1. Localised Council Tax Support Scheme Liz Hall & Andy Ormerod July 2012 1

2. Background to Localised Council Tax Support  Government Spending Review 2010  Localism Bill 2011  Welfare Reform Act 2012  Welfare Reform changes in 2013:  Localised Council Tax Support scheme  Benefit Cap – April 2013  Social Sector size changes – April 2013  Social Fund administration – April 2013  PIP’s to replace DLA – national rollout commences June 2013  Universal Credit - national rollout commences October 2013  Other changes:  Council Tax technical reforms – April 2013  Local Business Rates retention – April 2013 2

3. Introduction - Localised Council Tax Support  New local scheme determined by Councils  Intention is to reduce Council Tax Benefit bill by 10% nationally  Blackburn with Darwen 12% (approximately £1.8m)  Protection for pensioners  Consideration of vulnerable groups  Consideration of work incentives  Implications of the new scheme: –All current working age claimants will potentially be affected –Difficulty of collection of additional Council Tax debt 3

4. Government Guidance  Local schemes must reference obligations under:  Child Poverty Act 2010  Disabled Persons Act 1979  Housing Act 1996  Claimants should receive:  More overall income in work than out of work  More overall income from working more and earning more  Timely and accurate support 4

5. Government Guidance (continued)  Requirement to consult the Precepting Authorities, the public & their representative groups  Equality Act 2010  Introduction of scheme in April 2013  Year 1 scheme based on current system  New scheme must be adopted by 31 st Jan 2013  Government to provide a one off transitional payment in April 2013 (£84k) 5

6. The current Council Tax Benefit Scheme  Government sets the rules on who can claim  Calculated same way as Housing Benefit  The calculation is based on:  Household make up  Income  Capital or Savings  Non-dependants are taken into account  Applicable amount calculated (what the government says a person or family needs to live on)  Household Income compared to Applicable Amount 6

7. The current Council Tax Benefit Scheme  If household income is the same or less than the Applicable Amount – full Council Tax Benefit is awarded  If household income is more than the Applicable Amount – they have ‘excess income’  Council Tax Benefit is awarded at reduced rates dependant on the amount of ‘excess income’  The amount of Council Tax Benefit awarded can be 100% of the annual bill or just a few pounds 7

8. Council Tax Benefit Caseload Analysis Pension Age claims Working Age claims (passported) Working Age claims (other) No. of claims 6,7937,6734048 Total annual award £5,382,672£6,396,687£2,839,146 Total Council Tax Benefit caseload18,514 Total Council Tax Benefit awarded£14,618,507 Working Age (passported) – claimants in receipt of Income Support, Job Seekers (IB), Employment Support Allowance (IB) Working Age (other) – Earnings, Incapacity Benefit, Job Seekers (C), Employment Support Allowance (C) 8

9. Council Tax Benefit Caseload Trend 9

10. Localised scheme  BwD options for a scheme based on current CTB calculation:  Option A  Maximum eligible award for example 80% for all working age claims.  No additional vulnerable groups to be offered protection from the changes.  Proposed Hardship fund  Option B  Calculating Support in accordance with current CTB rules and applying a percentage reduction at the end of the calculation for all working age claims, for example 20% reduction  No additional vulnerable groups to be offered protection from the changes  Proposed Hardship fund 10

11. Financial Savings  Option A reduction of £1,964,905 (based on 80%)  Option B reduction of £1,831,665 (based on 20% reduction) Notes: 1)Only able to model option A) on Northgate modelling tool or option B) on DCLG modelling tool. 2)Any Financial Saving will be offset by provision in Hardship Fund. 3)Any scheme dependent on software capabilities 11

12. The preferred scheme  Blackburn with Darwen - the preferred option  Reduce the total Council Tax Benefit amount by 12%  Reduce Council Tax Benefit for all working age claimants (11,759)  Use same rules and calculations of the present scheme  Impose an approx 20% decrease in current Council Tax Benefit award for all working age claimants  Not to classify any group as ‘vulnerable’ and protected from the reduction  Proposed Hardship fund 12

13. Worked example Case 1 – A couple receiving Job Seekers Allowance: Current scheme Council Tax charge (in band A)£986.95 Council Tax Benefit awarded £986.95 Annual Council Tax to be paid£0.00 Under the new preferred scheme Council Tax charge (in band A)£986.95 Council Tax Support awarded (less 20%)£789.56 Annual Council Tax to be paid £197.39 13

14. Localised scheme Other funding possibilities:  Increase charge on empty properties and second homes  Council Tax technical reform of exemption classes  Premium charge on long-term empty properties  Increase Council Tax 14

15. Possible additional income to the Council  Increased charges for empty properties (after 6 months exemption) (*Based on 100% charge) - £554,000  Increased charges for 2nd Homes (*Based on 100% charge) - £41,000  Amendment of exemption and increase charges for empty and unfurnished properties (*Based on 100% charge) - £686,000  Amendment of exemption and increase charges for properties in need of major repair (*Based on 100% charge) - £72,000  Premium charge for properties empty over 2 years (*Based on 100% charge) - £241,000

16. Public Consultation  Questions to be based on the preferred options for the scheme and to include questions on other possible options:  Include income which is disregarded from current calc  Calculation of income - amendment of tapers  Changes to Earnings Disregards  Increase non-dependant deductions  Capital Limits  Work Incentives  Including questions on funding possibilities:  Increase Council Tax overall  Maximise income from 2 nd homes & long-term empty properties  Maximise income through Council Tax technical reforms  Make savings by further cuts to other services 16

17. Public Consultation  Adverts and posters  Consultation survey to be launched online - SNAP  Customers can request a paper survey  Roadshows:  Presentation  Leaflets  FAQ’s  Other welfare reform handouts  Copies of draft scheme & consultation literature will be placed at Town Halls  Consultation findings to be consolidated & published  Results to help define local scheme 17

18. Communication and Consultation process 18 ActivityDate Consultation with the Fire and Police Authorities 16 th July 2012 Member BriefingsLate July Mailshot to households who receive Council Tax Benefit (18,611) Early August Mailshot to 10% of other Council Tax Payers (3,739)Early August Public roadshows: Highercroft Mill Hill Community Centre Audley Neighbourhood Learning Centre Shadsworth Community Centre Bangor Street Community Centre Early – mid August Canvass voluntary and representative groupsEarly August

19. Communication and Consultation process 19 ActivityDate Discussed and consulted at ward solution meetingsAugust Stands at Blackburn and Darwen Town HallsAugust On-line questionnaireAugust - Sept Internal Departmental briefingsAugust Use of ShuttleAugust/Sept Consolidate responsesOctober Communicate findings to consulteesOctober - November Use results to define local schemeOctober - November Publish final schemeby 31 st January

20. Implications  Parallel schemes with different rules – HB/CTS  Customer confusion/Increased contact  Difficult to financially model - demographic changes, economic factors, welfare benefit reform, fraud etc.  Additional Council Tax debts to recover  Financial risk to the Council if debts not collected  Increased Council Tax reminders/summonses etc.  Number of summonses issued in 2011/12 - 9662  Estimated number of summonses to be issued in 2013/14 – 20,192 20

21. Implications  Increased pressure on Customer Services/Council Tax and Benefits  Extensive Equalities Impact Assessments required  Possible legal challenge to the local scheme 21

22. Challenges  Timescales – scheme designed/costed & consulted on by Nov 2012  Software enhancements not scheduled until late Autumn 2012 – will require lots of testing/modelling  Transition costs (2013 & 2014)  Dependence on DWP (Oct 2013 onwards)  Council perception – recovering debts against benefit claimants 22

23. ANY QUESTIONS ? 23