Localising Council Tax Support

Overview Context Policy overview & bill progress Delivery: Bill & regulations Support for local authorities Local authority action

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: Spending Review 2010 Support for council tax localised from Forecast spending (subsidised expenditure) reduced by 10% from the same date. 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.

Policy overview (1) Framework of support Support will take form of reductions within the council tax system Government will prescribe the framework of support for eligible pensioners in regulations Local authorities will be free to design their own schemes for working age claimants. Government has produced guidance on supporting incentives to work and the existing framework of requirements to protect vulnerable groups A ‘default scheme’ will be put in place under the Bill as a legal backstop so local authorities can continue to administer council tax support

Policy overview (2) Joint working Local authorities free to collaborate to reduce costs and develop schemes that support shared priorities Local authorities must consult major precepting authorities Funding Government will allocate funding to billing and major precepting authorities. For councils and fire and rescue authorities, funding will be through the new retained business rates system. Local precepting share will be allocated to billing authorities. Government expects billing and local precepting authorities to work together to manage the impact on parish Band D levels

Policy overview (3) Managing financial pressures Mechanisms already in place to manage financial pressures through the council tax system. In addition: The Bill provides powers to enter into arrangements to share pressures Government will also consider whether changes to the Funds Regulations needed Data sharing Powers in the Bill enable the sharing of HMRC data to reduce administrative costs and complexity.

Delivery: legislation Local Government Finance Bill Legal framework provided through Local Government Finance Bill Bill introduced on 19 December 2011 –now completed Commons stages Lords Committee was completed on 24 July 2012 Local Government Finance Bill The Bill - will continue its passage in the Lords following summer recess. Royal Assent is anticipated in early November Secondary legislation – to be made in the autumn

Delivery: legislation Local Government Finance Bill Secondary legislation Detail of framework will be set out in regulations. Statements of intent published in May, setting out detail for regulations: Requirements for preparing a scheme Transitional arrangements Prescribed requirements for all schemes Prescribed pension credit age scheme Prescribed default scheme Council tax base Sharing of financial pressures

Delivery: legislation Prescribed requirements for all schemes & Default Scheme Draft regulations published in mid-July, to give clarity on intent: Prescribed requirements scheme Schedules 1 – 6 - pension-credit age only Schedules 7 – 8 – apply to all applicants Default Scheme Contains requirements for both pensioners and those who are not pensioners Does not deliver the 10 per cent reduction!

Delivery: legislation Default Scheme Entirely based on SI 2006/ 215 and SI 2006/ 216 ‘Pensioners’ protected All other applicants protected Most administrative aspects the same Prescribed Requirements - Pensioners Entirely based on SI 2006/216 ‘Pensioners’ protected Pensioner material administrative elements protected Prescribed Requirements – all schemes People treated as not being in Great Britain Some key administrative elements protected – the rest is up to local authorities!

Delivery: legislation The Interpretation Act 1978 Legislative references as per SI 2006/ 215 and SI 2006/ 216 The Interpretation Act means that references are to provisions as subsequently amended Updating legislative references – over the summer The Local Government Finance Act 1992 Information-sharing provisions Recoveries/ overpayments

Delivery: data sharing Data sharing will be an important way of maximising convenience and reducing complexity for claimants, while also helping to reduce administrative costs. Powers in the Welfare Reform Act 2012 and Local Government Finance Bill will enable the sharing of DWP and HMRC data with local authorities. DCLG is working closely with DWP on continued data provision in support of localised council tax reduction schemes, including in relation to Universal Credit.

Delivery: legislation ‘Uprating’ The draft uses 2011/2012 figures DWP ‘uprating’ process in November/ December Non-dependent deductions and other elements to be uplifted The Local Government Finance Act 1992, e.g. Information-sharing provisions Recoveries/ overpayments

Legislation: welfare changes Universal Credit – Default Scheme The challenge: Replacing income support, income-based JSA, income-related ESA Seeking a solution: ‘Passporting’ for income and ‘cliff edges’? Means-testing modifying existing UC calculations Income Maximum Award (‘applicable amount’)

Legislation: welfare changes Universal Credit – Default Scheme Income: Use Universal Credit income calculation, adjusting for: Addition of UC income not of child care costs element and housing costs element Disregards under Council Tax Reduction scheme Applicable amount: ‘Maximum Award’ to be used as the applicable amount Housing costs element is netted off Personal Independence Payment Policy intent: to be treated as for Disability Living Allowance

Appeals The Government is clear there should be a single appeals process for the council tax bill and arrangements should be clear to the tax-payer DCLG is working closely with the Valuation Tribunal (Valuation Tribunal for England and Valuation Tribunal Service) and Ministry of Justice to establish the mixture of expertise that may be necessary to hear these appeals, and the best mechanism for delivering it. The Government is committed to making sure authorities are empowered to investigate fraud effectively, and are taking steps to strengthen the existing council tax system if necessary. Fraud

Delivery: supporting local authority planning To support local authority planning, the Department has: Paid out £30m of initial funding to help meet the costs of planning and analysing draft schemes – for both billing and precepting authorities; Provided a free online calculator, to help local authorities analyse the potential impacts of their proposed schemes: xsupport/ Published statements of intent and draft key secondary legislation: Issued a funding consultation, including provisional funding allocations xsupport/ xsupport/ Published guidance on work incentives and vulnerable groups

Delivery: action for local authorities Councils must have made their schemes by 31 January 2013, ready to implement in April Councils need to be preparing now: Engaging members - ensuring they are aware of the decisions they will need to take, Understanding their caseload – who it comprises, Engaging major precepting authorities, Engaging IT suppliers, Ensuring all relevant parties understand the timetable for developing schemes Preparing draft schemes for consultation.

More information Web: mentfinance/counciltax/counciltaxsupport/

Open session: Questions?