Localising Council Tax Support By Richard Enderby

Overview Context Policy overview Delivering the reform

The 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 LOCALISM 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

The context Welfare Reform DCLG is working closely with DWP on continued data provision in support of localised council tax reduction schemes, including in relation to Universal Credit. A number of benefits and tax credits (income support, income- related jobseeker’s allowance, income-related employment and support allowance, housing benefit, working tax credit and child tax credit) are being incorporated within Universal Credit. Reform is taking place in context of wider welfare reform and introduction of Universal Credit - intended to make work pay.

The context Deficit Reduction Support for council tax localised from Spending Review 2010 announced (subsidised expenditure) reduced by 10% from the same date (Around £500m p.a. across GB). Funding to be switched from AME to DEL. Reform should protect the most vulnerable, in particular pensioners – and support improved work incentives to be delivered through Universal Credit. Devolved administrations to bring forward own plans for reforming support for council tax.

The context Localism Proposals for Council Tax Support is being implemented alongside other localism policies in the Local Government Finance Bill; Technical Reforms of the Council Tax system Local Retention of Business Rates

The policy overview: Government's proposals (1) Support will take form of discounts within the council tax system Government will allocate funding to local authorities (at the moment council tax benefit spend is just under £5 billion across Great Britain). Government will set broad parameters for local schemes to ensure support for eligible pensioners Local authorities will be free to design their own schemes for working age claimants Data sharing will reduce administrative costs and complexity.

Recent Publications In May the following were published alongside Report and Third reading of the Bill Funding Consultation Statement of Intent Procedural Transition Prescribed Requirements Default Scheme Pensioner Protection Council Tax Base Risk Sharing Vulnerable People guidance

Funding Consultation Funding Consultation published on 17 th May Sets out indicative local authority allocations – final allocations will be based upon 2011/12 outturn data to be issued in the Autumn. Funding will be provided to major preceptign and billing authorities as part of the local retention of business rates proposals – apart from local police authorities where a separate grant will be provided. Funding consultation relates to funding of the reductions- DCLG working with DWP on the administrative costs. Consultation closes on 12 th July 2012

Statement of Intent Procedural and Transition Procedural No further regulations to be made under the powers in the Bill; The Bill has been amended so that consulting with interested parties prior to the Royal Assent will meet the requirements of the Act. Transition Regulations will enable existing claimants and those where an application has yet to be determined to be deemed to have applied for a local council tax reduction scheme.

Statement of Intent Default and Pensioner schemes Default scheme - Enable the ongoing administration of council tax schemes if an authority has not adopted their own scheme by 31 st January 2013 Important to note default scheme is not a model scheme – does not make 10% saving. Pensioner scheme, in itself, and where part of the default scheme, will as an outcome be similar as possible to means tested council tax benefit system. Pensioner credit age protection scheme will be applied nationally.

Statement of Intent Tax Base and Risk Sharing Council Tax Base Set out how the Council Tax Base regulations are intended to be amended to allow for the local council tax reduction. The reduction in the tax base will be an estimate based upon the local scheme to be adopted. Risk Sharing The Bill provides powers to enter into arrangements to manage cash flow pressures Also considering whether changes to the Funds Regulations are required to enable billing authorities, with major preceping authority agreement, to revise the schedule of precepts in year.

The policy overview: Vulnerable people Government has published guidance on existing local authority responsibilities in relation to vulnerable people, which they may wish to take into account in contemplating their schemes. Government will not prescribe the treatment of vulnerable groups in local schemes. Local authorities are best placed to understand local needs. Key responsibilities for local authorities in relation to vulnerable groups: The Child Poverty Act 2010 – addressing child poverty. The Disabled Persons (Services Consultation and Representation) Act 1986, and the Chronically Sick and Disabled Persons Act 1970 – having regard to the welfare needs of disabled people). The Housing Act 1996 – duty to prevent homelessness.

Delivery: Action for Local Authorities Councils must have their schemes ready to implement in April Councils need to be thinking about the process of establishing schemes now: Engaging members - ensuring they are aware of the decisions they will need to take, Understanding their caseload – who it comprises, Engaging precepting authorities, Engaging IT suppliers, Ensuring all relevant parties understand the timetable for developing schemes £30m already provided to billing and major precepting authorities to support work Central Government will continue to engage with local authorities, offering advice and guidance.

Delivery: Advice and Assistance Government is committed to a steady flow of information to assist authorities in setting up their schemes: On website: Design tool Delivery group details: Technical consultation on funding Provisional allocations Statements of intent Q&A Other suggested information resources/exchanges: CIPFA Networks (Benefits and Revenues) IRRV Forums Service -

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