1. Localisation of Council Tax Benefit - a Case Study David Oates Head of Benefits London Borough of Brent

2. Brent context

3. Brent Context Population 311,200 Diversity – 59% BME / 41% white Within the 15% most deprived local authorities nationally Third lowest income level in London Overall Benefits caseload 43,626 (27% increase since 2008) Impact of welfare reforms - 5000 LHA transitional protection cases (500 lose over £150 pw) 3300 Overall benefit cap cases (mostly 3+ children)

4. CTB in Brent Currently 36,029 Council Tax Benefit (CTB) claimants 11,722 pensioners 24,307 working-age Current CTB expenditure £35.5M Of working-age claims – 7,379 “passported” 16,928 “standard” claims 16,937 working age claimants on 100% rebate

5. Background Comprehensive Spending Review 2010 Welfare Reform Bill Consultation: “Localising Support for Council Tax” Local Government Finance Bill

6. Government Proposals Abolish current national CTB scheme from 2013 All authorities to devise their own local schemes Funded by fixed grant (10% less than current expenditure) Some government parameters - Pensioners to be protected Schemes should support work incentives Councils to consider support for other vulnerable groups

7. Risks / issues for Brent Financial risk Hard political choices Legal challenge Equalities impacts Timescales Public consultation Scheme design Software Customer confusion and potential hardship

8. Project Group Revenues Client Finance Legal Services Diversity Team Consultation Team Communications IT Core Benefits group

9. Financial Risk What is your deficit? Funding calculation Government forecasts for CTB in 2013/14 Distribution as per 2012/13 spending Initial funding allocation – 13.8% cut for Brent Assumptions Growth – caseload / expenditure Council Tax rises Collection rate

10. Funding Deficit 2013/14 Best estimate (2012/13 growth forecast at 1.4%) Estimated CTB Expenditure 2012/13 £35,500,000 Brent share 77.54%£27,526,700 Indicative grant figure£23,725,000 Initial shortfall£3,801,700 (13.8%) Growth through caseload increase 2013/14 £387,700 (1.4% growth) Growth through 3.5% Council Tax increase £964,691 Total Indicative Funding shortfall (2013/14) £5,154,091

11. Political Risk Engage with Members – it’s their decision! Committee / Leaders briefings Party group briefings Members Working Group Full Council decision

12. Funding Options Deficit £5.2M NO CHANGE CTB Changes (Working Age) Min £4M CHANGE Council Tax Exemptions Max £1.2M General Fund £0M General Fund £5.2M Council Tax & CTB changes £0M COMBINATION Impact on 2,000 CTax payers with uninhabitable or empty properties; second homes etc Impact on up to 24,000 Benefit claimants – workers, job seekers, disabled, lone parents, families etc Impact on up to 111,000 CTax payers. Reductions to other services / increased CTax

13. Proposed Model Deficit £5.2M General Fund £0M Council Tax Exemptions £1.2M CTB Changes (working age) £4M

14. Proposed changes to Council Tax Exemptions and Discounts Current positionProposed changePotential additional revenue 2013/14 Class A – uninhabitable (403 properties) 12 month exemption50% discount£300,000 Class C - empty (529 properties) 6 month exemption0% discount£688,000 Retrospective Changes* (A & C) £340,000 Total Class A & C £1,328,000 Less 10% bad debt** (£133,000) Sub-total £1,195,000 Second Homes (640 properties) 10% discount0% discount£80,000 Long Term Empties (460 properties) 100% Council Tax150% Council Tax£360,000* Total (2027 props) £1,635,000 Less GLA share 22.46% £367,221 Brent share 77.54% £1,267,779

15. CTS Scheme Design - Options Minimum contribution – 15%, 20%, 25%, 30% ? Cap at Band D ? Increase non-dependant charges ? Remove backdating ? Remove 2AR ? Reduce capital limit ? Increase taper – 25%, 30%? De minimus rule ? Limited period awards ?

16. CTS Scheme – Modelling Considerations Is it financially worthwhile? Does it achieve a policy objective? Is it fair? Is it consistent ? Is it practical (given the timescales)? What is the risk of challenge? Will the software support it? Is it understandable by customers? (and staff!)

17. Draft CTS Scheme – Key Principles Principle 1: “Everyone should pay something” All working age customers (unless protected) to pay a minimum element of their Council Tax – 20% in draft scheme Principle 2: “The most vulnerable claimants are protected” (from the minimum contribution) Claimants on Disability Premiums, War Disablement / War Widow’s Pensions are protected from the 20% minimum contribution.

18. Key Principles (2) Principle 3: “The scheme should incentivise work” £10 increase in earnings disregards for Single Person, Couple and Lone Parent earnings (currently £5, £10 and £25) Principle 4: “Everyone in the household should contribute” Double current non-dependant charges and replace the current nil charge for JSA (IB) non-dependants with the lowest charge of £6.60

19. Key Principles (3)  Principle 5: “Better off claimants pay relatively more than the least well-off”  The taper used in the Benefit calculation should be increased to 30% from the current 20%  Principle 6: “Benefit should not be paid to those with relatively large capital or savings”  The savings cut-off limit for CTB claims should be reduced to £6,000 from the current £16,000

20. Other General Features The current Second Adult Rebate scheme to be abolished for working age claimants Premiums and personal allowances to be held at 2012/13 rates Scheme for claimants receiving Universal Credit or Personal Independence Payments to be broadly equivalent to treatment under their current benefits

21. Potential Legal Challenges Scheme design Consultation Equalities impact assessment Decision-making process

22. Consultation Requirement to consult on a draft scheme Draft Sch 4 – sch 1A to be inserted into LGFA 1992:- 3 (1) Before making a scheme, the authority must (in the following order) – (a) consult any major precepting authority which has power to issue a precept to it (b) publish a draft scheme in such manner as it thinks fit, and (c.) consult such other persons as it considers are likely to have an interest in the operation of the scheme (2) The fact that this paragraph was not in force when consultation under sub-paragraph 1(a) took place is to be disregarded in determining whether there has been compliance with that sub- paragraph

23. Principles of Consultation R v Brent LBC ex parte Gunning (1986) (i) consultation must be at a time when proposals are at a formative stage; (ii) that the proposer must give sufficient reasons for any proposal to permit intelligent consideration and response; (iii) adequate time must be given for consideration and response (iv) the product of consultation must be taken conscientiously taken into account in finalising any proposals. Vale of Glamorgan Council v Lord Chancellor [2011] not necessary to consult on all the possible alternative ways in which a specific objective might arguably be achieved. consultation is not a negotiation but a process within which a decision maker at a formative stage in the decision making process invites representations on one or more possible courses of action.

24. Consultation (2) Who to Consult With Elected Members / local MP’s Existing CTB claimants and potential CTS applicants Council Tax Payers Welfare Advice Groups: Age Concern, Disablement needs, RNIB, RNID, Racial Equality Council Tax contractor Housing Associations and Landlords Citizens Advice Bureau GLA / Levying Authorities Brent Council employees and relevant Council services Business Ratepayers Chamber of Commerce

25. Consultation (3) Approach Consultation document / questionnaire available on website Paper version available in local offices and libraries Publicity leaflets to CTB claimants and with Council Tax bills Agenda slots at Area Forums and Service User forums (with Lead Member support) Direct mailing to stakeholders / voluntary groups / other Council departments Meetings with key stakeholder groups eg welfare rights and with employees Formal approach to GLA on behalf of preceptors

26. Equalities and other impacts Proposed scheme impacts on 21,664 working age claimants (mainly Band C and Band D) 2,643 claimants are completely protected Of affected claimants:- 23% impacted by less than £3 per week 52% impacted by £3-£5 per week 18% impacted by £5-£8 per week 7% impacted by more than £8 per week Equalities strands – maximum variance of 3.79% Ethnicity Gender Disability Families

27. Some final thoughts Universal credit Hardship fund? / Section 13A LGFA 1992 Year 2 and beyond Writing the scheme – draft / final Customer impact in April Timetable

28. Brent timetable EventDate PCG31 st May Consultation start11 th June Consultation length9 weeks Consultation ends10 th August Analysis period4 weeks CMT13 th September PCG27 th September Executive15 th October Full Council19 th November

29. An alternative timetable… Full Council decision – 15 January 2013 Executive – 15 December 2012 CMT – 15 November Evaluate consultation responses : 1 – 30 October Modelling / scheme design / write draft scheme / prepare and conduct consultation – 1 Aug – 30 Sept = 8 weeks!!

30. Thank you David.Oates@brent.gov.uk www.brent.gov.uk/localcounciltaxsupport