This evening we are writing about one of the BIG council issues for the next year.
At the moment people on low incomes receive council tax benefit to cover the cost of their council tax. The government pays 100% of this, so it doesn’t cost councils anything.
However from next April the Government is ending Council Tax Benefit. In its place they have instructed councils to design their own schemes. These will be known as Council Tax Support Schemes.
But instead of 100% government funding, councils are being given only about 90% of the cost. Rochford District Council will get about ?520,000 less. To cover the shortfall , we are expected to cut the benefits that people currently get! Though pensioners are protected from this.
It’s being left up to each District Council to devise their own schemes. But as there’s a rule that pensioners are protected on this, the whole burden of these cuts falls on people of working age (and there are about 2,100 people of working age getting council tax benefit in our district). Unless the council covers this shortfall by making cuts in its budget elsewhere. But ?520,000 is a lot of money.
Rochford District Council are proposing the following, though ordinary councillors haven’t voted on this yet:
“1. People living in properties whose Council Tax band is E, F, G or H will have their local council tax support restricted to the maximum amount payable for a Band D property.
2. Regardless of their financial circumstances, every working-age claimant should pay the first 20% of their council tax liability. This means people who currently get full CTB will have to pay something towards their council tax from 1st April 2013.
3. Only working-age claimants who have less than ?6,000 should be entitled to claim local council tax support.
4. Second Adult Rebate can be granted to single people who have a high income if they share their home with someone who is on a low income (not their partner). We are proposing to stop this.
5. The Budget 2008 announced that, from October 2009, child benefit was to be disregarded in the calculation of CTB. We are proposing to end this disregard and take child benefit into account as income when we calculate entitlement to local council tax support.
6. Child maintenance is currently disregarded in full when we calculate CTB. Some people have up to ?1,000 per month which doesn?t get included in the CTB assessment. We are proposing to end this disregard and take child maintenance into account as income when we calculate entitlement to local council tax support.
7. Currently we reduce CTB for working-age people if an adult friend or relative lives with them. These types of people are known as non-dependants. We want to try and ease some of the financial pressure as well as trying to reduce homelessness and under occupation of houses. We are proposing to stop making non-dependant deductions when we calculate entitlement to local council tax support.”
The District Council have also given some examples of how this would work in practice – we are showing these further down the page. You will see that some people will be unaffected, whilst others could be paying over ?900 more per year.
The District Council is currently carrying out a public consultation on this – to see if you agree with what they are proposing. You can do it online here. The people in the finance department are making an effort here to consult, and we hope that onlineFOCUS readers will complete their questionnaire by September 12th.
We are very interested in what our readers think on this – so please leave a comment here as well as completing the council questionnaire.
In Brentwood the Lib Dem opposition have come out against the plans:
“Put simply this is localism in its crudest sense with a proposal that has been dumped on local government by central government and we are basically being told to get on with it with one arm tied behind our back…..
….. Lib Dems welcome the fact that pensioners are going to be protected under any new scheme and will not see a cut in their benefit they are concerned that some Brentwood residents will face cuts of 32% in their council tax benefit..
Yes, councillors are certainly feeling ‘dumped on” by central government on this….
Interestingly some Conservative Councils have also decided to oppose the governments plans. To quote from the Guardian:
David Cameron is facing a revolt in his own Oxfordshire “backyard” as local Tories join a national outcry over council tax reforms that they say will cost people on low earnings more than ?420 a year from next April.
Tory-run West Oxfordshire district council, which covers the prime minister’s Witney constituency, has decided to go it alone and keep the existing system throughout next year, effectively snubbing Cameron’s government….
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In an internal report, West Oxfordshire officials state: “This approach does not meet the policy intention of incentivising work. Because of the way the benefit would be reduced progressively as incomes rise, councils argue the reform will deter many from seeking work.”…..The report also suggests that the cost and inconvenience of collecting small sums from people without the means to pay will make the whole system unworkable. The council will therefore defy government and postpone any change until 2014, making up the financial shortfall from other parts of the budget.
Across the country there are similar protests. In June council leaders from 12 councils in Surrey wrote to the chairman of the Local Government Association, Sir Merrick Cockell, voicing their dismay at a policy that was rushed and badly thought through.
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The examples:
Case Study 1
Mrs X is a pensioner living by herself. Her income includes Guaranteed Pension Credit so she is entitled to receive full Council Tax Benefit.
Her current Council Tax liability for her band C property is ?1,036.69 after a 25% reduction because she lives by herself. She is entitled to 100% Council Tax Benefit so does not have anything to pay.
Council Tax Support for pensioners will be a national scheme designed by the Government. They have guaranteed that people of pension credit age will continue to receive the same amount of support as they get now. Mrs X will continue to have nothing to pay.
Case Study 2
Mr and Mrs Y are a couple of Pension Credit age. Their total weekly income is ?426.55 per week. This is made up of their state pensions, a small private pension and Disability Living Allowance. They also have ?11,600 in savings. When we calculate Council Tax Benefit their Disability Living Allowance is disregarded. They are treated as having an additional ?4.00 income from their savings. The income used to work out their Council Tax Benefit is ?324.65 per week.
Their current Council Tax liability for their band D property is ?1,519.42 and they are entitled to ?653.42 Council Tax Benefit towards this.
Council Tax Support for people of Pension Credit age will be a national scheme designed by the Government. They have guaranteed that pensioners will continue to receive the same amount of support as they get now. This means that Mr and Mrs Y will continue to pay the same amount of Council Tax.
Case Study 3
Mr Z is a disabled person living by himselF. He receives Income Support so he is entitled to receive full Council Tax Benefit.
His current Council Tax liability for his band E home is ?1,402.45 after a 25% reduction because he lives by himself. This is paid in full by Council Tax Benefit.
Under the proposed Council Tax Support Scheme the maximum amount he will be entitled to will be 80% of the charge for a band D property, ?917.97.
He will have to pay an extra ?484.48 Council Tax.
Case Study 4
Miss K is a single parent living with her two children, aged 7 and 9. She receives Income Support. She also has her 19 year old son living with her who is in full time work earning ?181.00 per week. Because of this a non dependant deduction is made from her entitlement of ?3.30 per week.
Her Council Tax liability for her band C property is ?1,358.95 and she is entitled to ?1,186.88 benefit.
Under the proposed Council Tax Support Scheme no non dependant deduction would be made in the calculation, but she would only be entitled to 80% of her total liability. She would qualify for ?1,084.10.
She would need to pay an extra ?102.78 Council Tax.
If the non dependant deduction continued to be made she would only qualify for ?915.11.
Case study 5
Miss J is a single parent living with her 12 year old daughter. She works part time and her total weekly income is ?251.74. This is made up of ?20.30 Child Benefit, ?60.87 Child Tax Credit, ?74.57 Working Tax Credit and ?96.00 earnings. When we calculate her Council Tax Benefit we disregard ?42.10 of her earnings and all her Child Benefit. Her income used to work out her Council Tax Benefit is ?189.34 per week.
The Council Tax liability for her band C property is ?1,036.69 for the year after a 25% reduction because she lives by herself. She is entitled to ?662.41 Council Tax Benefit.
Under the proposed Council Tax Support Scheme her Child Benefit would no longer be disregarded, and her entitlement will be based on 80% of her Council Tax. She will therefore only be entitled to ?232.41.
She will have to pay an extra ?430.00
Case Study 6
Mr A is a single man in receipt of Incapacity Benefit of ?105.04 per week.
He lives in a band B property and his Council Tax liability is ?886.33 for the year after a 25% reduction because he lives by himself. He is entitled to ?847.85 Council Tax Benefit.
Under the proposed Council Tax Support Scheme his entitlement would be based on 80% of his Council Tax liability and he would only be entitled to ?668.75.
He would have to pay an extra ?179.10
Case study 7
Mr and Mrs B live with their two teenage children. Their weekly income of ?243.19 is made up of ?33.70 Child Benefit, ?41.99 Child Tax Credit and ?167.04 earnings. When we calculate their Council Tax Benefit we disregard ?27.10 of their earnings and all their Child Benefit. Their income used to calculate their Council Tax Benefit is ?181.93
The Council Tax for their band F property is ?2,208.30 and this is paid in full by Council Tax Benefit.
Under the proposed Council Tax Support Scheme Child Benefit would no longer be disregarded, and the Council Tax used in the calculation would be based on 80% of a band D property. As a result they would be entitled to ?1,223.06.
They would have to pay an extra ?985.24
Case study 8
Mr and Mrs C live with their two young children. Their weekly income of ?373.86 is made up of ?33.70 Child Benefit, ?113.15 Child Tax Credit, ?53.62 Working Tax Credit and ?173.39 earnings. When we work out their Council Tax Benefit we disregard ?27.10 of their earnings and all their Child Benefit. Their income used for Council Tax Benefit is ?313.06.
The Council Tax for their band C property is ?1,350.60 and at the moment they are entitled to ?785.06 Council Tax Benefit.
Under the proposed Council Tax Support Scheme, Child Benefit would no longer be disregarded. The Council Tax used in the calculation would be 80% of their liability. As a result they would only be entitled to ?163.21.
They would have to pay an extra ?621.85
How about case study 9. Mr & Mrs Z have both worked hard since they left school. They do not live beyond their means, have not had kids they cannot afford, do not receive benefits and do not expect others to fund them. They are both getting fed up paying for other people when they have to work very hard to make their own ends meet..
I would say for your case study 9, a couple who have to work very hard to make ends meet even when they haven’t got kids – that probably they are being required to pay too much tax, or they are underpaid. And if people are having to work so hard to make ends meet then , yeah, they won’t be keen to ‘pay for others.’
The coalition (pushed by the Lib Dems on this) are at least raising the tax threshold before people start paying income tax.
And I would add that sickness, accident, redundancy, business failure, divorce or simply a job that pays less than it used to can hit nearly all of us. And then a lot of us need a safety net.
Chris, it might be the people that jump straight onto the safety net without trying the wire first are the ones that hack others off….anyway, it’s a subject that is guaranteed to stir the emotions so let’s call it a draw !
Whilst unfortunate that there will be £520k less for the council to issue in the form of council tax rebates, what would be interesting to know is:
1. How much unpaid Council Tax has been written off in the past year.
2. How much fraudulently claimed council tax has been identified.
3. How much fraudulently claimed council tax has been recovered.
It is imperative that the council now, strengthen these policies to ensure money isn’t being lost. If not previously used in cases of fraud, legislation such as the Proceeds of Crime Act should be used to recover monies lost through fraud rather than via the usual maximum of £12.50 per week repayment when attachment to benefit orders are made.
Qs 2 & 3 should read fraudulently claimed Council Tax Benefit!
Cjav – regarding council tax collection, according to the council’s latest annual report:
“The Revenues and Benefits team collected
98.7% of the £47.6m Council Tax due last
year (98.9% in 2010/11). We also
collected 96.7% of business rates due last
year, compared to 96.8% in 2010/11.”
Will get back to you re council tax benefit !
I was asking about the figure for what is written off – Council Tax Departments write off unpaid council tax for varying reasons going back over numbers of years – Council Tax write offs are usually at the discretion of the Head of Revenues of Benefits, following recommendations of the Collection Dept Team Leader (titles of departments obviously subject to change varying on authority).
Whilst 98.7% collection rate is a very good collection rate, the remaining 1.3% uncollected amounting to £618,800 clearly exceeds the £520,000 lost from government grants.