Agenda item

To agree consultation options for the local Council Tax Support scheme 2025/26 (report of the Deputy Chief Executive – Corporate Development (S151) enclosed).

Consideration was given to the report of the Deputy Chief Executive – Corporate Development (S151) which requested agreement on consultation options for the local Council Tax Support scheme 2025/26.

The Portfolio Holder – Finance presented the report and provided the following information:

Councils had been required to develop local Council Tax Support schemes to support low-income working-age households since 2013.  Prior to this, support was based on a national Council Tax Benefit scheme, delivered by councils but based on rules determined by central government.  The Government continued to prescribe the scheme for pensioners who could receive up to 100% support.  The council had no discretion in this area.

The report under consideration focussed on the scheme for working age claimants. 

The Council was required to review its scheme for working age claimants each year and consult with major precepting authorities and other persons who may have an interest on the proposals for the forthcoming year.  Schemes could not be changed mid-year. 

Current scheme

South Holland’s current scheme provided a maximum level of support of up to 75% for the lowest income working age claimants, leaving at least 25% of the annual Council Tax bill to be paid.  Scheme expenditure in 2024/25 was forecast to be around £4.9million, with just over £2.2million of that relating to working age claimants.  The cost of the CTS scheme was shared between the major precepting authorities, as shown at section 2.3 in the report, with SHDC picking up just under 10%.

Fundamental Review

Cabinet agreed to fundamentally review the scheme in 2024/25, recognising that the current scheme was now dated.  Objectives included modernisation and simplification for the customer, and to improve operational efficiency.  Any final CTS scheme had to be affordable, and in reaching decisions there had to be consideration as to how it would be funded.

This extensive review, supported by the appointment of Visionary Network Ltd and its partners, had considered different scheme approaches, and analysis and data modelling based on current caseload and expenditure.

Section 4 of the report provided a breakdown of the current working age caseload by household type.  Table 2 in section 4.3 provided a view of the number of current CTS recipients with arrears in the last financial year, 2023/24.  The data revealed that almost 23% of current working age CTS recipients had council tax arrears in the previous financial year.  51% of those in arrears were in households with children.

Proposals for 2025/26 scheme consultation

The outcome of the review had led to the set of modification proposals shown in Section 6 of the report.  These would make the scheme more generous, offering enhanced protection for vulnerable families.  It would also provide the opportunity for administration efficiency through streamlining of processes. As an incremental approach to change, it would allow for review after the first full year of the new scheme. 

Having regard to the arrears position for households with children, and a recent DWP report which estimated that 24% of children in South Holland lived in relative low-income households, the options included an increase in the maximum level of support to 85% for households with children, demonstrating the council’s commitment to respond positively to concerns over child poverty.

There would be an increased cost as a result of this change, however a combination of the options shown in Section 6 would provide some off-set and improve administrative efficiency.

Depending on the options that Cabinet decided, the net increased scheme cost was estimated to be between £45k and £91k.

In any scheme there may be hardship cases.  The introduction of a discretionary exceptional hardship payment fund, (Option F) would allow additional short-term assistance in exceptional cases and provide signposting to other sources of help and support for maximising income.

The options decided by Cabinet would go into consultation, as required by legislation, including major preceptors who would share the cost of any increase.  This council would pick up around 10% of the total cost.

A further report, including the response to consultation would be brought back to Cabinet following consultation, for it to make its final recommendation to Full Council.

The Portfolio Holder advised that reference to the modification options at section 5 of the report (within recommendation 1) was incorrect.  The proposals were in fact within section 6 of the report.

The following issues were raised:

·       Members welcomed the report, and felt that all of the proposals within the scheme modification were important and should be consulted on.  The cost impact to the council was relatively small in comparison to the benefit it would provide to individuals.

·       Concern was raised around timescales and what the impact of any changes made by the new government in its forthcoming Budget would have on the scheme.   Officers responded that detail of the forthcoming budget was not known, that timescales were challenging and that consultation would be taking place alongside a draft government Budget.  Any updates would be included with the further report following consultation.  The main issue to be aware of was that the scheme could not be changed in-year – any further changes would need picking up in the following year’s scheme.

DECISION:

1)    That following consideration of the modification options presented in section 6 of the report, all the options detailed within it be consulted on; and

2)    That consultation be approved, and oversight of the consultation approach be delegated to the Section 151 Officer in conjunction with the Portfolio Holder – Finance.

(Other options considered:

·       Do nothing – This option was discounted as Cabinet had previously indicated its intention to carry out a more fundamental review of its scheme for 2025/26;

·       Replace the default, means tested scheme with an income banded scheme – this alternative approach had been discounted as part of the fundamental review process;

Reasons for decision:

·       This would enable a period of consultation with major preceptors and the general public on Cabinet’s preferred scheme option(s) for its 2025/26 Council Tax Support Scheme;

·       Following a consultation period, a report, including the consultation feedback would come back to Cabinet to make its final recommendation to Full Council in respect of the scheme for 2025/26).