Briefing on Local Support for Council Tax David Magor OBE IRRV (Hons) Chief Executive Institute of Revenues, Rating and Valuation

Briefing on Local Support for Council Tax

David Magor OBE IRRV (Hons)Chief Executive

Institute of Revenues, Rating and Valuation

Introduction

Council tax rebate reforms risk repeat of poll tax disaster, says IFS

Context

DEFICIT REDUCTION

Government’s top priority.

Taxpayers were paying almost £120 million a day (£43 billion a year) in debt interest - more than council tax, stamp duty and inheritance tax combined last year

WELFARE REFORM• Reforming the welfare

system - to make it fairer, more affordable and better able to tackle poverty, worklessness and welfare dependency

LOCALISATION• Coalition principles of

increasing freedom and sharing responsibility by localising power and funding.

• De-ringfencing of funding, abolition of top-down targets and inspection regime

Background Spending Review 2010 Localise support for council tax and reduce the

subsidy by 10% from 2013 -14 Abolition of council tax benefit provision in the

Welfare Reform Act Part of wider policy giving councils increased

financial autonomy Enabling power for the new scheme to be contained

in a finance bill now before the current parliamentary session

Why localise support for council tax the CLG view

Give local authorities (LAs) a greater stake in the economic future of their area

Give LAs the opportunity to reform the system of support for working age claimants

Reinforce local control over council tax Give LAs a degree of control on the impact of the

10% reduction Give LAs a financial stake in the local support for

council tax (LSCT)

Overview Broad parameters of LSCT

Reduce subsidy by 10% Existing subsidy to be replaced by a new grant Create a local scheme Statutory provision of a default scheme Protection for eligible pensioners and locally determined

vulnerable people Scheme should support incentives to work

LAs encouraged to collaborate to reduce costs LAs to consider how system can be simplified for working age

claimants LAs will seek to integrate arrangements for providing support within

council tax system Local mechanisms to manage financial pressures

Localism and Council Tax Support

Council Tax and Localism

The Localism Act 2011 More scrutiny on levy Just how far does the proposed power of

competence go? Referendum on levels of council tax above stated

thresholds Neighbourhoods, Community Councils and Parishes

– a new power base? How does all this impact on local support for council

tax?

A Recent Report

Paragraph 32

The LSCT Documents

The Initial Consultation

Consultation Response

Local Government Finance Bill

Impact Assessment

Statement of Intent

Equality Impact Assessment

Funding Arrangements

Vulnerable People

Taking Work Incentives into Account

Governance of LSCT

The Reference Group

Challenge Risks and opportunities Identify interactions Consideration of specific policy issues

through the use of networks Act as a sounding board Membership

The Delivery Group

Timetable Model Schemes Data sharing LA Software Forecasting Finance Issues Membership

Establishing a Local Scheme

Establishing a local scheme (1)

Analysis of existing caseload Impact analysis Developing a scheme Factors to be covered by schemes Consultation Adoption of the scheme Revisions to schemes Default schemes

Establishing a local scheme (2)

Likely to be a minimum of central criteria. Information from the Universal Credit (UC)

system to be available to local authorities for use in the administration LSCT

The rules relative to changes of circumstance should be identical for both schemes any change in entitlement to UC should automatically trigger a recalculation of LSCT

Developing the Local Scheme

The Link with Universal Credit

• Universal Credit will provide a new single system of means-tested support for working-age people who are in-work or out-of-work.

• Support for housing costs, children and childcare costs will be integrated in the new benefit. It will also provide additions for disabled people and carers

• Under Universal Credit, couples living in the same household will make a joint claim for the benefit payment.

• Ordinarily the benefit will be given in a single monthly payment to a household. It will be for the family to decide who receives the benefit

• No entitlement if capital of claimant or couple exceeds £16,000

• Transitional protection which will ensure that there are no cash losers at the point of change as a direct result of the migration to Universal Credit, where circumstances remain the same

Personal Independence Payment

Universal Credit

The Changes

Child Benefit, Carer’s Allowance (will remain)

Income related JSAIncome related ESAIncome Support (including SMI)Working Tax CreditsChild Tax CreditsHousing Benefit

Disability Living allowance

Current system New system

Contributory JSA and ESA (DWP still considering how these will work)

Council Tax and Rate Support ( schemes being considered)

… will include support for housing and children

Pension credit

The Universal Credit Award

The standard allowance The child responsibility element The housing cost element The limited capability for work element The limited capability for work element and

the work related activity element The carer element Childcare costs element

Treatment of Income

Calculation of monthly income Earned income Unearned income Income disregards Deprivation of income and income foregone Income treated as yield from capital Personal injury Compensation

Treatment of Capital

The capital limit, this appears to be £16,000 with similar derived income rules

The calculation of capital Jointly held capital Valuation of capital Deprivation of capital

Capital treated as income Capital of a company Disregarded capital

Treatment of Housing Costs

When an award is to include a housing cost element

The payment condition (Category A,B,C, or D payments)

The occupation condition The liability condition The calculation of the amount Restrictions on the amount of the housing

costs element

Universal Credit - Key stages in the UC calculation process

Localised Council Tax Support and Universal Credit calculation data

OBJECTIVES

Show the stages of the Universal Credit calculation

Highlight which figures may be available for transmission to Local Authorities for the purposes of LCTS assessment

Explain which elements are still subject to design and/or Policy activity

CONTEXT DWP currently transmits data to LAs for

Housing and Council Tax Benefit LAs require Universal Credit data to be

transferred for LCTS purposes The UC calculation process is markedly

different from existing legacy benefits We are working with DCLG, Devolved

Administrations and LAs to clarify requirements for LCTS

This presentation is intended to facilitate further discussion

SUMMARY – THE KEY STAGES IN THE UC ASSESSMENT PROCESS

STAGE 3 – CALCULATE UC ENTITLEMENT(APPLY ANY SANCTIONS, ADD ANY HARDSHIP PAYMENTS)

STAGE 2 – CALCULATE THE ADJUSTED UC AWARD (DEDUCT EARNINGS, CAPITAL, INCOME, BENEFIT CAP)

then

STAGE 0 – IDENTIFY WHO IS IN THE BENEFIT UNIT(ADULTS, DEPENDENT CHILDREN AND NON-DEPENDANTS)

STAGE 1 – CALCULATE THE UC MAXIMUM AMOUNT (TOTAL ALLOWED FOR LIVING AND HOUSING COSTS)

then

then

STAGE 4 – CALCULATE THE UC PAYMENT (ADD ANY ADVANCES, APPLY ANY DEDUCTIONS)

then

STAGE 0 – IDENTIFY THE BENEFIT UNIT

One or two ‘eligible(and connected ) adult claimants,

and relevant child dependents=

The UC Benefit Unit

Identify (for Housing

Element purposes only)any

non-dependants

STAGE 1 – CALCULATE THE BENEFIT UNIT’S ‘MAXIMUM

AMOUNT’ BY ADDING UP RELEVANT AMOUNTS COVERING……

Childcare Element

Carer Element

Housing Element

L

CW Limited capability for Work Related Activity,

or Work Element

C

arer

Child Element/Disabled Child Additions

Standard Allowance

Ad

ult

sC

hil

dre

nH

ou

sin

gC

hil

dca

re

Tick indicates available for LCTS

STAGE 2 (a) – CALCULATE THE UC ‘ADJUSTED AWARD’

Any earnings (subject to any disregards and taper)

Other applicable income

minus

UC MAXIMUM AMOUNT

Tariff income from applicable capital

minus

minus

And then......


STAGE 2 (b) – ‘CALCULATE THE UC ‘ADJUSTED AWARD’ BY APPLYING FURTHER CRITERIA

Any increases necessary (where Cap does/will not apply) to take account of Transitional Protection

minus

ADJUSTED AWARD stage 2(a)

Any reductions necessary to take account of the Benefit Cap

plus

UC ADJUSTED AWARDequals


STAGE 3 –CALCULATE THE ‘UC ENTITLEMENT’

minus

UC ADJUSTED AWARD

Any conditionality sanctions (plus anyhardship payment amounts)

equals UC ENTITLEMENT


STAGE 4 – ESTABLISH ANY DEDUCTIONS TO BE MADE TO UC ENTITLEMENT TO WORK OUT THE ‘UC PAYMENT’

Any short-term or budgeting advance

UC ENTITLEMENT

plus

The UC Payment equals

and

Any agreed deductions

e.g. child support, third party

rent payments)

minus


What will not be available

The actual amount included in the net payment for housing costs (although the amount included in the “maximum award” is available)

Net earnings for each member of the Benefit Unit – a total for the household can be provided

Elements not yet finalised

Treatment of non-dependantsHow any potential payments to third

parties could be shown

Using existing Parameters Building on existing approaches The existing structure

Personal allowances Premiums Non-dependant deductions Resources Disregards Second adult rebate Taper Excess benefit

Forecasting Formulating the scheme

Constraints

System Funding Limitation and referendums Protecting vulnerable groups Setting aside a sum for extraordinary events Political dimension Timetable Adverse consultation Collection issues

Administering Local Schemes

Initial transition The application Calculation and award Notification Excess LSCT Appeals

To the local authority To another body

Arrangements for individuals subject to immigration control or are not habitually resident in the UK

An Approach to Modelling

Stages in Scheme Creation


Profiling

Available Data Sets

SHBE Benefits system data Council tax system Electoral register Other internal data sets

Profiling requirements

Understanding current demographics Identify older people Identify vulnerable groups Identify claimant groups Identify the financials Identify potential saving areas


Model Structure

Approaches to modelling

Cap Minimum and maximum benefit Claimant type and/or status Percentage Needs and/or resources Family Flat rate Council Tax band

Forecasting

One to five year forecasts “ What if ” reporting Impact Population movement Forecasting across several data sources



Monitor and review

Budgetary control Shortfall or surplus Scheme impact Need for additional data sets Standard, comparative and regular reporting Preparing for year two !

Vulnerable People

Key Local Authority Duties

The public sector Equality Duty Equality Act 2010

Duty to mitigate the effects of child poverty Child Poverty Act 2010

Duty to people with disabilities Disabled persons (Services, Consultation and Representation)

Act 1986

The Armed Forces covenant Duty to prevent homelessness

Housing Act 1996

The Public Sector Equality Duty

The duty Relevant protected characteristics Requirements of the Equality Duty Welfare needs of disabled people Equality information and engagement

Duty to mitigate the effects of child poverty

Co-operate Understand needs Develop and deliver a strategy Equality information and engagement

The Armed Forces Covenant

Redress disadvantages Recognise sacrifices The obligation of the

Whole nation State

Treatment of War Pensions and the Armed Forces Compensation Scheme

Duty to Prevent Homelessness

Families with children No blame People at risk Vulnerable The Equality Duty

Equality Impact Assessment

Fit for purpose Data and circumstance driven Cannot be subordinated, “going through the

motions” Published as part of the consultation process Adverse outcome? Potential for Judicial Review

Work Incentives

What are the key aims?

1) Reduce worklessness, reward work and personal responsibility

• as a result of the single withdrawal rate under Universal Credit, 1.2 million households will see a reduction in their marginal deduction rate (MDR)

• virtually no household will have a MDR above 80 percent, compared to 500,000 households with a MDR above 80 per cent in the current system

• a single taper rate and a simple system of earnings disregards so people in work to see clearly how much support they can get while making sure that people considering a job will understand the advantages of work

• clear conditionality rules that strike a balance between dependency and support

What is a MDR?

• MDR measures the incentive for someone to increase their hours of work

• as the earnings of a household increase, means-tested benefits and tax credits start to be withdrawn

• in addition, above a certain level of earnings, the increase in their wages will also be partially offset by income tax and national insurance contributions

• MDR is calculated as the proportion of a small increase in earnings which is lost in lower Benefits/Tax credits and/or higher income tax and national insurance payments

Options on work incentives

Run on Disregards Non-dependant deductions Progressive manipulation Progressive taper Cash award Non cash facilities

These all have a cost

Treatment of income (other than earnings) UCPB9

Key policy proposals

As the White Paper ‘Universal Credit: Welfare that works’ set out, Universal Credit claimants who enter work will not see any reduction in their Universal Credit award so long as their earnings are below the appropriate earnings disregard.

A small group of income types will be treated identically to earnings. These are Statutory Sick Pay and Statutory Maternity/Paternity/Adoption Pay.

Treatment of income (other than earnings) UCPB9 Income received due to additional costs or expenses the

claimant has will be fully disregarded. There is also a group of income types which it would be

inappropriate to take into account due to the disproportionate administrative burden of doing so. Obvious examples would be the value of payments in kind or charitable payments. Such income will be fully disregarded.

The current approach of fully disregarding payments of child maintenance received by a claimant who is a parent with care, in order to encourage such parents to apply for child maintenance, will continue under Universal Credit.

Earnings disregards and tapers UCPB14

Minimum levels of disregards The recently published Impact Assessment for Universal Credit

assumes the following proposed minimum annual levels for the earnings disregards: for a single person without children: £700 for a couple: £1920 plus £520 for the first child and £260 for the

second and third children; for a lone parent: £2,260 plus £520 for the first child and £260 for

the second and third children; and for single disabled people or a couple where at least one person

is disabled: £2,080. Only one earnings disregard, whichever is highest, will be

available in each household. The exact amount of these minimum earnings disregards has not yet been set and will be set closer to implementation of Universal Credit.


Maximum levels of disregard With the minimum floor levels, the exact amount of these higher

disregards has not been set yet. The latest Universal Credit Impact Assessment assumed disregards in the order of: for a single person without children: £700 couple: £3,000 plus £4,250 per household for a child (regardless

of the number of children); lone parent: £9,000 (regardless of the number of children); and disabled people: £7,000 per household if a recipient or either

partner in a couple is disabled. Only one earnings disregard - whichever is highest - will be

available in each household.


How will the reduction for housing support work? There will be maximum and minimum disregards within Universal

Credit. The maximum earnings disregard will only apply where there are no additions for housing costs included in the Universal Credit gross award.

If the claimant is receiving some support for housing costs, the value of this support reduces the maximum level of their earnings disregard by, on current assumptions, 1½ times the amount of the housing element.

A household receiving some support for housing costs will be entitled to an earnings disregard equal to the value of the larger of their reduced earnings disregard and the minimum disregard.


Earnings Taper

A taper is the rate at which benefit is reduced to take account of earnings. A simplified single taper is at the heart of the design of Universal Credit.

Currently there are different taper rates operating throughout the benefit and Tax Credit system. The interaction between these tapers can mean that people have very little incentive to work more hours or to aspire towards a pay rise as they see only a few pence more in their pockets as a result.

Final decisions on the actual taper rate in Universal Credit will be taken closer to its introduction in 2013. However, the White Paper suggested that the taper or withdrawal rate would be around 65 per cent. In simple terms, that would mean that 35 pence in every pound earned would be kept.

The Default Scheme

The Features of the Default Scheme

Will follow the existing CTB scheme NOT a substitute for a local scheme Will not make the provision for the 10% cut If you fail to make your scheme by the 31st

January you will have to apply it You cannot deviate from it Would result in serious financial difficulties for

both the Billing Authority and Major Precepting Authorities

How Would You Manage It?

Could be seen as the benefit practitioners dream!

Existing procedures could continue You would need to meet the overall

legislative objectives Subject to the up rating? Tax base problems? Tax levels could trigger difficult outcomes Collection Fund issues

Local Schemes

Brent LBC

Chiltern DC

Harrow LBC

Consultation

The First Four Stages The first consultation should be with the major precepting authorities to gauge

the general reaction to local funding of all or part of the reduction in grant. These should be County wide meetings involving all the billing authorities and be at both officer and member level, all meetings need to be properly convened with appropriate minutes.

The second consultation should be with all billing authorities in the County to gauge the support or otherwise for a common scheme and resource pooling.

The third consultation should take the form of a briefing with all Third Sector bodies particularly those who represent client groups likely to be affected by the reductions in benefit.

The fourth consultation should be with the local precepting authorities warning them of the implications of the scheme for their tax base and the potential for triggering a referendum under the Localism Act.

At this stage the billing authorities should finalise the proposed scheme and carry out a detailed impact analysis. The authority should also be able to show it has properly considered incentives to return to work. The scheme should also be costed.

The Final Five Stages The fifth consultation should be with the major precepting

authorities for the third time to gauge the general reaction to proposed local scheme and the financial implications.

The sixth consultation should be with all billing authorities in the County to give them a further opportunity to share schemes.

The seventh consultation should take the form of a second briefing with all Third Sector bodies particularly those who represent client groups are to be affected by the reductions in benefit.

The eighth stage in the consultation should be seeking the direct views of your claimants both working age and pension aged.

The final consultation should be with the local precepting authorities after giving them the likely local financial impact and the potential need for local referendums.

Data Sharing

Data Sharing

Data sharing to process claims within local schemes

Provision in the Welfare Reform Act Will be subject to a protocol between CLG

and DWP Establishing data sharing Link with UC

Fraud and Error

Fraud

What structure? SFIS? Enabling power in Bill Specific powers or general powers? Developing local services High level business case for SFIS Risk based verification

Practical Issues

Staffing and structure Relationship with SFIS Exercise of new powers Legal process Information sharing Cost Wider fraud issues

NRPF Other areas of activity

Delivery

Aspects of Delivery (1)

The legally authenticated version of the local scheme Fit for purpose Resilient to challenge Avoid practitioners short cuts

Publicity Literature Application process

Aspects of Delivery (2)

Notification Excess local scheme awards Accounting A liability determination First level appeals Learning curve for the Billing Authority role in

the Valuation Tribunal This is not a minor issue!

The Appeal Process

The Process

Notification Extent of detail Detailed statements

Appeal to the local authority Decision

Appeal to another place The Valuation Tribunal Service Enabling power already in place

Appealing to the VTS

Read the Annual Review ! Process Need for regulation? Practice Statements Procedure Statements Sufficient expertise? Customer friendly? Is there a capacity issue?

The Hearing

Amendment in the Bill Provision for cases to be heard before a

Judge Evidence of scheme to be formally given? These are liability appeals Will there be a crossover with UC appeals? The big question “what is the potential

volume”

Funding

The Overall Funding Mechanism The government’s consultation on localising support for council

tax introduced the proposal to transfer the funding of council tax support from demand-led AME (Annually Managed Expenditure) to DEL (Departmental Expenditure Limits)

The Government is proposing to pay grant to billing and major precepting authorities to bring down council tax requirement rather than allocate it to the Collection Fund

This will mean the tax base will have to take account of the local scheme in a similar manner to discounts

This issue could create problems for Local Precepting Authorities (parish councils and town councils) because if the tax base is reduced and they do not receive grant then parish band D council tax will go up

This could be a particular issue if referendums are extended to some parish councils.

Calculating the Council Tax under the new rules

Benefit cost funding The authorities that will receive grant

Billing Authorities Major Precepting Authorities

The position on parishes Powers to pay grant Funded through the Central Share of non domestic rates Methodology for distributing grant Frequency of grant allocation Grant allocation in future Spending Review periods Limits on spending Maximising the tax base Managing pressures through the collection fund

Administration Costs

Administrative cost Implementation costs (£80k to billing

authorities and £27 to major precepting authorities already paid)

On going costs Link to existing subsidy arrangements New Burdens Assessment

Business Rates Retention Local Share and Central Share Was going to be 70/30 or even 80/20 The decision 50% Local Share and 50 % Central

Share Why the change? Could it be because the LSCT Grant is one of the

nominated matters to be funded from the Central Share

Doesn’t apply to Scotland, N Ireland and Wales What about growth in England? So where is the £3.82bn?

Grant allocation

The DCLG has invited a separate technical consultation on the specific factors and indicators which should determine the level of grant allocated to a particular authority. Issues to be considered in the consultation includes:

The basis for allocation (what factors are taken into account in distributing grant)

The frequency of allocation (how frequently grant is adjusted – annually or less annually).

Grant allocation

The relevant factors for the basis of allocation could include:

The relative size of eligible claimant groups Previous expenditure Other indicators – unemployment levels etc Council tax costs

Grant allocation

The issues that will need to be considered are: What are the advantages – and disadvantages of

using previous expenditure to determine shares of funding?

Is there a case for using previous expenditure initially?

What other factors could be taken into account as well or instead?

How should Government balance the need to reflect costs with the importance of incentivising local authorities to manage down demand/ensure there is accountability over council tax levels?

Grant allocation

Consideration will need to be given to the frequency of allocation.

There are two broad options:

Reflecting as closely as possible levels of take-up or demand, by adjusting as frequently as is practicable. This would achieve a better match between needs and grant across all authorities and would tend to reduce the financial risks to authorities

Leaving the grant allocation unchanged for several years. This would provide local authorities with greater certainty about their allocation in future years and help with financial planning; it would also enable a local authority to gain if liabilities under its scheme were to fall during that period.

Local precepting authorities

Option one - pass no money on Disregard the parish share entirely in distributing the total grant

between billing and precepting authorities Pass the parish share to billing authorities – but with no

obligation to pass it on to parishes

Implications Does not require additional legal powers Administratively simple for billing authorities – more complex for

central government if parish share has to be identified Could lead to big leap in Band D for some parishes – may mean

that some get caught by any referendums principles


Option two - pass money on Pay grant directly to parishesImplications Requires additional legal powers Highly administratively complex for central

government Minimises impact on Band D Unclear how this could operate under

retained business rates


Option three - pass money on Pay grant to billing authorities with a requirement to pass the

grant on to parishes Paying grant to billing authority, with requirement to pass on

through council tax systemImplications Requires additional legal powers Degree of complexity for both central and local government –

integrating within the council tax system could make less administratively onerous

Minimise impact on parish Band D Unclear how this could operate under retained business rates

Legislative Process

Legislative progress

The Local Government Finance Bill The need for subordinate legislation Draft regulations where needed Statements of intent Legislative timetable

Progress on the Bill

The Bill has passed through 1st and 2nd Reading as well as the Committee stage in the House of Commons.

The next stage is the House of Commons Report Stage followed by the Third Reading on the 28th May, before

Moved to the House of Lords on the 12th June with the Committee stage started on the 26th June

Royal Assent in July?

Pension Age Regulations

Commitment to protect pensionersDefinition in relation to ageMixed age couples – DWP approachTreatment of war pensionersUprating for pension aged claimants

Transitional Regulations

A claim under CTB on or before 31st March 2013

A claim under CTB on or after the 1st April 2013

A change of circumstance declaration for CTB

A change of circumstances for UC

Collection Fund Regulations

Possible amendment to the Local Authorities (Funds) (England) Regulations 1992

Precepts The proposal to vary the payment schedule Views being sort from the two groups The potential for an alternative proposal The impact of the in-year financial pressure

on Major Precepting Authorities

Council Tax Base Regulations

Amendment to existing regulations rather than new ones

Calculation of the impact of LSCT on the council tax base

The council tax base for baseline purposes likely to remain gross of LSCT

Timeline

Timetable

The Timetable

Spring 2012 Primary legislation in passage through Parliament. Government preparing and consulting on draft

secondary legislation. Initial thoughts on local scheme Discussions between billing authorities and major

preceptors Political direction Technical consultation on grant distribution

The Timetable

Summer 2012 Primary legislation passed. Secondary legislation prepared Develop operational project plan Billing authorities designing local schemes Scoping IT changes Consultation with Major Precepting Authorities Modelling proposed scheme Public consultation

The Timetable

Autumn / Winter 2012 Secondary legislation passed (early Autumn) Prepare risk assessment Grant allocations published Establishing local schemes – final consultation with

major precepting authorities and public, revisions to schemes.

Technical changes to systems begin Setting budgets. Adopt local scheme

The Timetable

Winter/Spring 2012/13 Finalise system changes Prepare tax base Set council tax and formally adopt scheme Publicise scheme Agree monitoring arrangements Billing

Policy into Practice

Operating the scheme in a small shire district

Under the new scheme the amount provided to support Council Tax benefit will be reduced by 10% amounting to £695K

Annual Council Tax benefits £6,954 Less: 10% reduction as proposed £ 695 Less: Protection for pension age groups (50%) £3,477 Balance to be used for working age £2,782

This means that the assistance with Council tax for working age claimants will be reduced by around 18% which means that in future working age claimants will be entitled to around 80% of the their current entitlement.

The caseload

6,800 caseload Working age 3,830

ISA/JSA etc Earners Non earners Second adult

Elderly 3,000

Operating the scheme in a large unitary council

Under the new scheme the amount provided to support Council Tax benefit will be reduced by 10% amounting to £6.3m

Annual Council Tax benefits £63.0m Less: 10% reduction as proposed £ 6.3m Less: Protection for pension age groups £30.9m Balance to be used for working age £25.8m

This means that the assistance with Council tax for working age claimants will be reduced by around 19% which means that in future working age claimants will be entitled to around 80% of the their current entitlement.

The caseload

63,257 total caseload Working age 32,115

ISA/JSA etc Earners Non earners Second adult

Elderly 31,142

What are the realistic options for Billing Authorities?

Maximise the tax base and utilise the discount changes Adjust the tax base provision Fund from the Non Domestic Rate growth Own resources? Fund the 10% locally from own resources either partially or fully

The Billing Authority proportion The Precepting Authority’s proportion

Continue with existing scheme with work incentives less up to 10% cost and protecting vulnerable groups, achieved by either/or A straight cut of the appropriate percentage for all non protected

claimants – the “equal pain” approach A flexible approach to minimum benefit or a cap A regressive taper A modified existing scheme protecting vulnerable groups and

reducing cost

The Council Tax Base

Council Tax Dwellings

Discounts

Discounts

Discounts

Discounts

Ipswich

Lancaster

Lancaster

Lancaster Non Parished Areas

Arnholme Parish

Managing Risk

Risk sharing

Sharing risk through the collection fund Deficit or surplus in the collection fund Shared the following year? Should major precepting authorities be able to

influence scheme design? Varying precepts in year

To reflect collection rates A new power

The risks of localisation

If the current financial crises continues, benefit costs will continue to rise.

Collection performance could suffer significantly with the 10% reduction which will fall largely on working age claimants.

The impact of the reduction in housing costs as a result of housing benefit changes and the cap will have a cumulative affect on the ability to meet council tax and other domestic bills

CTB is currently based on actual as opposed to estimated eligibility. Therefore an increase in the number of claimants will automatically lead to an increase in CTB costs This will expose councils to increased expenditure.

Any cap on expenditure needs to protect local authorities from the burden of increased caseloads.

Managing the risk of fraud and error The consultation document suggests that it is for local authorities to

administer support for council tax in as fair and efficient a way as is possible whilst minimising errors and the risk of fraud.

The Department for Work and Pensions will be launching the new Single Fraud Investigation Service (SFIS) in April 2013.

Local authority administration of fraud and error in LSCT should continue, whilst working in partnership with SFIS where the need arises.

In the long term LAs will have to make their own arrangements The risk of fraud and error should be minimised by effective data

sharing across all areas of the public sector. The Government have yet to realise the potential savings of

comprehensive public sector data sharing coupled with effective partnerships with the private sector.

Managing the financial risk

Billing authorities should be able to share the risk of any scheme across the tiers of administration and with Precepting Bodies

Strict budgetary control is necessary to manage the financial risk

Managing the Collection Fund and regular reporting will be critical

There is however a need for more discussion on how risk is managed across the tiers of local authorities and between central and local government.

Collection Issues

And finally, collection issues April 2013 and beyond

Collecting residue debt identical to the reduction in LSCT

Collecting small balances from those in receipt of LSCT

Do you apply for a liability order? If so which remedy do you use? If the debt remains unpaid how will you prove

culpable neglect and/or wilful refusal?

And Finally, What is the IRRV doing?

Membership of the Reference Board and the Delivery Group

Partnership with “Destin” on a modelling tool Partnership with “Coactiva” on a Risk Based

Verification tool Partnership with “Entitled to” on a UC/LSCT

calculator Delivering a “Resource Centre” for LSCT Developing a Mutual model for residue fraud teams

and a social enterprise for UC/LSCT/Benefit advice