Agenda item

 A report from the Director of Finance, Resources and Customer Services is attached. This updates Members on the progress of the Council Tax Support Local Scheme.  (Key decision – reference number 3588)

(Report No.138)

(8.30 – 8.35 pm)

Councillor Doug Taylor (Leader of the Council) introduced the report of the Director of Finance, Resources and Customer Services (No.138) updating Members on the Council Tax Support Local Scheme.

Alternative Options Considered: The Local Scheme included three main variants which were set out in the report and had been subject to extensive consultation on the basis of a fully funded scheme. A do nothing option was not feasible as the Government’s Default Scheme unamended would apply leaving a funding gap. Adopting the recently announced Government scheme of transitional grant for one year with restriction in reductions to 8.5% would not produce a fully funded scheme as the grant is insufficient. The Cabinet decision in July 2012 was to consult on the basis of a fully funded scheme, as the Government’s scheme of transitional grant did not exist at that time.

DECISION AND RECOMMENDATION TO COUNCIL: Cabinet agreed to instruct the Director of Finance, Resources and Customer Services to prepare and recommend a local council tax support scheme to the Council on 30 January 2013 including proposals for council tax technical changes, the council tax and business rate tax base.

Reasons for recommendations: This report resulted from Government legislation to replace the national Council Tax Benefit scheme with a locally agreed scheme with reduced grant support.

(Key decision – reference number 3588)

Councillor Taylor (Leader of the Council) advised Members that following the production of the above report, a full and amended report had been prepared for the Council meeting on 30 January 2013, which had been published the previous day and was available for Cabinet Members this evening for consideration.

James Rolfe (Director of Finance, Resources and Customer Services) gave a short presentation to Members on the Council Tax Support Scheme as set out in the report to full Council, as follows:

The Government as part of its welfare reform agenda is scrapping the current national Council Tax Benefit scheme and replacing this with Council Tax Support which Councils have to determine locally and with reduced levels of Government funding. Pensioners are protected from the scheme and impact of the reduced support falls upon working age benefit cases. Enfield has developed a number of models and the Council will be asked to determine which model should be adopted for 2013/14 and will need to agree this before the end of this month.

The Council has carried out a full 12 week consultation on four different schemes all of which passed on the reductions in the forms of reduced support to working age cases to produce a fully funded scheme. At the very end of the consultation period, the Government announced a Transitional Grant scheme limiting reductions in support subject to certain criteria. This announcement was far too late to be included in the consultation and although such a scheme would not be fully funded the Council had developed this as further scheme options. The Council also has up to date information on the Government funding available and upon the slowing in the rate of caseload growth which change the amount but not the principle of each of the scheme models upon which Enfield consulted.

The Council report before Members this evening showed the results of the consultation and whilst there were some differences in response from those responding who currently received benefit to those who do not, there is broad support for the design principles consulted upon following the July 2012 Cabinet meeting. In terms of the scheme model the picture was more mixed.

The six models of reduced support are as follows:

A – a flat rate reduction of £200 per annum

B – a percentage reduction of 19.5%

C – a variable percentage reduction of 11.5% for those in employment and of 23% for those who are unemployed

D – paying cases in Council Tax bands A to C as now, applying a 25% reduction in band D and no paying anything to bands E to H

E – taking the Government’s Transitional Grant and limiting reductions to 8.5% and making up the funding gap

F – as E but as the Transitional Grant funding announced is for one year only, taking the Government’s Transitional Grant for one year and in 2014/15 applying a 19.5% reduction as in model B

Of the options subject to consultation, those responding who are current benefit cases and are those directly affected by the reductions favoured option B, a reduction of 19.5% irrespective of Council Tax band and a scheme which is fully funded. If the Council takes the Government’s Transitional Grant funding, the reduction is 8.5% but the Council will have to find additional funding to pay for the scheme.

Whichever reduction scheme model the Council chooses will apply to people on low income many of whom will also be affected by the Government’s other welfare reforms so there are no easy answers but it needs to be decided next week at Council.

Cabinet were not being asked to make any decision this evening, this would be a matter for full Council at its meeting on 30 January 2013. However, Members were invited to discuss the options and raise any questions of clarification or concerns.

Councillor Taylor (Leader of the Council) invited questions from the Cabinet Members. The following issues arose:

1.         Councillor Charalambous expressed concerns regarding Option D and the effect on residents living in large properties who would be affected by other Government welfare reforms. It was noted that Options E and F would require the Council to find additional savings. James Rolfe advised that the funding shortfall, in addition to current budget savings, would be £800k in year one and £1.5m in year two.

2.         Councillor Hamilton noted that Option B was the option favoured through the consultation and would be nil cost to the Council.

3.         Councillor Taylor noted that the table on page 9 of the Council report illustrated the impact of the four different approaches in Options A – D using the information in the consultation documentation. These were the updated figures.

4.         Councillor Goddard sought clarification on Option D and the formula used in calculation. James Rolfe outlined the requested detail. The Council report set out the key equalities implications for each of the scheme options and an evaluation of the options, sections 6 and 7 of the Council report referred.

5.         Councillor Taylor raised an issue for discussion regarding a Member’s opportunity, if they so wished, to raise an alternative option for consideration at the Council meeting. A full and detailed discussion took place on such a scenario including governance issues and a potential increased risk of challenge due to lack of consultation on such an option. It was noted that Members had had an opportunity to come forward with comments as part of the consultation processes undertaken. A lengthy decision making process had been applied with a number of opportunities for challenge previously. Members noted that a decision had to be made by 31 January otherwise the Council’s default scheme would apply. Officers would not recommend that Members consider an option that had not been subject to the full processes as set out in the Council report.

6.         Councillor Charalambous stated that he would not be in support of Option A or Option C.

7.         In conclusion, Councillor Taylor stated that this was a very difficult decision for the Council to take as the scheme would either have to be fully funded by the residents affected or a partially funded scheme would result in a reduction in council services or an increase in the level of council tax to meet any gaps in funding. Councillor Taylor highlighted the proposed hardship scheme (section 7 of the Council report) that the Council intended to develop to offer as much support as

possible within the constraints of the Council’s budget.

Members noted that the report would be considered and decided upon at the Council meeting scheduled to take place on 30 January 2013.