Agenda item

From the Cabinet, 5 January 2016

Further to Minute 90 of the Cabinet, the City Council considered a report of the Executive Director of Resources, which set out the outcome of consultation on proposals for a new Council Tax Support Scheme and made recommendations for the introduction of a new scheme.

Council Tax Support (CTS) was a means tested discount to help low income households with the cost of Council Tax payments. The existing CTS scheme in Coventry broadly mirrored the Council Tax Benefit (CTB) scheme, previously administered under the framework from the Department for Work and Pensions (DWP).

Since the Government announced that CTB was to be localised from April 2013 every council has had the responsibility for designing its own scheme of support.  In localising support, the Department for Communities and Local Government had also cut funding by 10 per cent in 2013/14.  Notwithstanding this reduction in funding, the Council initially made the decision to implement a new Council Tax Support scheme which effectively mirrored the previous CTB scheme, meaning no change in the level of financial assistance received by recipients.  Due to the 10 per cent reduction in funding from central government, this meant that the Council had to find approximately £3 million of additional resources to maintain the equivalent level of support under the CTS scheme.

The report indicated that the Council faced significant funding pressures for 2016/17 and beyond.  Although the Pre-Budget Report previously approved by Cabinet contained proposals that would move the Council towards a balanced Budget in 2016/17, large shortfalls existed in the budget for later years.  Given these medium term funding pressures, the 2015/16 Budget Report included a £3 million saving target for CTS from 2016/17.  This formed part of the Council’s 2015/16 budget consultation process. 

It was acknowledged that reducing the CTS scheme was only one of a number of difficult and challenging decisions that the Council would need to take as it reduced and redesigned services to ensure that the Council maintained a sustainable financial position in the wake of unprecedented reductions in funding. Additional cuts to services in other areas to make up the £3 million savings would cause significant impacts across the Council when all service areas were looking at ways of reducing costs.

In proposing to now revise its CTS scheme, the Council would be following the majority of English councils who had now similarly reduced the levels of discounts offered under local schemes than were funded under CTB.  In 2015/16 only 42 out of 326 councils had protected all recipients from a cut in support.  On average, councils in England had cut scheme discounts compared with levels of benefits previously provided, by 20 per cent.

The rules governing support for pensioners, who comprised approximately 39 per cent of the caseload in Coventry, would continue to be prescribed nationally.  People of pension age did not receive any reduction in entitlement under a local scheme when compared to the previous CTB scheme.  This meant that pensioners would not be impacted by any proposals to revise the local CTS scheme although this inevitably had the impact of loading the weight of a cut onto people of working age.

Following a period of formal public consultation on the proposed changes, which was undertaken from 17th August 2015 to 26th October 2015, and consideration of the consultation analysis and Equalities Consultation Assessment appended to the report, it was proposed that a minimum contribution approach to pass on a 15 per cent reduction in support to all working age people should be adopted.  This approach would apply a blanket reduction regardless of individual circumstances or the type or level of income of the customer.  The advantage of this approach would be to disperse the cut across the widest possible section of customers to minimise the average impact.  The average weekly award of £20.09 (in a Band A property) would reduce by £3.01 to £17.08, leaving the Council to collect the annual balance of around £156.52 from each of these households (around £2.4 million additional charges if applied equally to all working age residents).

The Cabinet had noted that the Finance and Corporate Services Scrutiny Board (1) had considered the Local Council Tax Support Scheme at their meeting on 11 November 2015.  They had recommended that, in considering the proposals, the Cabinet should be mindful of Council policy to protect the most vulnerable in the City and to consider other options to achieve the required savings.  The Cabinet Member for Strategic Finance and Resources indicated that these issues had been taken into account when looking at various alternative options as identified within the report.

RESOLVED that the City Council:

1  Note the outcomes of the consultation responses, resulting equality impacts and other information in this report, then make a decision on the proposed new Council Tax Support (CTS) Scheme

2  Approve the proposed Council Tax Support scheme as set out in appendix 1 of the report and delegate authority to the Director of Resources to make final detailed changes to the Scheme and to implement the scheme from 1 April 2016.