PAPER C
Purpose: For Decision

Committee

FULL COUNCIL

Date

20 NOVEMBER 2019

Title

COUNCIL TAX REDUCTION SCHEME 2020/21

Report of

THE DEPUTY LEADER AND CABINET MEMBER FOR
RESOURCES

EXECUTIVE SUMMARY
1.

Each year the council is required to review its local Council Tax Support (CTS)
Scheme in accordance with the requirements of the schedule 1A of the Local
Government Finance Act 1992 and to either maintain the scheme or replace it

2.

Council tax reduction was introduced from 1 April 2013 when it replaced the
central government funded council tax benefit regime. From its inception, the
funding available to the council from government has reduced year on year.

3.

As with the majority of authorities within England, the council has changed its
scheme each year for a number of reasons including:

4.

•

adjusting the level of support in line with the funding available from central
government; and

•

to aid administration

This report details the proposed changes and makes recommendation to
members for the 2020/21 scheme to introduce a new income banded grid
scheme for working age applicants with effect from 1 April 2020 to reduce the
administrative burden placed on the council by the introduction of Universal
Credit.

BACKGROUND
5.

The national Council Tax Benefit Scheme was abolished by central government
on 31 March 2013. Under that scheme claimants on very low incomes could get
100 per cent of their council tax paid. The government paid a grant in respect of
the benefit given which meant that there was no cost falling on the council.

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 6.

CTS was introduced by central government as a replacement for the Council Tax
Benefit Scheme administered on behalf of the Department for Work and
Pensions (DWP). As part of its introduction, the government in transferring the
responsibility to individual councils set requirements namely:
•

the duty to create a local scheme for working age applicants with billing
authorities.

•

funding was initially reduced by the equivalent of ten per cent from the levels
paid through benefit subsidy to authorities under the previous council tax
benefit scheme; and

•

persons of pension age, although allowed to apply for council tax reduction,
would be dealt with under regulations prescribed by central government and
not the authorities’ local scheme.

7.

Since that time, funding for the CTS has been amalgamated into the settlement
funding assessment (SFA) for each local authority as determined by central
government. The council’s SFA has reduced significantly each year since 2013
and it is no longer possible to identify the amount of funding that specifically
relates to CTS.

8.

Under the local scheme, the cost of CTS is expressed as a discount and results
in a reduction in the council tax base. This has a financial impact on the Isle of
Wight Council, as well as the police and local preceptors. Police funding is paid
directly to the police and crime commissioner for Hampshire. For local town and
parish council preceptors the funding relating to them is included with the Isle of
Wight Council’s funding which is then apportioned and passed on to individual
town and parish councils.

9.

The current support scheme created by the council is divided into two schemes,
with pension age applicants receiving support under the rules prescribed by
central government, and the scheme for working age applicants being
determined solely by the local authority.

10. Pensioners, subject to their income, can receive up to 100 per cent support
towards their council tax. The council has no powers to change the level of
support provided to pensioners and therefore any changes to the level of CTS
can only be made to the working age scheme.
11. In 2013, the council broadly adopted the previous means tested council tax
benefit scheme as the basis of awarding support. However, due to the reduction
in funding, a number of changes have been made over the years to the working
age scheme.
12. A CTS exceptional hardship fund was introduced during 2016/17 to recognise the
potential impacts to some low-income households that might be faced with
genuine hardship as a result of the CTS 2016/17 scheme changes agreed by Full
Council 20 January 2016. This provision was reviewed again by Full Council 18
January 2017 and continues to provide support for those in genuine hardship.
This requires individual applications and takes into account individual
circumstances including the claimant’s income and essential outgoings.
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 The main issues with the current scheme
13. There are a number of issues with the current scheme that will need addressing
if the system is to continue to provide effective support to low income taxpayers
and also if the Council is able to provide the service in an efficient manner. The
main issues are as follows:
•

The introduction of full-service Universal Credit for working age applicants.

•

The need for a simplification of the scheme.

Each of the above are examined in detail below.
Council tax reduction and the full service roll out of Universal Credit
14. The introduction of Universal Credit within the area has, as experienced in all
other local authority areas, brought a number of significant challenges to both the
administration of council tax reduction, confusion for the customer because of
changing council tax bills and therefore the collection of council tax generally. All
Local Authorities are now experiencing the following:
•

A high number of changes to Universal Credit cases are received from the
Department for Work and Pensions requiring a change to council tax
reduction entitlement. On average 40 per cent of Universal Credit claimants
have between eight and 12 changes in entitlement per annum. These
changes result in amendments to council tax liability, the re-calculation of
instalments, delays and the demonstrable loss in collection.

•

Confusion for the customer as a result of the number of changes being
made following the number of changes to their Universal Credit case.

•

The reluctance of Universal Credit claimants to make a prompt claim for
council tax reduction leading to loss of entitlement.

15. It is clear that the existing means tested Council Tax Support scheme, which is
too reactive to change, will not be viable in the longer term now that Universal
Credit has been rolled out fully within the area. The move to a new more efficient
scheme from 2020 is now imperative
The need for a simplified approach to the Council Tax Support Scheme.
16. Notwithstanding the introduction of Universal Credit, the existing scheme is
based on an ‘old fashioned’ means tested benefit scheme. It has major defects
namely:
•

it is complex for customers to understand and is based on a complex
calculation of entitlement;

•

the administration for staff is complex, with staff having to request significant
amounts of information from applicants;

•

staff have to undergo significant training to be proficient in processing
claims;
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 •

the timescales for processing applications is lengthy mainly due to the
complexity and evidence required to support the applications; and

•

the scheme is complex when compared to other discounts for council tax for example, there are 24,217 single person discount (SPD) claimants
compared to 10,576 CTS claimants, but the administrative input for SPD is
considerably less onerous.

17. Clearly there is a need now to simplify the scheme, not only to mitigate the effects
of Universal Credit, but also make it easier for customers to make a claim and to
significantly reduce the costs of administration.
The proposed approach for the 2020/21 Council Tax Support Scheme
18. In view of the problems being experienced with the current scheme, it is proposed
that an alternative approach be taken from 2020/21. The approach has been to
fundamentally redesign the scheme to address all of the issues with the current
scheme and in particular:
a)

the problems with the introduction of full-service Universal Credit; and

b)

the significant increase in administration costs due to the high level of
changes received in respect of Universal Credit;

19. Work has been ongoing since January 2019 on a new scheme which is now
nearing completion. Consultation has been undertaken with the public and the
precepting authorities. If accepted by the council, the new scheme would take
effect from 1 April 2020. The consultation considered two approaches and the
following proposed scheme is the one most popular with both the public and
preceptors and also is the one recommended for implementation.
20. The proposed new scheme has a number of features as follows:
a)

The overall expenditure (cost) of the scheme will remain broadly as at
present, however some savings have been factored in due to level of spend
compared to the amount of grant received.

b)

The changes can only be made to the working age schemes as the current
schemes for pensioners is prescribed by central government.

c)

The current means tested scheme will be replaced by a simple income grid
model as shown below as ‘income grid 2’ which was the preferred option
from the consultation – see consultation section below.

See next page.

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 Band

Level
of
CTR

Couple with
Couple with no
children
children
Income per Income per week
week

Single parent
with two or
more children
Income per
week

Single parent
with one
child
Income per
week

1

70%

in receipt of a disability benefit

2

70%

in receipt of a passported benefit

3

70%

4

60%

5
6

£0.00 - £115.00

Single person
Income per
week

£0.00 - £250.00

£0.00 - £210.00

£0.00 - £140.00

£0.00 - £75.00

£115.01 £165.00

£250.01 - £300.00

£210.01 - £260.00

£140.01 - £190.00

£75.01 - £125.00

40%

£165.01 £215.00

£300.01 - £350.00

£260.01 - £310.00

£190.01 - £240.00

£125.01 - £175.00

20%

£215.01 £265.00

£350.01 - £400.00

£310.01 - £360.00

£240.01 - £290.00

£175.01 - £225.00

d)

It is proposed that the highest level of discount will be set at a maximum
level of liability (70 per cent) and all current applicants that are in receipt of
a ‘passported benefit’ such as Income Support, Jobseeker’s Allowance
(income based) and Employment and Support Allowance (income related)
receive maximum discount;

e)

It is proposed that the highest level of discount will be set at a maximum
level of liability (70 per cent) and all current applicants that are in receipt of
a ‘disability benefit’ such as Disability Living Allowance or Personal
Independence Payments receive maximum discount.

f)

Mirror the amendment to the housing benefit national scheme to disregard
Infected blood payments as income and capital. These schemes are run by
the Eileen Trust, the McFarlane Trust, MMEF Limited, the Skipton Fund and
the Caxton Foundation.

g)

As with the current scheme, the payment of CTS will be limited to council
tax band C level. This means any applicants living in premises which have
a council tax band of D, E, F, G or H have their entitlement calculated on
band C levels.

h)

All other discount levels are based on the applicant’s (and partner’s, where
they have one) net income.

i)

The scheme allows for variation in household size with the levels of income
per band increasing where an applicant has a partner, and/or dependants.

j)

Where an applicant had non-dependants living with them, a standard
deduction of £2 per week will be made. This is a significant change and
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 means that the administration of the scheme will be more straightforward
while also protecting low income families where adult sons and daughters
for example remain at home.
k)

To encourage work, a standard £25 per week disregard will be provided
against all earnings for all applicant types. This will take the place of the
current standard disregards and additional earnings disregards. Where a
family also receives a childcare disregard, the income levels in the ‘grid
scheme’ are set at a higher rate.

l)

Disability benefits such as Disability Living Allowance and Personal
Independence Allowance will continue to be disregarded and, in addition,
the support component of Employment and Support Allowance and Carer’s
Allowance will also be disregarded, again providing additional protection
with the scheme.

m)

The disregard of Carer’s Allowance as an income is a significant change as
this benefit is currently taken into account within the scheme. Carers are
only able to earn up to £123 while in receipt of Carer’s Allowance.
Therefore, this change will assist those customers who claim Carer’s
Allowance as they are unable to maximise their earned income.

n)

Child benefit and child maintenance will continue to be disregarded.

o)

The total disregard on war pensions and war disablement pensions will
continue.

p)

The capital limit under the new scheme will be the same as at present
namely £6,000.

q)

The current approach for self-employed applicants and directors will be
maintained with the use of a minimum income floor.

How the new scheme will address the problems with the current Council
Tax Support Scheme
21. The options to start providing a simplified new scheme and by taking a more
council tax discount approach, will start to address the problems associated with
the increased administration caused by failings in the current scheme and
Universal Credit as follows:
22. The scheme will require a simplified claiming process. Applicants will see a
significant reduction in the claiming process and where possible CTS will be
awarded automatically These changes will have the following distinct advantages
namely the following:
23. Speed of processing – claims will be able to be calculated promptly and
automatically without the need to request further information which inevitably
leads to delays.

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 24. Maintenance of collection rates – the new scheme will avoid constant changes
in discount, the need for multiple changes in instalments and therefore assist in
maintaining the high collection rates currently achieved.
25. The income bands are sufficiently wide to avoid constant changes in
discount. The current CTS is very reactive and will alter even if the overall
change to the person’s liability is small. This is leading to constant changes in
council tax liability, the need to recalculate monthly instalments and the
requirement to issue a large number of council tax demands. The effect of this is
that council tax collection is reduced. The new scheme, with its simplified income
banding approach will have the following advantages:
•

Only significant changes in income will affect the level of discount awarded.

•

Council taxpayers who receive CTS will not receive multiple council tax
demands and adjustments to their instalments.

Transition to the new scheme and the Exceptional Hardship Scheme
26. The council must be mindful that any change in scheme or a transition to a new
scheme may result in a change to the entitlement of certain applicants.
27. Inevitably, with any change in scheme, there will be both winners and losers
although the proposed scheme has been designed to protect the most
vulnerable. While the new scheme has been designed to protect vulnerable
groups and, where possible, minimise any reductions in entitlement, it is
proposed that the new scheme will contain additional provisions to protect
individuals who experience exceptional hardship. Where any applicant is likely to
experience exceptional hardship, they will be encouraged to apply for an
exceptional hardship payment. The council will consider all applications for
exceptional hardship on an individual basis, taking into account available income
and essential outgoings. Where appropriate further support will be given to the
applicant.
28. This approach will enable individual applicants to be dealt with in a fair and
equitable manner. The Exceptional Hardship Scheme will form part of the CTS.
STRATEGIC CONTEXT
29. CTS needs to be considered in the context of the council’s overall budget strategy
and whilst separate to, it is an important consideration in the context of the
council’s budget and the financial impact on the ability to deliver services. It also
needs to be consistent with the Corporate Plan priorities that seek to ensure the
following:
•

A financially balanced and sustainable council.

•

Vulnerable people are supported and protected.

•

People have a place to call home and can live with independence.

•

People take responsibility for their own health and wellbeing.

•

All young people will have the best start in life so that they can fill their
potential.
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 •

Community needs are met by the best public services possible.

CONSULTATION
Public consultation
30. A full and comprehensive consultation exercise was undertaken from 10 June to
5 August 2019 as follows:
Stakeholders
1. Existing claimants (both
working
age
and
pensionable
age
approximately 10,500).

Methodology
Individual postcards to inform of the LCTS
potential changes “slogan If you receive local
council tax support, new changes could affect
you”.
Online survey via questionnaire explaining
proposals and likely impact.
Paper survey if requested.

2.Council
taxpayers Online survey via questionnaire explaining
(approximately 71,456) and proposals and likely impact.
Paper survey if requested.
service users generally
3. Interested organisations Workshops were held with partners as well as
and groups.
the Anti-Poverty Group to ensure that as many
organisations and communities were aware of
the proposed change to gather their comments.
In addition, the Anti-Poverty Group partners
were e-mailed detailing the consultation on two
occasions to circulate and raise awareness with
their customers.
Email to all parish and town council clerks to
raise awareness and seek their views
Letter sent to the police and crime commissioner
seeking views.
199 responses
received.

to

the

consultation

were

General awareness
Provision of information and www.iwight.com
awareness
raising
of Press releases.
changes and proposals
Face to face communication at customer service
points.
The council’s Facebook and Twitter sites
(weekly promotions).
Information on the front page of iwight.com.

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 31. Details of the consultation response analysis are set out in Appendix 1. The
consultation was responded to by 199 residents, which for validation purposes
provided confidence in the outcome of the consultation. Of the 199 responses,
22 per cent stated they were currently receiving CTS. Respondents were also
given the opportunity to provide additional comments when asked why they
disagreed with an option and what alternatives they would like to see considered,
which are set out in Appendix 1a.
32. The consultation explored two income grid schemes to deal with the problems
being experienced with the current scheme to alleviate the issues caused by the
introduction of full-service Universal Credit and the significant increase in
administration costs due to the high level of changes received in respect of
Universal Credit. The majority of respondents:
•
•
•
•
•
•
•
•
•
•

agreed that the council should keep a scheme to support residents;
agreed to option 2 of the income grid scheme;
agree to option 2a of the income grid scheme;
agreed to option 2b of the income grid scheme;
agreed to option 2c of the income grid scheme;
agreed with the principle to disregard any payment made under the infected
blood and thalidomide regulations in full as capital and income, in line with
Housing Benefit regulations;
disagreed keeping the scheme as it is currently;
disagreed in reducing the maximum level of support to 65 per cent or 60 per
cent;
disagreed with increasing council tax levels;
disagreed with finding savings from reducing or cutting other council
services.

The full details of the consultation are set out in appendices 1 and 1a.
33. Appendix 1b provides a summary of the responses received from town and
parish councils in terms of their views on the options to change the CTS scheme.
There were 11 responses received from town and parish councils.
34. The latest position on claimants and cost of support between the different
categories is set out in the table below:

Pensioner
Working age
enhanced
premiums
(disabled)
Other working
age
Council
support

tax

Average
number of
claimants
2013/14

Average
number of
claimants
2015/16

Average
number of
claimants
2016/17

Average
number of
claimants
2017/18

Average
number of
claimants
2018/19

Cost
of
support
2013/14
£M

Cost of
support
2015/16
£M

Cost of
support
2016/17
£M

Cost
of
support
2017/18
£M

Cost
of
support
2018/19
£M

6,907

6,341

5,969

5,678

5,385

£6.278

£5.934

£5.820

£5.867

5.992

2,754

3,320

3,287

3,272

3,441

£2.579

£3.456

£2.891

£2.965

2.726

4,943

3,675

2,447

1,915

£3.666

£2.194

£1.767

£1.661

1.315

14,604

13,336

11,397

10,741

£12,523

£11,584

£10,511

£10,493

10,033

2,838
12,094

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 35. It can be seen from the above table there is a continuing reduction in the number
of CTS claimants but the cost of claims for pensionable age claimants has risen
slightly. One of the factors for the reduction in numbers is as a result of the
changes made to the 2016/17 working age scheme that sought to reduce the
level of support available as well as further changes made in subsequent years.
There was an average band D council tax increase of 4.54 per cent including the
police and town and parish councils’ precepts. The reason that ‘average’ is used
is due to the town and parish council precepts which vary across the whole area.
36. The projected outturn for 2019/20 is a cost of £10.3 million, which is the overall
reduction in council tax as a result of the council tax support given. This relates
not just to the council element of council tax but also to the police and town and
parish council precepts. The funding that relates to the police precept is paid
directly to them. The council and town and parish council element is included with
the council’s funding and the relevant element is then passed onto individual town
and parish councils.
37. Since 2012/13 the number of claimants and the cost of council tax support given
have reduced by 26.45 per cent in terms of caseload and 19.88 per cent in terms
of CTS awards. The biggest impact, however, is that the funding from the
government has been absorbed into the SFA as part of the local government
finance settlement and that this has been reduced significantly year on year.
Since 2012/13 indicative funding relating to CTS has been effectively cut by £6.5
million (54 per cent reduction).
38. A summary of the average impact on claimants of the potential changes is set
out in Appendix 3. In terms of the average weekly loss of support in both
monetary values and the number of claimants potentially impacted by these
options the table below provides a summary:
Option

Number of claims negatively
impacted by over £2 per week
276

Number of claims positively affected
by over £2 per week
107

Option 1: Introducing an ‘income
grid scheme’
Option 2: Introducing an ‘income 817
101
grid scheme’ (excluding the
options below)
Options based on Option 2 Number of claims better off
‘income grid scheme’
Option 2a: Disregarding Carer’s 52*
Allowance
Option 2b: Replacing the current 612*
earnings disregards with a
standard disregard of £25 per
week
Option 2c: Replacing the current 101**
Non-Dependant deduction rates
with a standard deduction of £2
per week
Option 3: Disregarding any Information unknown as is not available in current caseload
Infected Blood or Thalidomide
payment as income or capital
*This figure does not include those cases which automatically receive 70 per cent maximum support.
**This figure does not include those cases which fall into the vulnerable band of the income grid scheme

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 39. There will also be an added impact of any council tax increase. There was an
average council tax increase of 4.54 per cent in 2019/20 (including the police and
town and parish council precepts). Everyone per cent increase made on the
average council tax band D would result in an increase of £18.88 and this would
increase the amount of CTS awarded.
40. Examples of impacts are also provided within Appendix 3 to enable members to
understand what the changes to the award levels of CTS could be if they were
applied and how much more a person might have to pay towards their council
tax.
41. There remains provision through the Exceptional Hardship Fund by taking into
account individual circumstances, including the claimants’ income and essential
outgoings for a claimant to demonstrate that they require an exceptional hardship
award as a result of ‘genuine hardship’. This discretionary assistance can be
applied for to assist a claimant with any shortfall between their CTS and council
tax liability in accordance with the policy’s intentions. This is a potential mitigation
action where considered appropriate.
42. The equality impact assessment completed during 2018 has been updated
following the consultation exercise and this is set out in Appendix 2 to this report.
The equality impact assessment is based on the scheme options for 2019/20
including the recommended changes.
43. The government has determined that under the new CTS scheme arrangements
that there can be no reduction for council tax support to pensioners.
44. Within the assessment of CTS, there will remain a number of incomes or benefits
that are either fully disregarded or have a specific level of disregard applied to
them in determining the level of income that is used within the calculation of CTS.
The disregards from certain incomes received assist the disabled, families and
working claimants to meet some of their household and other costs.
COUNCIL TAX SUPPORT SCHEME POTENTIAL CHANGES
45. Taking into account the updated financial position, the consultation, equality
impacts, and the evaluation set out above the potential CTS scheme options can
be summarised as delivering the following:
BASELINE FIGURE (what the scheme would cost in
2020/21 if we remain with current CTS scheme shown at
2019-20 precept levels)
OPTION
Option 1: Income grid scheme
Option 2: Income grid scheme (with no additional options)

Option 2a: Disregarding Carers Allowance

£10.3 million

Saving (-) against
baseline
-£35,346
-£254,760
Cost against Option
2
£51,831
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 Option 2b: Changing earnings disregard to single rate of
£25 per week

£40,709

Option 2c: Changing non-dependant deductions to single
rate of £2 per week

£14,672

Overall net saving of Option 2: Income grid scheme
(with all additional options) against Baseline

-£147,548*

Option 3: Disregarding Infected Blood Payments as not able to model on
income and capital
caseload
*This figure reflects the total savings before deducting the share for the police and
town and parish council’s
FINANCIAL / BUDGET IMPLICATIONS
46. The amount of CTS being provided has reduced significantly since its
introduction in 2013.
47. The total expenditure at 31 March 2019 was £10 million and at 30 August 2019
the expenditure was at £10.3 million. Since 2013 there has been a reduction in
expenditure of £3.3 million which has already been reflected in previous years
budgets. This is due to both a reduction in caseload and the changes to the
working age scheme since 2013.
48. The assumed settlement funding assessment (SFA) grant towards CTS during
19/20 = £5.48 million. A one-year spending review was held in September 2019
although specific allocations to individual local authorities are not expected to be
announced until December 2019. The expectation is that the 2019-20 forecast
figures will be rolled over to 2020-21 which would mean that the 2020-21 CTS
grant would remain at the 2019-20 level of £5.48 million. This means there is
currently a funding gap of £3.24 million.
49. In addition to the wider considerations in the report including the outcome
of the consultation, the impact on claimants and the equality impact assessment
the overall financial position of the council needs to be taken into account.
50. The funding cuts from government are significant and it is not realistic to reduce
CTS to match the level of cuts to bridge the gap which is currently £3.24 million.
51. The current scheme requires all working age claimants to pay a minimum of 30
per cent of their council tax, which means a maximum of 70 per cent support may
be provided.
52. A breakdown of the current CTS expenditure is shown below:

No. of claimants

Pension age
5,310

Working age
5,266

Cost (2019)

£6 million

£4.3 million
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 53. It should be noted that the authority cannot vary the level of CTS provided to
pension age claimants.
LEGAL IMPLICATIONS
54. The council will need to set a lawful and balanced budget and council tax level
for 2020/21 at the Full Council meeting on 26 February 2020.
55. The Local Government Finance Act 1992 (as amended) stipulates that for each
financial year, each billing authority must consider whether to revise its scheme,
or to replace it with another scheme. The authority must make any revision to its
scheme no later than 11 March in the financial year preceding that for which the
revision or replacement scheme is to have effect.
56. In finally deciding what form the local CTS should take, the council will need to
take into account the equality impact assessment of the options, what mitigating
actions can be taken to reduce the impact, the results of the consultation
exercise, the wider budget position, and the potential impact on council taxpayers
and users of services.
57. There must be proper consideration of the impact of the proposals on relevant
groups and Full Council members are required to have read the equality impact
assessment to enable them to have due regard to the public sector equality duty
before making a decision.
58. Section 10 of the Welfare Reform Act 2012 added a new section 13A to the Local
Government and Finance Act 1992 so that, in respect of dwellings in England, a
person’s liability to pay council tax is reduced in accordance with the billing
authority’s CTS. Liability may be reduced “to such an extent as the billing
authority thinks fit”. Billing authorities can apply a reduction in particular cases or
by determining a class of case. Liability for council tax can be reduced to nil.
59. The framework within which billing authorities must devise their council tax
reduction schemes is contained in section 13A of the Local Government Act 1992
(as amended).
EQUALITY AND DIVERSITY
60. The council has to comply with section 149 of the Equality Act 2010. This
provides that decision makers must have due regard to the elimination of
discrimination, victimisation and harassment, advancing equalities, and fostering
good relations between different groups (race, disability, gender, age, sexual
orientation, gender reassignment, religion/belief, pregnancy and maternity, and
marriage/civil partnership). An equality impact assessment has been completed
in respect of relevant proposals as part of the decision-making process to enable
members to take into account and if necessary, mitigate the impacts as part of
the decision-making process.
61. The equality impact assessment for the proposed local Council Tax Support
Scheme is attached at Appendix 2 to this report and is required to have been
read by Full Council members before making any decision on the scheme.
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 62. A summary of some of the key findings from the equality impact assessment has
been provided earlier within the report. This has indicated that the present
working age CTS scheme will continue to provide more support to those people
in receipt of a disability or who have a carer in the household, than those people
without a disability or without a carer in the household.
63. Furthermore, the council has already introduced an exceptional hardship scheme
since 2016 and allows any claimant to apply for additional support up to the full
level of their council tax and will continue to provide mitigating actions to those
deemed to be in genuine hardship and requiring additional support above the
CTS scheme provision.
OPTIONS
64. There are three main options to consider:
a)

To agree a local scheme that is the same as the existing scheme currently
in place for 2019/20 and to bridge the level of funding gap currently
estimated at £3.24 million, which will need to be met from reducing other
council services.

b)

To implement an income grid scheme for working age applicants with effect
from 1st April 2020 to reduce the administrative burden placed on the
council by the introduction of Universal Credit as well as the constant
changes to council tax payment plans to assist customers with budgeting.

c)

To implement a local scheme that varies certain elements of the existing
scheme so that the CTS scheme continues to bring the working age CTS
scheme in line with housing benefit and the pensionable age CTS scheme
changes proposed by central government.

RISK MANAGEMENT
65. The financial risks relate to the uncertainty of future growth in cases and eligibility
and the potential impact on council tax collection rates. The projected level of
support with estimated collection rates will be included within the council tax base
calculations in determining the total of council tax income for 2020/21.
66. As implied in the council tax recovery section the assumption is that overall
ultimate collection levels will remain broadly the same of the additional council
tax to be collected from working age claimants impacted. This is uncertain but
considered prudent.
67. To introduce an income grid scheme may impact marginally on the council’s
collection rate levels to a lower level than predicted as a result of making further
changes to the scheme and increasing the council tax levels during 2020/21.
EVALUATION
68. Universal Credit has been fully rolled out and more local authorities are
considering and looking at how the administrative burden of monthly notifications
of earning changes received from the DWP are affecting both the benefit
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 processing teams as well as the effects this is having on council tax account
rebilling and therefore recovery.
69. Local authorities are now looking at changing their schemes to a banded
approach to deal with the amount of changes being sent through from the DWP
and ease the administrative burden as well as issues with council tax account
monthly changes and collection.
70. The scheme is complex for customers to understand and is based on a complex
calculation of entitlement. By bringing in some options to simplify the scheme
the administration will be alleviated, and customers will have a better
understanding of their entitlement to CTS support.
71. Without an income grid scheme, CTS customers paying their council tax on a
monthly basis, may face constant changes to their council tax payment plans,
which given their limited income will potentially create difficulties with budgeting,
creating confusion and therefore the need to contact the benefits and council tax
team for additional advice.
72. Option A - in the context of the council ‘s financial position and the provisional
local government finance settlement is considered unaffordable, but
consideration should be had as to the potential impact with the ability of CTS
claimants to pay increased levels of council tax.
73. Option B
(i)

To retain a CTS reduction scheme for working age council tax payers.

(ii)

Introduce an ‘income grid scheme’ for all working age applicants, to replace
the current means tested approach, but with the addition of the following
options.

(iii)

To implement option 2 as the preferred income grid scheme

(iv) Disregarding Carer’s Allowance which is currently taken into account as an
income in the calculation.
(v)

Replacing the three current earnings disregards with a standard £25
disregard, irrespective of the person circumstances.

(vi) Replacing the five current non-dependant deduction rates with a standard
deduction of £2 per week for each non-dependant in a household.
(vii) Continue to provide an exceptional hardship fund that would require
individual applications and take into account individual circumstances
including the claimant’s income and essential outgoings to assist those that
are deemed to be in ‘genuine hardship’ and receive additional assistance
based on need.
74. Option B - will provide a scheme which deals with the issues being faced by the
introduction of full-service Universal Credit and the significant increase in
administration costs due to the high level of changes received in respect of
Universal Credit. In addition, the changes will create less confusion for our
customers as they will not receive a potential council tax bill every month and will
aid collection for the Revenues Department.
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 75. Option B - also continues to provide an exceptional hardship fund for those that
are deemed to be in ‘genuine hardship’. This not only provides some additional
assistance based on need for those that recognises there may be instances
where individual circumstances require some additional support through genuine
hardship in accordance with the funds policy as per Appendix 5.
76. Option C - currently under housing benefit regulations, any payment made to a
person through Infected Blood schemes run by the NHS Business Services
Authority, the Eileen Trust, the Macfarlane Trust, MFET Ltd, the Skipton Fund,
the Caxton Foundation and the Thalidomide Health Grant are fully disregarded
as income and or capital.

RECOMMENDATION
That Full Council considers:
1. To agree a local scheme that is the same as the existing scheme currently
in place for 2019/20 and to bridge the level of funding gap currently
estimated at £3.24 million, which will need to be met from reducing other
council services.
2. To implement an income grid scheme for working age applicants with effect
from 1st April 2020 to reduce the administrative burden placed on the
council by the introduction of Universal Credit as well as the constant
changes to council tax payment plans to assist customers with budgeting.
3. To implement a local scheme that varies certain elements of the existing
scheme so that the CTS scheme continues to bring the working age CTS
scheme in line with housing benefit and the pensionable age CTS scheme
changes proposed by central government.
And agrees that:
4. the Local Council Tax Reduction Scheme for 2020/2021 be adopted as set
out from a combination of changes contained in Option B and C of the report
and the CTS scheme policy as set out in Appendix 4 as follows:
(i)

To retain a CTS reduction scheme for working age council tax payers
that is deemed affordable.

(ii)

To adopt the new council tax reduction scheme (CTR) as proposed as
a grid model from April 2020 and implement option 2 as the preferred
income grid scheme.

(iii)

Disregard Carer’s Allowance which is currently taken into account as
an income in the calculation.

(iv) Replacing the three current earnings disregards with a standard £25
disregard, irrespective of the person circumstances.

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 (v)

Replacing the five current non-dependant deduction rates with a
standard deduction of £2 per week for each non-dependant in a
household.

(vi) Mirror the amendment to the housing benefit national scheme
(Infected blood payments where payments are disregarded).
(vii) Continue to provide an exceptional hardship fund that would require
individual applications and take into account individual circumstances
including the claimant’s income and essential outgoings to assist those
that are deemed to be in ‘genuine hardship’ and receive additional
assistance based on need.

APPENDICES ATTACHED
Appendix 1: Summary of responses to consultation
Appendix 1a: Additional written text responses to the consultation
Appendix 1b: Comments received from parish and town councils to the consultation
Appendix 2: Equality impact assessment council tax support scheme
Appendix 3: Examples of impact on claimants
Appendix 4: Draft local scheme policy based on proposed option
Appendix 5: Draft exceptional hardship fund policy

Contact Point:

Debbie Vallas, Benefits Operational Manager – Tel (01983) 823950
e-mail debbie.vallas@iow.gov.uk

CHRIS WARD
Director of Finance and S151 Officer

CLLR STUART HUTCHINSON
Deputy Leader and Cabinet Member for
Resources

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