1. Council tax benefit reforms The town and parish “problem”

2. 2 Current position Council tax benefit currently administered by councils according to national rules Reimbursement by the Department for Work and Pensions on a demand basis – if expenditure goes up, so does the subsidy received Benefit “paid” by crediting the customer’s council tax account the same as cash

3. 3 Government’s initial proposal From 1 April 2013 councils will determine and administer their own local “council tax reduction schemes” Councils have freedom to design schemes but must protect pensioners and consider “vulnerable” people Councils will receive funding from the Department for Communities and Local Government in the form of a fixed grant – approximately ten per cent less than current annual subsidy Reduction will take the form of a discount on the council tax bill

4. 4 New Government proposal New consultation paper issued 28 August 2012 “Localising support for council tax - Council tax base and funding for local precepting authorities” http://www.communities.gov.uk/public ations/localgovernment/localpreceptc onsult http://www.communities.gov.uk/public ations/localgovernment/localpreceptc onsult Consultation ends 9 October 2012

5. 5 Effect of proposals Because the reductions will take the form of a discount they will affect the “taxbase” (in the same way “single person discount” works) Councils calculate the taxbase for their entire area and separately for each individual town or parish area South Oxfordshire has 87 towns and parishes Vale of White Horse has 68 towns and parishes

6. 6 The “taxbase” The taxbase is an estimate of the number of dwellings in the area, adjusted for exemptions and discounts, and then converted to “Band D equivalents” (e.g. Band H dwelling equals two Band D dwellings) The taxbase dictates the “Band D” council tax for an area So, precept ÷ taxbase = Band D tax

7. 7 Example – old CTB scheme Number of Band D equivalents Less exempt dwellings (e.g. student households) Less 200 dwellings with 25% discount Taxbase (prior to non-collection allowance) 4,000 -250 -50 3,700

8. 8 Example – new CTRS scheme Number of Band D equivalents Less exempt dwellings Less 200 dwellings with 25% discount Less dwellings with CTB discounts Taxbase (prior to non-collection allowance) 4,000 -250 -50 -500 3,200

9. 9 Effect on a parish precept of £30k Band D Old scheme£30,000 ÷ 3,700 =£8.11 per property New scheme£30,000 ÷ 3,200 =£9.38 per property Without raising the precept, Band D council tax has increased by £1.27 (15.7%)

10. 10 Example - Berinsfield Original 2012/13 taxbase – CTRS Band D equivalents - Revised 2012/13 taxbase - 2012/13 precept - Original Band D council tax - Revised Band D council tax - Increase = £39.88 (28%) 798.6 174.4 624.2 £114,000 £142.75 £182.63

11. 11 Example - Faringdon Original 2012/13 taxbase – CTRS Band D equivalents - Revised 2012/13 taxbase - 2012/13 precept - Original Band D council tax - Revised Band D council tax - Increase = £14.38 (13.65%) This is repeated across every town and parish council in England 2,724.7 327.2 2,397.5 £287,092 £105.37 £119.75

12. 12 How will the scheme be funded? By a fixed grant from DCLG 90 per cent of the current funding level Cost to South - £59,000 Cost to Vale - £67,000

13. 13 And for parishes The fixed grant from DCLG will include an amount attributable to town and parish councils Government expectation is that “billing authorities and town and parish councils will work together to manage the potential impact on the town and parish council Band D council tax level” Not easy with the numbers of towns/parishes in South and Vale and the fact that the grant will only cover 90 per cent of the average shortfall

14. 14 But there is an alternative proposal Consultation paper issued by DCLG on 28 August 2012 Recognises “parish problem” and suggests alternative to the current proposals –Town and parish taxbases calculated without taking CTRS into account –Billing authorities transfer funds to the collection fund equivalent to costs of CTRS for towns and parishes

15. 15 Alternative proposal Consultation paper can be accessed from - http://www.communities.gov.uk/public ations/localgovernment/localpreceptc onsult http://www.communities.gov.uk/public ations/localgovernment/localpreceptc onsult Consultation closes on 9 October 2012

16. 16 Other proposed changes Currently unoccupied properties requiring or undergoing structural repair are exempt from council tax (up to 12 months) – Class A Unoccupied and unfurnished properties are exempt from council tax (up to six months) – Class C “second homes” receive a ten per cent discount Exemptions make no contribution to the taxbase, second home discounts only contribute 90 per cent for a Band D dwelling

17. 17 Other proposed changes Government proposing to change the Class A and C exemptions to discounts and allow councils to vary the percentage (from 0 to 100) and also period for Class C (0 to 6 months) Councils will be able to reduce the second home discount to nil Should a council choose to use these new powers it would result in an increase in the taxbase (all other things being equal)

18. 18 Impact on budget setting timetable South and Vale normally advise towns and parishes of provisional taxbase in late November/early December Taxbase formally set by the councils in December This year councils cannot set taxbase until Local Government Finance Bill becomes law

19. 19 Impact on budget setting timetable Local Government Finance Bill not yet completed Lords stage in parliamentary process Amendments will then need to be approved by the Commons – any rejected changes will then be reconsidered by the Lords DCLG “hopeful” that Bill will become an Act in early November Any delay could mean that councils cannot calculate taxbase until late December/early January

20. 20 Questions ?