29 October 2020 Business and economy

Have your say on proposals to increase Council Tax support

We’re consulting on proposals to increase the financial support available for low income households in the city with Council Tax.

Council Tax Reduction (CTR) helps low income households with their Council Tax. Residents who pay Council Tax are eligible for support if their income and savings are below a certain level.  

We are required to review our CTR scheme every year and are now consulting on the proposed changes to the scheme for 2021/22.

Covid-19 has affected everyone in the city and those on a low income are particularly vulnerable. 

There have been various national measures to support people financially through the pandemic, including temporary increases to Universal Credit and additional help for Council Tax, with up to an extra £150 for people already receiving CTR.

We’re not currently aware of any plans to continue the increase to Universal Credit or the extra support for Council Tax, meaning that residents in the lowest income range are likely to experience a drop of income in April, alongside increased Council Tax bills.

We’re proposing changes to the scheme to make CTR more supportive to help lessen some of this financial pressure for thousands of residents on low incomes. 

Increasing the cost of the CTR scheme has potential implications for the council’s budget which continues to be under pressure. 

The consultation is open for comments until Tuesday 1 December 2020.

Increasing the maximum amount

The current maximum amount of CTR that can be claimed is 80% of the Band D Council Tax rate. This means that all working age people, regardless of income and circumstances, are asked to pay a minimum of 20% towards their Council Tax.

We are proposing to reduce this minimum payment to 18% of Band D by raising the maximum discount rate from 80% to 82% of Band D in 2021-22. 

Changing the maximum award available would help many more claimants than changing any other part of the scheme.

Our intention is to continue to make the scheme more supportive in future by further increasing the maximum CTR rate. This will depend on available funding as increasing the maximum award increases the cost of the scheme to the council.

Other proposals to increase support

The consultation also sets out a number of other proposals to increase the support.

This includes looking at removing the criteria that claims have to be eligible for at least £5 a week of support in order to qualify. We could reset this minimum amount to 50p a week, as it was when CTR was first introduced, or zero.

This would mean that a further 300 to 400 people would qualify for CTR, receiving an average of £120 per year. 

There is also a question about whether to increase the budget of the Discretionary Council Tax Reduction fund, aimed at helping people experiencing particular hardship. 

The final proposal is to remove the need for the online CTR claim form for most Universal Credit (UC) claimants.

In the vast majority of these cases, the person will already have told the Department of Work and Pensions (DWP) that they want to claim CTR, by stating it on their UC claim. 

The DWP provides us with the information we need about the claimant’s household, income and capital, and will have checked the details to guard against fraud. Removing the CTR claim form will make the process much simpler for the claimant. 

We’d still require a claim form for people not receiving Universal Credit, if they are working with a low income or claiming another benefit for example.

Increasing financial support

Councillor David Gibson, Joint Deputy Chair of the Policy & Resources Committee (Finance & Resources), said: “One of our key priorities is to address inequality, poverty and financial inclusion in the city. 

“The huge economic impact Covid-19 has had, particularly for residents on a low income, makes this area ever more urgent. 

“We’re keen to do more to increase the financial support available to residents through the Council Tax Reduction scheme, which has expanded to help 12% more households since March.

“Our aim is to continue to make the scheme more supportive in future years. 

“Since the government scrapped Council Tax Benefit in 2013 and placed the cost of supporting people with Council Tax bills on to councils, we have to strike a balance between the cost of the scheme with the council’s ever increasing budget pressures.

“Please do have a look at the detail of the proposed options and send us your feedback.”

Have your say

The decision on the final options will be made at the Full Council meeting in January 2021.

Any changes agreed to the scheme would come in on 1 April 2021.