Localisation of Council Tax Benefit

-a Case Study

David OatesHead of Benefits

London Borough of Brent

Brent context

Brent Context

• Population 311,200

• Diversity – 59% BME / 41% white

• Within the 15% most deprived local authorities nationally

• Third lowest income level in London

• Overall Benefits caseload 43,626 (27% increase since 2008)

• Impact of welfare reforms -• 5000 LHA transitional protection cases (500 lose over £150 pw)• 3300 Overall benefit cap cases (mostly 3+ children)

CTB in Brent

• Currently 36,029 Council Tax Benefit (CTB) claimants• 11,722 pensioners• 24,307 working-age

• Current CTB expenditure £35.5M

• Of working-age claims –• 7,379 “passported” • 16,928 “standard” claims

• 16,937 working age claimants on 100% rebate

Background

• Comprehensive Spending Review 2010

• Welfare Reform Bill

• Consultation: “Localising Support for Council Tax”

• Local Government Finance Bill

Government Proposals

• Abolish current national CTB scheme from 2013• All authorities to devise their own local schemes• Funded by fixed grant (10% less than current

expenditure)

• Some government parameters -• Pensioners to be protected• Schemes should support work incentives• Councils to consider support for other vulnerable groups

Risks / issues for Brent

• Financial risk • Hard political choices • Legal challenge• Equalities impacts• Timescales• Public consultation• Scheme design• Software• Customer confusion and potential hardship

Project Group

• Revenues Client• Finance• Legal Services • Diversity Team• Consultation Team• Communications• IT• Core Benefits group

Financial Risk

• What is your deficit?

• Funding calculation • Government forecasts for CTB in 2013/14• Distribution as per 2012/13 spending• Initial funding allocation – 13.8% cut for Brent

• Assumptions • Growth – caseload / expenditure• Council Tax rises• Collection rate

Funding Deficit 2013/14   Best estimate (2012/13

growth forecast at 1.4%) Estimated CTB Expenditure 2012/13

£35,500,000

Brent share 77.54% £27,526,700 

Indicative grant figure £23,725,000 

Initial shortfall £3,801,700(13.8%)

Growth through caseload increase 2013/14

£387,700(1.4% growth)

Growth through 3.5% Council Tax increase

£964,691

Total Indicative Funding shortfall (2013/14) £5,154,091

Political Risk

• Engage with Members – it’s their decision!

• Committee / Leaders briefings

• Party group briefings

• Members Working Group

• Full Council decision

Funding Options

Deficit £5.2M

NO CHANGE

CTB Changes (Working Age)

Min £4M

CHANGE

Council Tax Exemptions Max £1.2M

General Fund£0M

General Fund

£5.2M

Council Tax & CTB changes

£0M

COMBINATION

Impact on 2,000 CTax payers with

uninhabitable or empty

properties; second

homes etc

Impact on up to 24,000

Benefit claimants – workers, job

seekers, disabled,

lone parents, families etc

Impact on up to 111,000 CTax

payers.Reductions to

other services /increased CTax

Proposed Model

Deficit £5.2M

General Fund £0M

Council Tax Exemptions

£1.2M

CTB Changes (working age) £4M

Proposed changes to Council Tax Exemptions and Discounts

  Current position Proposed change Potential additional revenue 2013/14

Class A – uninhabitable (403 properties)

12 month exemption 50% discount £300,000

Class C - empty (529 properties)

6 month exemption 0% discount £688,000

Retrospective Changes* (A & C)

    £340,000

Total Class A & C     £1,328,000

Less 10% bad debt**     (£133,000)

Sub-total     £1,195,000Second Homes (640 properties)

10% discount 0% discount £80,000

Long Term Empties (460 properties)

100% Council Tax 150% Council Tax £360,000*

Total (2027 props)     £1,635,000

Less GLA share 22.46%     £367,221

Brent share 77.54%     £1,267,779

CTS Scheme Design - Options

• Minimum contribution – 15%, 20%, 25%, 30% ?• Cap at Band D ?• Increase non-dependant charges ?• Remove backdating ?• Remove 2AR ?• Reduce capital limit ? • Increase taper – 25%, 30%?• De minimus rule ?• Limited period awards ?

CTS Scheme – Modelling Considerations

• Is it financially worthwhile?• Does it achieve a policy objective?• Is it fair?• Is it consistent ?• Is it practical (given the timescales)?• What is the risk of challenge?• Will the software support it?• Is it understandable by customers? (and staff!)

Draft CTS Scheme – Key Principles

• Principle 1: “Everyone should pay something”

• All working age customers (unless protected) to pay a minimum element of their Council Tax – 20% in draft scheme

• Principle 2: “The most vulnerable claimants are protected” (from the minimum contribution)

• Claimants on Disability Premiums, War Disablement / War Widow’s Pensions are protected from the 20% minimum contribution. 

Key Principles (2)

• Principle 3: “The scheme should incentivise work”

• £10 increase in earnings disregards for Single Person, Couple and Lone Parent earnings (currently £5, £10 and £25)

• Principle 4: “Everyone in the household should contribute”

• Double current non-dependant charges and replace the current nil charge for JSA (IB) non-dependants with the lowest charge of £6.60

Key Principles (3)

Principle 5: “Better off claimants pay relatively more than the least well-off”

The taper used in the Benefit calculation should be increased to 30% from the current 20%

Principle 6: “Benefit should not be paid to those with relatively large capital or savings”

The savings cut-off limit for CTB claims should be reduced to £6,000 from the current £16,000

Other General Features

• The current Second Adult Rebate scheme to be abolished for working age claimants

• Premiums and personal allowances to be held at 2012/13 rates

• Scheme for claimants receiving Universal Credit or Personal Independence Payments to be broadly equivalent to treatment under their current benefits

Potential Legal Challenges

• Scheme design

• Consultation

• Equalities impact assessment

• Decision-making process

Consultation• Requirement to consult on a draft scheme

• Draft Sch 4 – sch 1A to be inserted into LGFA 1992:-

3 (1) Before making a scheme, the authority must (in the following order) –

(a) consult any major precepting authority which has power to issue a precept to it

(b) publish a draft scheme in such manner as it thinks fit, and

(c.) consult such other persons as it considers are likely to have an interest in the operation of the scheme

(2) The fact that this paragraph was not in force when consultation under sub-paragraph 1(a) took place is to be disregarded in determining whether there has been compliance with that sub-paragraph

Principles of Consultation• R v Brent LBC ex parte Gunning (1986)

(i) consultation must be at a time when proposals are at a formative stage;

(ii) that the proposer must give sufficient reasons for any proposal to permit intelligent consideration and response;

(iii) adequate time must be given for consideration and response

(iv) the product of consultation must be taken conscientiously taken into account in finalising any proposals.

• Vale of Glamorgan Council v Lord Chancellor [2011] • not necessary to consult on all the possible alternative ways in which a

specific objective might arguably be achieved.

• consultation is not a negotiation but a process within which a decision maker at a formative stage in the decision making process invites representations on one or more possible courses of action.

Consultation (2)

Who to Consult With• Elected Members / local MP’s• Existing CTB claimants and potential CTS applicants• Council Tax Payers• Welfare Advice Groups: Age Concern, Disablement needs,

RNIB, RNID, Racial Equality• Council Tax contractor• Housing Associations and Landlords• Citizens Advice Bureau• GLA / Levying Authorities • Brent Council employees and relevant Council services• Business Ratepayers • Chamber of Commerce

Consultation (3)

Approach• Consultation document / questionnaire available on website• Paper version available in local offices and libraries• Publicity leaflets to CTB claimants and with Council Tax

bills • Agenda slots at Area Forums and Service User forums

(with Lead Member support)• Direct mailing to stakeholders / voluntary groups / other

Council departments• Meetings with key stakeholder groups eg welfare rights and

with employees• Formal approach to GLA on behalf of preceptors

Equalities and other impacts

• Proposed scheme impacts on 21,664 working age claimants (mainly Band C and Band D)• 2,643 claimants are completely protected

• Of affected claimants:-• 23% impacted by less than £3 per week• 52% impacted by £3-£5 per week• 18% impacted by £5-£8 per week• 7% impacted by more than £8 per week

• Equalities strands – maximum variance of 3.79%• Ethnicity• Gender• Disability• Families

Some final thoughts

• Universal credit

• Hardship fund? / Section 13A LGFA 1992

• Year 2 and beyond

• Writing the scheme – draft / final

• Customer impact in April

• Timetable

Brent timetable

Event Date

PCG 31st May

Consultation start 11th June

Consultation length 9 weeks

Consultation ends 10th August

Analysis period 4 weeks

CMT 13th September

PCG 27th September

Executive 15th October

Full Council 19th November

An alternative timetable…

• Full Council decision – 15 January 2013

• Executive – 15 December 2012

• CMT – 15 November

• Evaluate consultation responses : 1 – 30 October

• Modelling / scheme design / write draft scheme / prepare and conduct consultation –

1 Aug – 30 Sept = 8 weeks!!

Thank you

David.Oates@brent.gov.uk

www.brent.gov.uk/localcounciltaxsupport