Agenda item

This report outlines the proposed options for the delivery of a local Council Tax Support scheme with effect from 1 April 2013. 

Discussion:

The Chief Finance Officer introduced the report, which outlined the proposed options for the delivery of a local Council Tax Support Scheme with effect from 1 April 2013 but that would have to be in place by 31 January 2013. The scheme would be administered by the council and replaced current Council Tax benefit by giving a discount on Council Tax instead. Currently, some residents had 100% of their council tax paid for them by the local authority, which was then reclaimed from central government and this would cease next April and the discount given instead.

The committee was advised that there would also be changes to elements of the council tax system, which would allow the council additional discretionary powers to set the level of certain discounts and exemptions but this did not include the current Single Person Discount. Officers had calculated that it was probable that through the new arrangements the council was likely to receive £4 million less revenue than through the current scheme and that this shortfall would either have to be found from efficiency savings within the council, by raising Council Tax or by adjusting the benefit paid to recipients or through a mixture of all three of these options. The council’s preferred scheme was to reduce the benefit to claimants (with government regulations stating that there must be no change for pensioners) but to protect those people in receipt of a war widows/disablement pension. This would mean that 60% of current benefit recipients who were of working age were liable to a reduction to their current benefit. The council’s proposal was set out in full at Appendix A to the report on page 63 of the agenda.

The council was also looking to amend current exemptions for paying Council Tax, in particular by reducing the six-month exemption on empty properties to three months and also to ensure that banks and building societies paid Council Tax on repossessed properties, which currently they did not have to do. The proposals for all changes to discounts and exemptions were set out in Appendix D to the report on page 69 of the agenda.

The Chief Finance Officer informed the committee that the Cabinet had considered this matter on 4 September 2012 and had agreed to undertake a public consultation on its preferred scheme as set out in Appendix A and the committee was considering this matter as part of that consultation.

The Revenue and Benefits Manager gave a presentation on the consultation responses received so far. He advised that 24,800 benefit claimants had been written to, including pensioners, who would not be affected by the proposals. Thirty stakeholder groups, such as the Citizens Advice Bureau, had also been written to and an advertisement placed on the front page of the Council’s website, posters and flyers circulated to libraries and elsewhere, a press release sent out and advertisements placed in local newspapers, together with other forms of contact around Medway. There was also an article in the ‘Medway Matters’ newsletter, which was delivered to every home in Medway. Consultees had the opportunity to respond by letter or to use a paper or on-line survey.

The committee was advised that, to date, the council had received 254 survey replies through the website and 69 in paper format. There had also been 50 letters received. From these replies 82.5% of respondents were currently in receipt of council tax benefit with the majority currently in agreement with the basic principles of Medway’s preferred scheme. A copy of the survey was circulated for Members’ information.

Members of the committee voiced their concern that the single person discount was not part of the discretion allowed to local councils by the government. The committee considered that it should add its weight to other local authority’s representations to central government by writing a letter to the appropriate ministers. This would probably be too late to take effect for April 2013 but at least it could be set in place for 2014/2015.

Officers were asked that if the council was unable to obtain the council tax due on an empty property whether a charge could be placed on that property for payment of the council tax when it was sold. Members were advised that this was possible and that the council did do this, where appropriate.

Members advised that many disabled people seemed to be confused and anxious about the proposed changes, as they were already due to lose benefits through the Universal Credit proposals. The Chief Finance Officer advised that disabled people and carers currently received a number of additional premiums as part of their means assessment process and it was not proposed to change this process, so disabled people claiming benefits were protected but not in the same way as pensioners. If they were to be protected in the same way as pensioners i.e. they were exempted from the restrictions of the local scheme, this would severely reduce the potential savings of the proposed scheme.

Members asked if there would be an appeals process for the new system administered by the council and officers confirmed that there would be.

Members also asked whether officers had built into the calculations for the new scheme a contingency that more council tax might not being paid than at present and the subsequent work to recover it that required, as the consequences of the new Universal Credit benefit scheme and the proposed council tax discount scheme was likely to result in more people unable or unwilling to pay their council tax. The Chief Finance Officer responded that most recipients of national benefits would be in a worse position next year (except pensioners) and recognised it would be very difficult for people but the council needed to focus on this area of its own responsibility i.e. council tax benefit recipients. However, the financial position for Medway Council was also bleak and the options available to the council were currently being consulted on with the public. It was also proposed to create a ‘Hardship Fund’, by utilising the saving from the removal of the repossession exemption described in Appendix D, which would provide a discretionary safety net for those in most severe difficulty.

The Chief Finance Officer also highlighted the risk that more people may apply for a Council Tax ‘Discount’ as opposed to the previous description of ‘Benefit’ because of the perceived stigma associated with benefit.  Officers confirmed that the cost of any growth in this respect would fall upon the council and agreed that there was a likelihood that this would happen.

Decision:

The committee agreed to:

(a)         note the report and the consultation undertaken on the preferred scheme, as set out in Appendix A, whilst also describing the other possibilities mentioned in Appendix E;

(b)         send a letter from the Chairman and Spokespersons of the committee to the Prime Minister, Deputy Prime Minister, Chancellor of the Exchequer and the Chief Secretary to the Treasury with regard to including the single person discount in the flexibility available to local councils when setting their local Council Tax Support Scheme.