What is this consultation about?
Each year the Council has to decide whether to change the Council Tax Reduction Scheme for working age applicants in its area. This year the Council has decided that changes should be made to the Council Tax Reduction Scheme due to the roll out of Universal Credit within the Hampshire area and the significant increase in Universal Credit claimants. In effect the traditional link between Housing Benefit (which will no longer be available to new working age claimants) and Council Tax Reduction will no longer exist and it is essential that the scheme is revised to meet future requirements, to reduce administration costs and to ultimately prevent any additional costs being added to the Council Tax.
What is Council Tax Reduction?
Council Tax Reduction is a discount for Council Tax. The level of discount is based on the income of the household. Currently the maximum discount is 100% of Council Tax.
Why is a change to the Council Tax Reduction scheme being considered?
In April 2013 the Council Tax Benefit Scheme was replaced by a new Council Tax Reduction Scheme. Council Tax Benefit had been funded by The Department for Work and Pensions and supported people on low incomes by reducing the amount of Council Tax they have to pay.
The Council Tax Reduction Scheme is determined locally by Winchester City Council rather than the Department for Work and Pensions. Although the Government initially provided funding for the scheme, the funding has reduced each year in line with the reduction in Revenue Support Grant provided to councils.
Applicants in receipt of income-based Jobseekers Allowance, Income Support and income-related Employment and Support Allowance receive the maximum level of support. Others receive a level of Council Tax Reduction based on their income and other factors.
A separate Central Government scheme is retained for people of pension age and Councils are only able to vary their schemes for people of working age.
Each Council is required to review their schemes each year and decide if they want to make any changes. Before any changes can be implemented, they must be subject to public consultation.
Winchester City Council is proposing a number of changes to its existing scheme and, in line with legislation, we have a duty to consult you and provide you with the opportunity to tell us your views on the proposed changes to our Council Tax Reduction Scheme.
The Council is consulting on the following changes to its scheme for 2021/22:
- Introducing an income banded scheme for all working age applicants replacing the current scheme which was based on the previous Council Tax Benefit scheme (Option 1);
- Limiting the number of dependent children used in the calculation of support to two for all working age applicants (Option 2);
- Removing non-dependant deductions (Option 3);
- Disregarding Carers Allowance, the support component of the Employment and Support Allowance and the housing element of Universal Credit in the calculation of income (Option 4);
- Reducing the capital limit to £6,000 from £16,000; (Option 5);
- Removing all of the current earnings disregards and replacing them with a standard £35 disregard for single applicants and £70 for disabled applicants, carers, those in special employments or couples or lone parents where they are in work (Option 6);
- Where a member of the household is disabled and in receipt of certain disability benefits, allowing a further deduction from their income before calculating any entitlement to Council Tax Reduction (Option 7);
- Removing the Extended Reduction provision (Option 8);
- Removing the Second Adult Reduction provision (Option 9);
- Making all new claims and changes in circumstances which change any entitlement to Council Tax Reduction on a daily basis rather than the current (benefit based) weekly basis (Option 10); and
- Allowing the discretion to backdate any discount to the start of the financial year where a good reason is provided (Option 11).
In the Winchester City area, over 5,700 people currently receive Council Tax Reduction. The gross cost of the scheme is £6.4 million which is spread across the City Council (7.93%), Hampshire County Council (71.29%), Hampshire Fire and Rescue Service (3.83%) the Police and Crime Commissioner for Hampshire (11.72%) and Parishes and Winchester Town (5.23%) in accordance with the proportion of Council Tax which each organisation levies (which is shown in brackets).
Who will this affect?
Working age households in the Winchester City Council's area who currently receive or will apply for Council Tax Reduction.
Pension age households will not be affected as Central Government set the scheme.
Are there any alternatives to changing the existing Council Tax Reduction scheme?
We have also thought about other ways to make the administration simpler. These have not been completely rejected (including maintaining the current scheme) and you are asked about them in the Questionnaire, but, at the moment we do not think we should implement them for the reasons given.
We have considered:
- Continuing with the current scheme
This would mean higher administration costs and scheme costs generally. Not making these changes would significantly increase the administration of Council Tax Reduction. The current scheme will not work effectively with the Government’s Universal Credit system. The multiple changes in Universal Credit inevitably lead to multiple changes in Council Tax Reduction. This would increase the costs for all Council Tax payers in the District paying towards the scheme. The decision to increase Council Tax may need to be made by voting in a local referendum; or
- Reduce funding to other Council services to pay for additional administration costs
Keeping the current Council Tax Reduction scheme will mean an increase in administration costs and less money available to deliver other Council services.