Consideration was given to a report of the Director of Finance which presented to Cabinet the proposed Council Tax Reduction Scheme for 2023/24 prior to its consideration by full Council on 1 March 2023.
There is a 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 places a requirement 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 2023/24 scheme must be agreed by full Council in line with budget setting and no later than 10 March 2023. For Oldham, this required the Council to agree a revised 2023/24 scheme at the 1 March 2023 Council meeting. Any proposed change must be subject to prior consultation with the major preceptors (for Oldham this is the Greater Manchester Combined Authority), and with the public.
The scheme for those of pensionable age was set by the Government and cannot be changed.
A major consultation exercise has 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 was proposed.
In this regard, the proposal that the CTR scheme for 2023/24 remained the same as that operating in 2022/23 was presented to the Policy Overview and Scrutiny Committee on 26 January 2023 as part of the suite of documents that presented the proposed revenue, capital and Housing Revenue Account budgets for 2023/24. After scrutinising the proposal, the Select
Committee was content to accept the proposed approach to the 2023/24 CTR scheme and commend this to Cabinet.
In taking this decision, the Select Committee was aware that the Council has provided further relief to CTR claimants via the Household Support Fund, its response to the Cost of Living Crisis, together with other initiatives funded from Council resources. In addition, announced within the Provisional Local Government Finance Settlement on 19 December 2022 was a new Council Tax Support Fund of £100m nationally for 2023/24. The Government expected Local Authorities to use the majority of their funding allocations to reduce bills for current working age and pension age Local Council Tax Support (LCTS) claimants by up to £25. Councils can use their remaining allocation as they see fit to support vulnerable households with Council Tax bills and a local scheme would be prepared to ensure the maximum benefit to Oldham residents. On 23 December 2022 it was announced that Oldham’s allocation for this ringfenced grant is £0.573m.
Another important factor when considering a change to the CTR scheme was that the full roll out of Universal Credit (UC) was not yet completed and this added further uncertainty when assessing the likely impact of changes to CTR relief.
The Government had recently delayed the full UC roll out to 2028, but as Oldham was a pilot Authority for the scheme, the movement to the new regime within the borough was more advanced than many other areas.
Options considered in this report were leaving the scheme unchanged, increasing the maximum relief by 2.5% and reducing maximum relief by 2.5%. A 2.5% change in the relief impacts the overall Council tax collected by some £0.356m but had a marginal impact upon CTR claimants (increasing/reducing the benefit per resident by £0.68 per week).
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 Cabinet proposes that Council maintains the current CTR scheme during 2023/24. This would provide continuity about entitlement to those residents on the lowest incomes and allow time for the impact of the roll out of UC to become clearer.
Options/alternatives considered
Option 1 - Maintain the current 85% of a Band A maximum schemeThe current scheme limits the maximum CTR award to 85% of Council Tax for a Band A property. The scheme was understood and established in Oldham. This scheme required a minimum payment towards Council Tax for all those of working age. Oldham’s scheme requires a minimum payment of 15% of a Band A Council Tax charge. The payments made by eligible households in properties from Bands B to H are therefore reduced by a maximum of £1,202.99 (the difference between the Band A charge and the minimum payment).
Option 2 -Increase the maximum support to 87.5% of a Band A Rate of Council Tax At current levels of CTR claimants, increasing the maximum discount by 2.5% to 87.5% would reduce the Council Tax collected by approximately £0.356m (of which the Council’s share would be £0.285m). This would be on top of the reduction identified in the report due to the lowered Council’s Tax Base. However, as identified above, the CTR scheme is demand led and the financial impact would be much higher if the number of claimants should increase significantly.
Option 3 - Reducing the maximum support to 82.5% of a Band A Rate of Council Tax Increasing the Council Tax charge by reducing the support available for those in receipt of Council Tax Reduction had been a common approach taken by Local Authorities since 2013. Many of those with high minimum payments also have cut CTR in other ways e.g. removing earnings disregards. The Council may wish to reduce the level of maximum support offered to counteract any rising costs of the scheme as a result of increases in caseload.
For Oldham, based on the 2022/23 position, Council Tax income would potentially increase in 2023/24 by £0.356m for a 2.5% reduction in Council Tax support assuming a collection rate of 80%. Oldham’s share of this income would be £0.240m, once the Greater Manchester Combined Authority (GMCA) has received its share for the Mayoral Police and Crime Commissioner precept and Mayoral General Services precept including Fire Services.
It was important to note than an increase in minimum payments can impact collection levels and result in Council Tax becoming a more regressive tax for residents in receipt of low incomes than for those on higher incomes. An increase in Council Tax for those on low incomes at a time when the cost of living is increasing will have a detrimental impact on the local economy and the availability of jobs.
RESOLVED – That Cabinet approved and commended to Council the proposal to keep the Council Tax Reduction Scheme unchanged in 2023/24.