The ramifications of Council Tax Support proposals

Brent Council Executive will discuss proposals for the Council Tax Support scheme which replaces Council Tax Benefit next year. It will go to full council for approval. The shift includes a 10%  Coalition Government cut in funds available for the support.

Brent's extensive consultation received only 184  residents' responses. 97 online and 87 paper. This represents 0.5% of the benefits caseload. In addition there were submissions from Citizens Advice Bureau, Mencap, Capita, GLA, Network Housing, Catalyst Housing, Brent Children and Families and Brent Partnership and Improvements.

The response on how the Key Principles outlined in the proposals should be prioritised were:

These are the proposals::

5. The Council’s Proposed Council Tax Support  scheme

5.1 The Council undertook consultation concerning its proposed draft scheme which comprised the key principles and features set out below for working age claimants:

Principle 1: “Everyone should pay something”

All working age claimants (unless defined as protected) shall be required to pay a minimum contribution towards their Council Tax – set in the draft scheme at 20%.

Principle 2: “The most vulnerable claimants should be protected”(from the minimum contribution)

Claimants shall be protected from the 20% minimum contribution if they or a dependant in their household are entitled to a disability premium, enhanced disability premium, disabled earnings disregard, Disability Living Allowance or Personal Independence Payment, Disabled Persons Reduction for Council Tax purposes, War Disablement Pension and War Widow’s Pension.

Principle 3: “The scheme should incentivise work”

Incentives to work are achieved by letting claimants who are working keep more of what they earn (before means-testing) – the recommended scheme proposes an increase of £10 per week in the earnings disregards for Single Person, Couple and Lone Parent earnings (currently set at £5, £10 and £25 respectively). In this context, a disregard means the amount of weekly earnings that may be ignored when calculating entitlement to Benefit.

Principle 4: “Everyone in the household should contribute”

Other adults in the claimant’s household (“non-dependants”) should contribute more proportionately to their income – the recommended scheme proposes doubling the existing rates of non-dependant deductions from those in place in 2012/13 and replacing the current nil deduction for other adults in the claimant’s household receiving Job Seekers Allowance (Income Based) with a deduction of £6.60.

Principle 5: “Better off claimants should pay relatively more so that the least well off receive greater protection.”

The recommended scheme proposes that the taper used in the Benefit calculation for those above the means-test (i.e. where the claimant’s income exceeds their needs) should be increased to 30% from the current 20%. This is the rate at which Council Tax Support reduces where weekly income exceeds basic living needs and will be 30 pence in the pound rather than the 20 pence currently applied for CTB.

Principle 6: “Benefit should not be paid to those with relatively large capital or savings”

The recommended scheme proposes reducing the current savings cut off limit applied for CTS claims from £16,000 at present for the purposes of CTB to £6,000.

Commenting on feedback from consultees the report states:

In summary, (the responses) appears to indicate a clear distinction as to whether principle 1 is fair based upon whether the respondent is in receipt of Council Tax Benefit or not, principle 2 was agreed as being fair by the majority of both sets of respondents, principle 3 was agreed as being fair by the greater majority of both sets of respondents, principle 4 was agreed as being fair by the greater majority of non Benefit respondents than in the case of Benefit respondents, principle 5 was not agreed as fair by Benefit respondents but had an equal split of non Benefit respondents considering it unfair and principle 6 was considered unfair by a greater majority of Benefit respondents than non Benefit respondents

The scheme recommendations are:

Appendix C to the report sets out the implications for the budget ion the future and the impact of various Council Tax rises: LINK

Any increased revenue from a higher Council Tax will be reduced by 25% as more become eligible for Council Tax Support.


The report anticipates difficulties in Council Tax collection:

Additional challenges are anticipated in collection arising from the implementation of Council Tax Support and difficulties in achieving full collection on the accounts affected may result in an overall collection rate that is less than the 97.5% currently built into the Council Tax Base. The assumed collection rate used in the Council Tax Base setting for 2013/14 will need to be given careful consideration as any anticipated reduction in future Council Tax collection rates would have the effect of increasing the Band D Council Tax unless a corresponding reduction in Council expenditure were to be provided. An overly optimistic collection assumption could lead to a need to declare a deficit on the Collection Fund in later years. Consideration will also need to be given to the other potential financial effects of the proposed scheme on the Collection Fund to prevent a deficit position from occurring (i.e. the scheme would need to raise sufficient additional Council Tax revenue).

The report recognises that Asian families will  be disproportionately  hit by a reduction in entitlement because they are more likely to be of working age, have more dependants (22% have 3-4 children compared with 10% in the 'white group), live in larger houses and have more adults living in the household. The 18-24 age group  are most likely to be affected by an entitlement loss of £3-£5 a week. The report states that claimants aged 55 to 60 are proportionately more likely to have a difference in their entitlement of £8.00 to £30.00 per week than the younger age groups. For example, in the £8 - £15 category they are represented by 11% rather than the 6% average. One factor for this variance is because claimants aged 55 to 60 are more likely to live in larger properties. For example, 15% live in Band E properties compared to 3% aged 18 - 24 and 6%aged 25 - 34 than the younger age groups. They are also in proportionate terms more likely to have more non-dependants living in their home.