This consultation closed on 4 November 2018.

What is this consultation about?

Each year the Council has to decide whether to change the Council Tax Reduction scheme for working age applicants in its area. This year the Council has decided that changes should be made to significantly change the Council Tax Reduction scheme due to the introduction of Full Service Universal Credit within the Warwickshire area. In effect, the traditional link between Housing Benefit (which will no longer be available to new working age claimants) and Council Tax Reduction will no longer exist and it is essential that the scheme is changed to meet future requirements for these cases, reduce administration costs and to ultimately prevent any additional costs being added to the Council Tax.

The Council is consulting as to whether the scheme should be changed from 1 April 2019 for all applicants who are or become entitled to Universal Credit and for all other applicants from 1 April 2020.

What is Council Tax Reduction?

Council Tax Reduction is a discount for Council Tax. The level of discount is based on the income of the household. Currently the maximum discount is 85% of Council Tax for working age households and up to 100% for pensioners.

Why is a change to the Council Tax Reduction scheme being considered?

In April 2013, the Council Tax Benefit Scheme was replaced by a new Council Tax Reduction Scheme. Council Tax Benefit had been funded by the Department for Work and Pensions and supported people on low incomes by reducing the amount of Council Tax they must pay.

The Council Tax Reduction scheme is determined locally by District Councils rather than the Department of Work and Pensions. Although the Government initially provided funding for the scheme, the funding has reduced each year in line with the reduction in Revenue Support Grant provided to councils. From 2019 no funding will be provided for the scheme.

People can claim Council Tax Reduction if they are on certain benefits. The current scheme requires all working age applicants to pay a minimum of 15% of their Council Tax (a maximum level of support of 85%). Applicants in receipt of income based Jobseekers Allowance, Income Support and Income Related Employment and Support Allowance receive the maximum level of support. Others receive a level of Council Tax Reduction based on their income and other factors.

A separate Central Government scheme is retained for people of pension age and Councils are only able to vary their schemes for people of working age.

Each Council is required to review their schemes each year and decide if they want to make any changes. Before any changes can be implemented, they must be subject to public consultation.

The District Council is proposing a number of changes to its existing scheme and, in line with legislation, we have a duty to consult you and provide you with the opportunity to tell us your views on the proposed changes to our Council Tax Reduction Scheme.

The Council is consulting on the following changes to its scheme for 2019/20:

  • Option 1 - Introducing an income ‘grid’ scheme for all working age applicants replacing the current means tested approach which was based on the previous Council Tax Benefit scheme. This will be effective from 1 April 2019 for all applicants who currently receive Universal Credit or become entitled to Universal Credit and 1 April 2020 for all applicants who do not receive Universal Credit;
  • Option 2 - Limiting the number of dependent children used in the calculation of support to two for all working age applicants;
  • Option 3 - Removing Non-Dependant deductions;
  • Option 4 - Simplifying the claiming process for all applicants who receive Universal Credit;
  • Option 5 - Removing the current earnings disregards and replacing them with a standard £25 disregard irrespective of a person’s circumstances;
  • Option 6 - Disregarding Carer’s Allowance which is currently taken into account as income;
  • Option 7 - Removing the Extended Payment provision;
  • Option 8 - Making all new applications and changes in circumstances which change any entitlement to Council Tax Reduction, on a daily basis rather than the current (benefit based) weekly basis;
  • Option 9 - Reducing the current capital limit to £6,000 and simplifying the capital rules;
  • Option 10 - Where an applicant is disabled, they have a disabled child or receive the Support Component of the Employment and Support Allowance or the Limited Capability for Work Related Activity element within Universal Credit, the amount they receive as a premium or element under the existing scheme will be replaced by an equivalent income disregard;

In the District, 6,500 people currently receive Council Tax Reduction. The gross cost of the scheme is £6.1 million which is spread across the District Council (9.21%), the County Council (77.57%), and the Police and Crime Commissioner (11.6%) in accordance with the proportion of Council Tax which each organisation levies (which is shown in brackets).

Who will this affect?

The changes will affect working age households only in the District. The new Council Tax Reduction scheme will be introduced from 1st April 2019 for all applicants who either receive Universal Credit on the 1st April 2019 or who become entitled to Universal Credit after that date. All other applicants of working age will move to the new scheme on 1st April 2020. Once an applicant has moved onto the new scheme, they will always be assessed for any entitlement under the new scheme.

Pension age households will not be affected as Central Government prescribe the scheme.

Are there any alternatives to changing the existing Council Tax Reduction scheme?

We have considered:

Continuing with the current scheme - The current scheme will not work effectively with the Government’s Universal Credit system. The multiple changes in Universal Credit inevitably lead to multiple changes in Council Tax Reduction and this means customers could receive revised bills on a monthly basis leading to confusion about what they should pay and making it difficult to budget.  You are asked whether you would prefer to continue with the current scheme in question 2.