Consultation on the Council Tax Support Scheme

Introduction

The Council Tax Support Scheme is an important policy enabling the Council to provide assistance with council tax bills to the lowest income households. Financing the scheme is particularly challenging in the face of repeated government cuts to Islington’s funding and the Council having to make the difficult decision to increase general levels of council tax. Despite these changes, Islington’s council tax remains below the London average.

Even with these pressures we’ve both protected the scheme over the years and put in additional funding as it’s come under pressure during Covid, with many more households becoming eligible as they’ve lost jobs or had reduced income. Given the unprecedented challenges residents faced during Covid, it is right that we look at the scheme to ensure we are doing as much as we can for those that need the support most. But the council has also come under financial pressure so there aren’t any easy answers to providing the maximum possible help to all.

The cost to the Council of providing the current Council Tax Support Scheme has increased by £2 million since 1 April 2020. The increased cost is because more households have claimed Council Tax Support during the Covid19 period. 

The Council has provided all working age households who qualify for Council Tax Support with an additional up to £150 Covid rebate on their council tax bill for 2020/21 and 2021/22. The Council will not be able to continue with the Covid rebate for 2022/23 and beyond.

The current Council Tax Support Scheme

In 2013 we were required by the government to create a local Council Tax Support scheme to replace the national scheme known as council tax benefit. 

When they did this the government cut the grant available to finance the scheme, but, at the same time, required us to protect people of pension credit age. As a result we had to make up a shortfall in funding of around £2 million a year by developing a local scheme for people of working age only. The Council capped the council tax support entitlement by only 8.5% for working age households, which has been an important feature in the range of support which we provide to residents. We estimate that we would need to cap the council tax scheme by around 20% to cover the full cost of the scheme.

We consulted on this at the time and again in 2016. The scheme that we adopted and have used since has the following key features:

• Pensioners are protected and their Council Tax Support award is linked to national requirements that are set-out by the government. This broadly means that their Council Tax Support is the same as they would have received in council tax benefit.
• The Council Tax Support award for working age people is worked out by calculating how much benefit they would have received under the old Council Tax Benefit scheme, and then reducing this by 8.5 per cent.
• Pensioners aged 65 or over receive at least £100 in Council Tax Support to help them pay their council tax if they are charged from the start of the council tax year.
• We base the award for working age people on the Council Tax Benefit Regulations providing extra support for disabled people, families with children, and people in employment.
  
   

What we are proposing to keep in the Council Tax Support scheme for 2022/23

Pensioners would still be protected to receive full support.

• Working age people would still have their award based on regulations that would continue to provide extra support for disabled people, families with children, and people in employment.
• Any reduction from Council Tax Support for working age people would continue to be capped at a maximum of 8.5 per cent. This means that the council would continue to subsidise the scheme, ensuring that we are not passing on the full amount of the government cuts to Council Tax Support claimants in our area.
• Changes to the way that Council Tax Support is calculated similar to benefits nationally, we retain the option to make changes at the same time to Council Tax Support, when national benefit changes are made.
• Allowing for income rises of £5 a week (in total) for working age people without a reduction in support to encourage paid employment.
  
   

What are the options for change being consulted on?

The Council is considering changing the maximum level of support that is provided to people of working age. We welcome your views on the following options: 

• Option 1 – Retaining the current level of support to working age residents, capped at 8.5%. The Council already provides a high level of support, including extra support for those that are disabled, families with children and people in employment. No additional funding will be required for this option, allowing the Council to invest any available resources in priorities elsewhere.
• Option 2 – Increasing the level of support to working age residents by reducing the cap to 5% from 8.5%.  This would provide up to 95% of the support they would have been able to get under the old council tax benefit rules. This will offer additional support to working age households. 
• The estimated additional cost to the Council of this option is £700,000 per year. The average impact to a working age household in receipt of council tax support would be a reduction in the council tax bill of £42.81 per annum.
• Option 3 - Increasing the level of support to working age residents by reducing the cap to 0% from 8.5%, which would allow up to 100% of the support they would have been able to get under the old council tax benefit rules. This will provide the maximum possible additional support to working age households. The estimated additional cost to the Council of this option is in excess of £1.6 million per year. The average impact to a working age household in receipt of council tax support would be a reduction in the council tax bill of £103.92 per annum.

The Council does not feel Option 3 is directly affordable for the 2022/23 financial year unless support were to be reduced elsewhere within the Council Tax Support Scheme. The areas where additional support would be removed if we went ahead with option 3 are set out below: 

• The Older Person Discount – this provides additional protection for pensioners so that their Council Tax Support is broadly the same as they would have received in Council Tax Benefit.  A person or persons with a council tax liability who is at State Pension age or over shall be entitled to a minimum reduction of £100 per annum, unless the council tax liability is less than this, in which case it shall match the annual council tax liability
• The Foster Care Allowance - All approved foster carers including those who foster through the Shared Lives Scheme do not have to pay council tax in Islington.  They currently receive 100% council tax exemption.
• Care Leavers/Shared Lives Allowance - Local Authority care leavers including those that were in care in other authorities, are exempted from council tax until the age of 25. Shared Lives scheme households are exempted from council tax. 
  
   

Other changes to the Council Tax Support Scheme

The current Council Tax Support Scheme does not allow an award payment of Council Tax Support on two homes at the same time. This provision has always been present within the Housing Benefit regulations but has never been present within Council Tax Benefit regulations. This was previously not an issue as we used to offer an empty property discount, however since this changed, this issue feels unfair that in certain circumstances an award of Council Tax Support makes sense. 

The Council intends to update the Council Tax Support Scheme to allow payment of Council Tax Support on two addresses – in line with the Housing Benefit rules.

The criteria for the award of Council Tax Support on two homes would be only in the following circumstances:

• Left the normal home because of fear of violence (up to 52 weeks)
• Awaiting disability adaptions on new home and unable to move in until these are carried out (up to 4 weeks)Moved out within the last 4 weeks and still have to pay rent on old home (for Council Tax support this would be one day).

The cost of this change will be minimal. 

The Council plans to update Class 2 of the Council Tax Support Scheme.

Class 2 currently states - A person or persons with a council tax liability on 1 April (each year) aged 65 or over shall be entitled to a minimum reduction of £100 per annum, unless the council tax liability is less than this, in which case it shall match the annual council tax liability.

Update Class 2 of the CTS scheme to a person or persons with a council tax liability on 1 April (each year) of pension age or over shall be entitled to a minimum reduction of £100 per annum, unless the council tax liability is less than this, in which case it shall match the annual council tax liability.
This will align Class 2 with the government’s gradual increase in state pension age.  The cost of this change will be minimal.

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