Council Tax Reduction Scheme 2016/17

The consultation for the Council Tax Reduction Scheme for 2016/17 is now closed. 

The Council Tax Reduction Scheme consultation for 2016/17, which was launched on 1st July 2015, has been withdrawn due to changes to other Welfare Benefits announced in the Government’s recent budget. The proposed changes have implications for Council Tax Reduction expenditure. A new consultation process is underway as follows.

This consultation opens on 1 September 2015 and closes on 31 October 2015.

2016/17 Council Tax Reduction Scheme – Background Information to the Consultation

Prior to April 2013, Council Tax payers could apply for Council Tax Benefit (CTB) to help pay their Council Tax. Under this national scheme, Council Tax payers could receive benefit of up to 100% of their Council Tax liability. The Council then received full funding from the Government for all correct Council Tax Benefit awards made.

Changes introduced by the Government abolished the Council Tax Benefit scheme from 1 April 2013 and made local authorities responsible for setting up their own local Council Tax Reduction Schemes (CTR) for working age people. The Government also reduced the amount of funding given to Councils to pay for the schemes in 2013/14.

Winchester City Council’s CTR Scheme has been based on the former CTB scheme with an increase in the amount of income that working age customers can earn before it affects their level of CTR.

In the recent budget, the Government announced a number of changes to Welfare Benefits, which will affect CTR. The changes being made from April 2016 to Tax Credit earnings thresholds and tapers will have the biggest impact. Any reduction in Tax Credits income will create an increase in CTR entitlement/expenditure. It is estimated that the changes to Tax Credits could increase the cost of the current CTR Scheme by £79,000.

The Government has also announced a freeze in the annual uprating of working age allowances. This means that levels of Applicable Amounts (the figures set by Government that are used to calculate Housing Benefit) for working age customers will remain at current levels and will not increase to allow for cost of living increases. Our CTR Scheme includes the provision that its applicable amounts will be uprated in line with Housing Benefit. As Housing Benefit will not be uprated then CTR levels will also be frozen for the next 4 years for working age customers.

The scheme for Pension Age claimants is set by Government and is not affected by any of the options set out in this consultation.


Our Timetable

The Council is required to formally adopt a scheme by 31 January each year to commence on 1 April of that year and to consult on any changes to the scheme.


The proposals

The Council is still committed to safeguarding its vulnerable residents who need assistance with paying their Council Tax. We also want to ensure that those in work are better off. The Council is considering a number of changes to the scheme for 2016/17 and these are explained in this consultation.


How much the Council Tax Reduction Scheme Costs

The cost of the CTR Scheme since it was introduced in April 2013 is as follows.

Financial Year CTR Expenditure
2013/14  £5.06 million
2014/15  £4.90 million
2015/16  £4.94 million (in year estimate)
2016/17  £5.06 million (estimate – taking into account the changes to Tax Credits announced in the recent budget)

The costs of the scheme are shared between the City Council, and the Precepting Authorities as follows:

Winchester City Council 13%; Hampshire County Council 72%; Hampshire Police & Crime Commissioner 11%; Hampshire Fire and Rescue Authority 4%


Council Tax Reduction Scheme options being considered

There are four proposed changes being considered for the Winchester City Council Tax Reduction Scheme from 1st April 2016:

Option 1

To maintain the current CTR scheme with no changes
(The cost of the scheme would be in line with the estimated expenditure given in the table above. The changes to Central Government’s tax credits would add approximately £79,000 to the cost of the scheme)

Option 2

To maintain the current CTR scheme but include some of the changes being made to Housing Benefit from April 2016. These are:

a) Remove the family premium from working age claims. The family premium will not be removed from existing claims. It will not be awarded where a new claim is made on or after 1st April 2016; and
b) Limit backdating of claims from 6 months to 4 weeks for working age customers

(The changes to Central Government’s tax credits would add approximately £79,000 to the cost of the scheme. These proposed changes would result in savings but the amounts of these are unknown at this stage.

Option 3

To maintain the current CTR scheme but to further increase the amount of income that working age customers can earn before it affects their level of CTR. It is proposed that earnings disregards are further increased as follows:

  1. From £30.00 to £35.00 per week for single customers
  2. From £60.00 to £70.00 per week for all other customers

(The changes to Central Government’s tax credits would add approximately £79,000 to the cost of the scheme and the proposed changes in this option would result in further costs of £58,000)

Option 4

To maintain the current CTR scheme but reduce the amount of income that working age customers can earn before it affects their level of CTR. It is proposed that earnings disregards are decreased as follows:

  1. From £30 to £25 per week for single customers
  2. From £60 to £50 per week for all other customers

(The changes to Central Government’s tax credits would add approximately £79,000 to the cost of the scheme but the proposed changes would result in estimated savings of £65,000)

Alternatives to reducing the amount of help provided by the Council Tax Reduction Scheme 

We have also thought about the ways to maintain the amount of financial support provided by the Council Tax Reduction Scheme, which is currently in place. You can give your views on these in the questionnaire.


We have considered:

  1. Increasing the Level of Council Tax - Increasing the Level of Council Tax to protect the current Council Tax Reduction Scheme (or increase the support given) could see a rise in the amount of council tax charged by Winchester City Council; or
  2. Reduce Funding Available for Other Council Services - If we decide to protect the current Council Tax Reduction Scheme (or increase the level of support), this will mean there is less money available to support other services provided by the Council; or
  3. Limiting the Growth of Other Council Services - If we decide to protect the current Council Tax Reduction Scheme (or increase the level of support), this will mean there is less money available to invest in the growth of other services provided by the Council.


Conclusion

No final decisions have been made yet and the questionnaire seeks your views and suggestions to help us design the scheme for 2016/17.


How to Have Your Say

There is an online questionnaire. This is our preferred method for your response – go to https://www.surveymonkey.com/r/CouncilTaxReductionsurvey

Or, if you have evidence that you wish to attach, or you don’t wish to complete the questionnaire, please email: benefits@winchester.gov.uk

Or write to Jane Petty, Deputy Head of Revenues, Winchester City Council, City Offices, Colebrook Street, Winchester, Hants, SO23 9LJ