Council Tax Support 2020/21 consultation

Background to the consultation

What is this consultation about?

Each year the Council has to decide whether to make changes to the Council Tax Support scheme for working age customers in its area.  By working age we mean people who have not yet reached state pension age.  This year the Council has decided that changes should be made to the Council Tax Support scheme to make it easier to understand and to reduce the number of adjustments to awards that result from monthly changes in payments for customers who receive Universal Credit. Our aim is to be able to continue to spend the same amount of money on Council Tax Support by reducing how much it costs us to run the scheme and so ultimately preventing any additional costs being added to the Council Tax.

What is Council Tax Support?

Council Tax Support provides low income households with help to pay their Council Tax bill.  The level of support is based on the income and circumstances of the household and the maximum support would mean council tax payments for working age customers would reduce by 80%.  We have no plans to change the maximum level of support.

Why is a change to the Council Tax Support scheme being considered?

Each council is required to review their Council Tax Support scheme each year and decide if they want to make any changes. Before any changes can be implemented, they must be subject to public consultation.

Plymouth City Council is proposing a number of changes to its existing scheme mainly because of the impact of Universal Credit. We are consulting on our proposals and would like your views.

Proposed Changes for 2020/21:

  • Introducing an income banded scheme for working age customers to replace the current means tested approach.  This means that how much support customers receive will depend where their income falls within a range of specified bands (Proposal 1); 
  • Introducing a standard weekly non-dependant deduction instead of the current tiered system (Proposal 2);
  • Support incentives to work by ignoring the first £25 of earnings where there is a dependent child in the household.  Currently the amount of earnings ignored is different for couples with children at £10 and lone parents £25 (Proposal 3);
  • Encourage planning for the future by ignoring the total amount of any contribution made to a personal pension from earnings.  Currently only 50% of any contribution is ignored as earnings (Proposal 4);
  • An extra amount of £50 of household income will be ignored if someone in the household is disabled where a qualifying disability benefit is in payment (Proposal 5);

  • To ignore any income from Carer’s Allowance (Proposal 6);

  • To ignore up to 100% of any housing costs included in Universal Credit payments (Proposal 7);

  • To ignore any income from Bereavement Support payments (Proposal 8);

  • To remove the requirement to show good cause before backdating an award of Council Tax Support by up to 6 months.  Instead we will consider all the circumstances of the case (Proposal 9);

  • To make all changes in circumstances which would change the amount of Council Tax Support on a daily basis rather than the current weekly basis (Proposal 10)

There are currently 20,251 people currently receiving Council Tax Support in the Plymouth City Council area, of which 60% (12,122) are working age.  Of those receiving Council Tax Support under the current working age scheme 86% (10,486) are receiving the maximum 80% award.  The gross cost of the scheme in 2019-20 is £17,058,314.  All figures are as at 30 June 2019.

Who will this affect?

If you are currently receiving the maximum 80% support any change will not affect you.  Over 90% of working age customers currently receiving Council Tax Support will see no change and some may get more support.  A small number of customers will receive less support because their income is too high to qualify.  This will ensure the support is provided where it is most needed. 

There is no intention to change the scheme for pension age households.

Are there any alternatives to changing the existing Council Tax Support scheme?

We have thought about alternatives, but we do not think we should implement them for the reasons given below.

We have considered:

1. Continuing with the current scheme

The current scheme will not work effectively with the government’s Universal Credit system. The frequent changes in Universal Credit payments results in multiple changes in Council Tax Support.  This can be confusing for customers where levels of Council Tax Support can change each month, making household budgeting more difficult which can lead to arrears of council tax. This could mean higher administration and scheme costs generally.

2. Changing the maximum amount of Council Tax Support

Currently working age customers are asked to pay a minimum of 20% towards their council tax bill.  If we changed the maximum amount that can be awarded without increasing the total amount of Council Tax Support awarded annually, would mean that those who don’t currently receive the maximum would receive less or even no Council Tax Support at all.

3. Reduce funding to other Council services such as Adult Social Care or Children’s Services

Keeping the current Council Tax Support scheme could mean an increase in administration costs and less money available to deliver other Council services; or

4. Use the Council’s reserves to keep the Council Tax Support scheme

Using reserves to fund the additional administration costs would be a short-term option. Once used they will no longer be available to support and invest in other Council services and additional cuts would have to be made in the following years.