Welfare Reform - Local Council Tax Support Scheme
- Meeting of Cabinet, Thursday, 29th November 2012 6.15 p.m. (Item 132.)
- View the background to item 132.
A report by the Interim Director of Finance informed the Cabinet that the Council was required to establish a Local Council Tax Support Scheme, known as Council Tax Support (CTS), to replace Council Tax Benefit (CTB) from April 2013. This was a key strand of the Government’s wider Welfare Reform Review. The Director informed that the Scheme also brought with it reduced funding from Central Government.
It was proposed that a new Local Council Tax Support Scheme would replace CTB for 2013/14 that would manage the £3.2 million shortfall in Government funding that had been based upon current, and increasing, levels of CTB. The Cabinet was told that there were associated costs that increased the shortfall to a maximum of £3.635 million. In addition, the change also increased the likely level of non-collection of Council Tax by up to £1 million gross/£0.85 million net, and this needed to be included within the Budget Projections for 2013/14.
It was noted that the Council must approve a Scheme by no later than 31 January 2013 or the Government default Scheme, requiring the shortfall to be fully funded by the Council, would be imposed. The Cabinet was asked to recommend a Scheme to the Council.
The Scheme options were as follows:
· Scheme 1 - Grant reduction contained within claimant base
· Scheme 2 – Transitional Grant Scheme
· Scheme 3 – Government Default Scheme
The Cabinet was informed that the adoption of a Localised Scheme included the need to change financial modelling to support the Scheme. Government support would reduce by around £3.2 million in 2013/14 and the Council had to determine whether to meet this loss from alternative savings or to fund all, or part of this, from a reduction in awards to current CTB recipients. Depending upon the decision taken there could be increased challenges ahead in collecting the sums due.
Scheme 1 was recommended as this, essentially, ensured the Scheme could be funded from within the reduced resources available.
Councillor Phil Davies commented that he found the report very difficult to accept. The Council would be imposing an additional burden on some of the poorest people living in the Borough. It was regrettable that the Government had transferred this Benefit to the Council without adequate funding. Under the circumstances he questioned whether the Government was serious about localism as he considered that this made a mockery of it. It was imperative that the Council was given sufficient funds to deliver the new Scheme if the adverse impact upon the poorest in the Borough was to be avoided. Councillor Davies commented that the Government was imposing a charge of 22% on people on low incomes and consequently, Councillor he felt uncomfortable in moving the recommendations.
(1) it is recommended to the Council that:
(a) eligible Pensioners and Vulnerable Groups (disabled, disabled child and war pensioners) be protected under the Local Council Tax Support Scheme;
(b) the Local Council Tax Support Scheme proposed for 2013/14 be Scheme 1 with the associated proposals that will see Working Age Claimants meet 22% of the Council Tax payable in order to meet the £3.2 million reduction in Government Grant;
(c) the annual increase in caseload, estimated at 1% (£300,000) per year be included with the Budget Growth Projections for 2014/15 onwards;
(d) the potential losses on collection of £1 million gross/£0.85 million net be incorporated within the Council Tax Base calculation and that this reduction in Council Tax Income be reflected in the Budget Projections for 2013/14, funded from the change in the Council Tax discounts; and
(e) thanks be extended to those residents who participated in the Council Tax Benefit consultation, ensuring the consultation was meaningful.
(2) the Cabinet is appalled at the Government’s decision to transfer responsibility for helping people on low incomes to pay their Council Tax to local authorities, but to cut the funding for this by 10 %, resulting in a shortfall for Wirral of £3.5 million;
(3) Councils like Wirral have been placed in the awful position of being forced to choose between reducing support to some of the poorest people in the Borough or removing funding from other Council services;
(4) the Government’s transitional grant scheme will not help Wirral as it will leave a shortfall of £1.4 million which will have to be found by cuts elsewhere;
(5) the Cabinet believes that this policy makes a mockery of Localism. If the Government is not prepared to transfer both powers and adequate funding to Councils then genuine devolution will never be achieved;
(6) the Cabinet calls on the Government to rethink this ill-judged policy as a matter of urgency; and
(7) the four Wirral MPs be requested to lobby the Government for more funding on the Council’s behalf.