims?
1) Reduce worklessness, reward work and personal responsibility
• as a result of the single withdrawal rate under Universal Credit, 1.2 million households will see a reduction in their marginal deduction rate (MDR)
• virtually no household will have a MDR above 80 percent, compared to 500,000 households with a MDR above 80 per cent in the current system
• a single taper rate and a simple system of earnings disregards so people in work to see clearly how much support they can get while making sure that people considering a job will understand the advantages of work
• clear conditionality rules that strike a balance between dependency and support
What is a MDR?
• MDR measures the incentive for someone to increase their hours of work
• as the earnings of a household increase, means-tested benefits and tax credits start to be withdrawn
• in addition, above a certain level of earnings, the increase in their wages will also be partially offset by income tax and national insurance contributions
• MDR is calculated as the proportion of a small increase in earnings which is lost in lower Benefits/Tax credits and/or higher income tax and national insurance payments
Options on work incentives
Run on Disregards Non-dependant deductions Progressive manipulation Progressive taper Cash award Non cash facilities
These all have a cost
Treatment of income (other than earnings) UCPB9
Key policy proposals
As the White Paper ‘Universal Credit: Welfare that works’ set out, Universal Credit claimants who enter work will not see any reduction in their Universal Credit award so long as their earnings are below the appropriate earnings disregard.
A small group of income types will be treated identically to earnings. These are Statutory Sick Pay and Statutory Maternity/Paternity/Adoption Pay.
Treatment of income (other than earnings) UCPB9 Income received due to additional costs or expenses the
claimant has will be fully disregarded. There is also a group of income types which it would be
inappropriate to take into account due to the disproportionate administrative burden of doing so. Obvious examples would be the value of payments in kind or charitable payments. Such income will be fully disregarded.
The current approach of fully disregarding payments of child maintenance received by a claimant who is a parent with care, in order to encourage such parents to apply for child maintenance, will continue under Universal Credit.
Earnings disregards and tapers UCPB14
Minimum levels of disregards The recently published Impact Assessment for Universal Credit
assumes the following proposed minimum annual levels for the earnings disregards: for a single person without children: £700 for a couple: £1920 plus £520 for the first child and £260 for the
second and third children; for a lone parent: £2,260 plus £520 for the first child and £260 for
the second and third children; and for single disabled people or a couple where at least one person
is disabled: £2,080. Only one earnings disregard, whichever is highest, will be
available in each household. The exact amount of these minimum earnings disregards has not yet been set and will be set closer to implementation of Universal Credit.
Earnings disregards and tapers UCPB14
Maximum levels of disregard With the minimum floor levels, the exact amount of these higher
disregards has not been set yet. The latest Universal Credit Impact Assessment assumed disregards in the order of: for a single person without children: £700 couple: £3,000 plus £4,250 per household for a child (regardless
of the number of children); lone parent: £9,000 (regardless of the number of children); and disabled people: £7,000 per household if a recipient or either
partner in a couple is disabled. Only one earnings disregard - whichever is highest - will be
available in each household.
Earnings disregards and tapers UCPB14
How will the reduction for housing support work? There will be maximum and minimum disregards within Universal
Credit. The maximum earnings disregard will only apply where there are no additions for housing costs included in the Universal Credit gross award.
If the claimant is receiving some support for housing costs, the value of this support reduces the maximum level of their earnings disregard by, on current assumptions, 1½ times the amount of the housing element.
A household receiving some support for housing costs will be entitled to an earnings disregard equal to the value of the larger of their reduced earnings disregard and the minimum disregard.
Earnings disregards and tapers UCPB14
Earnings Taper
A taper is the rate at which benefit is reduced to take account of earnings. A simplified single taper is at the heart of the design of Universal Credit.
Currently there are different taper rates operating throughout the benefit and Tax Credit system. The interaction between these tapers can mean that people have very little incentive to work more hours or to aspire towards a pay rise as they see only a few pence more in their pockets as a result.
Final decisions on the actual taper rate in Universal Credit will be taken closer to its introduction in 2013. However, the White Paper suggested that the taper or withdrawal rate would be around 65 per cent. In simple terms, that would mean that 35 pence in every pound earned would be kept.
The Default Scheme
The Features of the Default Scheme
Will follow the existing CTB scheme NOT a substitute for a local scheme Will not make the provision for the 10% cut If you fail to make your scheme by the 31st
January you will have to apply it You cannot deviate from it Would result in serious financial difficulties for
both the Billing Authority and Major Precepting Authorities
How Would You Manage It?
Could be seen as the benefit practitioners dream!
Existing procedures could continue You would need to meet the overall
legislative objectives Subject to the up rating? Tax base problems? Tax levels could trigger difficult outcomes Collection Fund issues
Local Schemes
Brent LBC
Chiltern DC
Harrow LBC
Consultation
The First Four Stages The first consultation should be with the major precepting authorities to gauge
the general reaction to local funding of all or part of the reduction in grant. These should be County wide meetings involving all the billing authorities and be at both officer and member level, all meetings need to be properly convened with appropriate minutes.
The second consultation should be with all billing authorities in the County to gauge the support or otherwise for a common scheme and resource pooling.
The third consultation should take the form of a briefing with all Third Sector bodies particularly those who represent client groups likely to be affected by the reductions in benefit.
The fourth consultation should be with the local precepting authorities warning them of the implications of the scheme for their tax base and the potential for triggering a referendum under the Localism Act.
At this stage the billing authorities should finalise the proposed scheme and carry out a detailed impact analysis. The authority should also be able to show it has properly considered incentives to return to work. The scheme should also be costed.
The Final Five Stages The fifth consultation should be with the major precepting
authorities for the third time to gauge the general reaction to proposed local scheme and the financial implications.
The sixth consultation should be with all billing authorities in the County to give them a further opportunity to share schemes.
The seventh consultation should take the form of a second briefing with all Third Sector bodies particularly those who represent client groups are to be affected by the reductions in benefit.
The eighth stage in the consultation should be seeking the direct views of your claimants both working age and pension aged.
The final consultation should be with the local precepting authorities after giving them the likely local financial impact and the potential need for local referendums.
Data Sharing
Data Sharing
Data sharing to process claims within local schemes
Provision in the Welfare Reform Act Will be subject to a protocol between CLG
and DWP Establishing data sharing Link with UC
Fraud and Error
Fraud
What structure? SFIS? Enabling power in Bill Specific powers or general powers? Developing local services High level business case for SFIS Risk based verification
Practical Issues
Staffing and structure Relationship with SFIS Exercise of new powers Legal process Information sharing Cost Wider fraud issues
NRPF Other areas of activity
Delivery
Aspects of Delivery (1)
The legally authenticated version of the local scheme Fit for purpose Resilient to challenge Avoid practitioners short cuts
Publicity Literature Application process
Aspects of Delivery (2)
Notification Excess local scheme awards Accounting A liability determination First level appeals Learning curve for the Billing Authority role in
the Valuation Tribunal This is not a minor issue!
The Appeal Process
The Process
Notification Extent of detail Detailed statements
Appeal to the local authority Decision
Appeal to another place The Valuation Tribunal Service Enabling power already in place
Appealing to the VTS
Read the Annual Review ! Process Need for regulation? Practice Statements Procedure Statements Sufficient expertise? Customer friendly? Is there a capacity issue?
The Hearing
Amendment in the Bill Provision for cases to be heard before a
Judge Evidence of scheme to be formally given? These are liability appeals Will there be a crossover with UC appeals? The big question “what is the potential
volume”
Funding
The Overall Funding Mechanism The government’s consultation on localising support for council
tax introduced the proposal to transfer the funding of council tax support from demand-led AME (Annually Managed Expenditure) to DEL (Departmental Expenditure Limits)
The Government is proposing to pay grant to billing and major precepting authorities to bring down council tax requirement rather than allocate it to the Collection Fund
This will mean the tax base will have to take account of the local scheme in a similar manner to discounts
This issue could create problems for Local Precepting Authorities (parish councils and town councils) because if the tax base is reduced and they do not receive grant then parish band D council tax will go up
This could be a particular issue if referendums are extended to some parish councils.
Calculating the Council Tax under the new rules
Benefit cost funding The authorities that will receive grant
Billing Authorities Major Precepting Authorities
The position on parishes Powers to pay grant Funded through the Central Share of non domestic rates Methodology for distributing grant Frequency of grant allocation Grant allocation in future Spending Review periods Limits on spending Maximising the tax base Managing pressures through the collection fund
Administration Costs
Administrative cost Implementation costs (£80k to billing
authorities and £27 to major precepting authorities already paid)
On going costs Link to existing subsidy arrangements New Burdens Assessment
Business Rates Retention Local Share and Central Share Was going to be 70/30 or even 80/20 The decision 50% Local Share and 50 % Central
Share Why the change? Could it be because the LSCT Grant is one of the
nominated matters to be funded from the Central Share
Doesn’t apply to Scotland, N Ireland and Wales What about growth in England? So where is the £3.82bn?
Grant allocation
The DCLG has invited a separate technical consultation on the specific factors and indicators which should determine the level of grant allocated to a particular authority. Issues to be considered in the consultation includes:
The basis for allocation (what factors are taken into account in distributing grant)
The frequency of allocation (how frequently grant is adjusted – annually or less annually).
Grant allocation
The relevant factors for the basis of allocation could include:
The relative size of eligible claimant groups Previous expenditure Other indicators – unemployment levels etc Council tax costs
Grant allocation
The issues that will need to be considered are: What are the advantages – and disadvantages of
using previous expenditure to determine shares of funding?
Is there a case for using previous expenditure initially?
What other factors could be taken into account as well or instead?
How should Government balance the need to reflect costs with the importance of incentivising local authorities to manage down demand/ensure there is accountability over council tax levels?
Grant allocation
Consideration will need to be given to the frequency of allocation.
There are two broad options:
Reflecting as closely as possible levels of take-up or demand, by adjusting as frequently as is practicable. This would achieve a better match between needs and grant across all authorities and would tend to reduce the financial risks to authorities
Leaving the grant allocation unchanged for several years. This would provide local authorities with greater certainty about their allocation in future years and help with financial planning; it would also enable a local authority to gain if liabilities under its scheme were to fall during that period.
Local precepting authorities
Option one - pass no money on Disregard the parish share entirely in distributing the total grant
between billing and precepting authorities Pass the parish share to billing authorities – but with no
obligation to pass it on to parishes
Implications Does not require additional legal powers Administratively simple for billing authorities – more complex for
central government if parish share has to be identified Could lead to big leap in Band D for some parishes – may mean
that some get caught by any referendums principles
Local precepting authorities
Option two - pass money on Pay grant directly to parishesImplications Requires additional legal powers Highly administratively complex for central
government Minimises impact on Band D Unclear how this could operate under
retained business rates
Local precepting authorities
Option three - pass money on Pay grant to billing authorities with a requirement to pass the
grant on to parishes Paying grant to billing authority, with requirement to pass on
through council tax systemImplications Requires additional legal powers Degree of complexity for both central and local government –
integrating within the council tax system could make less administratively onerous
Minimise impact on parish Band D Unclear how this could operate under retained business rates
Legislative Process
Legislative progress
The Local Government Finance Bill The need for subordinate legislation Draft regulations where needed Statements of intent Legislative timetable
Progress on the Bill
The Bill has passed through 1st and 2nd Reading as well as the Committee stage in the House of Commons.
The next stage is the House of Commons Report Stage followed by the Third Reading on the 28th May, before
Moved to the House of Lords on the 12th June with the Committee stage started on the 26th June
Royal Assent in July?
Pension Age Regulations
Commitment to protect pensionersDefinition in relation to ageMixed age couples – DWP approachTreatment of war pensionersUprating for pension aged claimants
Transitional Regulations
A claim under CTB on or before 31st March 2013
A claim under CTB on or after the 1st April 2013
A change of circumstance declaration for CTB
A change of circumstances for UC
Collection Fund Regulations
Possible amendment to the Local Authorities (Funds) (England) Regulations 1992
Precepts The proposal to vary the payment schedule Views being sort from the two groups The potential for an alternative proposal The impact of the in-year financial pressure
on Major Precepting Authorities
Council Tax Base Regulations
Amendment to existing regulations rather than new ones
Calculation of the impact of LSCT on the council tax base
The council tax base for baseline purposes likely to remain gross of LSCT
Timeline
Timetable
The Timetable
Spring 2012 Primary legislation in passage through Parliament. Government preparing and consulting on draft
secondary legislation. Initial thoughts on local scheme Discussions between billing authorities and major
preceptors Political direction Technical consultation on grant distribution
The Timetable
Summer 2012 Primary legislation passed. Secondary legislation prepared Develop operational project plan Billing authorities designing local schemes Scoping IT changes Consultation with Major Precepting Authorities Modelling proposed scheme Public consultation
The Timetable
Autumn / Winter 2012 Secondary legislation passed (early Autumn) Prepare risk assessment Grant allocations published Establishing local schemes – final consultation with
major precepting authorities and public, revisions to schemes.
Technical changes to systems begin Setting budgets. Adopt local scheme
The Timetable
Winter/Spring 2012/13 Finalise system changes Prepare tax base Set council tax and formally adopt scheme Publicise scheme Agree monitoring arrangements Billing
Policy into Practice
Operating the scheme in a small shire district
Under the new scheme the amount provided to support Council Tax benefit will be reduced by 10% amounting to £695K
Annual Council Tax benefits £6,954 Less: 10% reduction as proposed £ 695 Less: Protection for pension age groups (50%) £3,477 Balance to be used for working age £2,782
This means that the assistance with Council tax for working age claimants will be reduced by around 18% which means that in future working age claimants will be entitled to around 80% of the their current entitlement.
The caseload
6,800 caseload Working age 3,830
ISA/JSA etc Earners Non earners Second adult
Elderly 3,000
Operating the scheme in a large unitary council
Under the new scheme the amount provided to support Council Tax benefit will be reduced by 10% amounting to £6.3m
Annual Council Tax benefits £63.0m Less: 10% reduction as proposed £ 6.3m Less: Protection for pension age groups £30.9m Balance to be used for working age £25.8m
This means that the assistance with Council tax for working age claimants will be reduced by around 19% which means that in future working age claimants will be entitled to around 80% of the their current entitlement.
The caseload
63,257 total caseload Working age 32,115
ISA/JSA etc Earners Non earners Second adult
Elderly 31,142
What are the realistic options for Billing Authorities?
Maximise the tax base and utilise the discount changes Adjust the tax base provision Fund from the Non Domestic Rate growth Own resources? Fund the 10% locally from own resources either partially or fully
The Billing Authority proportion The Precepting Authority’s proportion
Continue with existing scheme with work incentives less up to 10% cost and protecting vulnerable groups, achieved by either/or A straight cut of the appropriate percentage for all non protected
claimants – the “equal pain” approach A flexible approach to minimum benefit or a cap A regressive taper A modified existing scheme protecting vulnerable groups and
reducing cost
The Council Tax Base
Council Tax Dwellings
Discounts
Discounts
Discounts
Discounts
Ipswich
Lancaster
Lancaster
Lancaster Non Parished Areas
Arnholme Parish
Managing Risk
Risk sharing
Sharing risk through the collection fund Deficit or surplus in the collection fund Shared the following year? Should major precepting authorities be able to
influence scheme design? Varying precepts in year
To reflect collection rates A new power
The risks of localisation
If the current financial crises continues, benefit costs will continue to rise.
Collection performance could suffer significantly with the 10% reduction which will fall largely on working age claimants.
The impact of the reduction in housing costs as a result of housing benefit changes and the cap will have a cumulative affect on the ability to meet council tax and other domestic bills
CTB is currently based on actual as opposed to estimated eligibility. Therefore an increase in the number of claimants will automatically lead to an increase in CTB costs This will expose councils to increased expenditure.
Any cap on expenditure needs to protect local authorities from the burden of increased caseloads.
Managing the risk of fraud and error The consultation document suggests that it is for local authorities to
administer support for council tax in as fair and efficient a way as is possible whilst minimising errors and the risk of fraud.
The Department for Work and Pensions will be launching the new Single Fraud Investigation Service (SFIS) in April 2013.
Local authority administration of fraud and error in LSCT should continue, whilst working in partnership with SFIS where the need arises.
In the long term LAs will have to make their own arrangements The risk of fraud and error should be minimised by effective data
sharing across all areas of the public sector. The Government have yet to realise the potential savings of
comprehensive public sector data sharing coupled with effective partnerships with the private sector.
Managing the financial risk
Billing authorities should be able to share the risk of any scheme across the tiers of administration and with Precepting Bodies
Strict budgetary control is necessary to manage the financial risk
Managing the Collection Fund and regular reporting will be critical
There is however a need for more discussion on how risk is managed across the tiers of local authorities and between central and local government.
Collection Issues
And finally, collection issues April 2013 and beyond
Collecting residue debt identical to the reduction in LSCT
Collecting small balances from those in receipt of LSCT
Do you apply for a liability order? If so which remedy do you use? If the debt remains unpaid how will you prove
culpable neglect and/or wilful refusal?
And Finally, What is the IRRV doing?
Membership of the Reference Board and the Delivery Group
Partnership with “Destin” on a modelling tool Partnership with “Coactiva” on a Risk Based
Verification tool Partnership with “Entitled to” on a UC/LSCT
calculator Delivering a “Resource Centre” for LSCT Developing a Mutual model for residue fraud teams
and a social enterprise for UC/LSCT/Benefit advice