Agenda item

Council Tax Reduction Scheme 2024/25

To present to Cabinet the proposed Council Tax Reduction Scheme for 2024/25 prior to formal approval by full Council on 13th December 2023.


The Cabinet considered a report of the Director of Finance that presented members the proposed Council Tax Reduction Scheme for 2023/24 prior to formal approval by full Council.


There was a legal requirement to have a local Council Tax Reduction (CTR) scheme to support residents of working age on a low income who qualify for assistance in paying Council Tax. The Local Government Finance Act 2012 requires that each year a billing authority must consider whether to revise its Council Tax Reduction scheme or to replace it with another scheme. Any change to the 2024/25 scheme must be agreed by full Council in line with budget setting arrangements and by no later than 10th March 2024. Any proposed change must be subject to prior consultation with major preceptors (for Oldham this is the Greater Manchester Combined Authority on behalf of the Mayor of Greater Manchester and the Greater Manchester Police and Crime Commissioner) and with the public.


The scheme for those of pensionable age was set by the Government and could not be changed. CTR is a demand led discount scheme so the greater the demand, the higher the impact on Council resources. If the number of CTR claimants increased, it impacted the amount of Council Tax that could be collected by reducing the Council’s Council Tax Taxbase.


A major consultation exercise had not been undertaken regarding changes to the CTR scheme and the Greater Manchester Combined Authority has been provisionally advised that no change to the scheme is proposed. In this regard, the proposal was that the CTR scheme for 2024/25 remained the same as that operating in 2023/24 and therefore no consultation exercise was required.


The current CTR scheme provided a maximum reduction equivalent to 85% of the Council Tax charge for a Band A property and this has been unchanged since 2014/15.


In order to inform this proposal, the Council had undertaken some initial analysis regarding a change to the CTR scheme and the appropriateness of introducing an income banded scheme. An income banded scheme would mean that the level of CTR would be based on a claimant’s weekly household income assessed against pre-determined income bands. This meant that if a claimant’s household income varied but remains in the same band, the amount of support they get wouldn’t change. The amount of support only varied if their income changed and moved them into another income band. In this regard, a modelling exercise had been undertaken.


Firstly, leaving the 2023/24 scheme unchanged was modelled. Then two income banded scheme options were modelled (Model 1 and Model 2 as described at 2.14 of the report). The results of the exercise undertaken had been analysed and the results were presented at section 3 of the report. There was significant uncertainty around the extent that the transition of residents from legacy welfare benefits onto Universal Credit would have on a claimants’ household income and how this would then impact on the cost of an income banded scheme if it were to be introduced in 2024/25.


The Council could not currently accurately determine the level of income those transitioning residents will ultimately receive, which will be critical for an appropriate scheme design. In view of the continued uncertainty concerning Universal Credit and the marginal impact of any practical change to the CTR scheme at this stage, it was recommended that the Council maintains the current CTR scheme during 2024/25. This would provide continuity regarding entitlement to those residents on the lowest incomes and allow time for the impact of the roll out of Universal Credit to become clearer.


Alternatives/options considered:

Given the current economic climate, the financial position of the Authority and the uncertainty prevailing, the report outlined three options, which were presented for consideration.

a.    Option 1: Maintaining the present level of support i.e., limiting the level of support at 85% of Council Tax for a Band A property as the maximum amount available.

b.    Option 2: Introduce income banded scheme Model 1.

c.    Option 3: Introduce income banded scheme Model 2.



It is recommended that Cabinet approves the report and commends to Council the proposal contained therein to keep the Council Tax Reduction Scheme unchanged in 2024/25.

Supporting documents: