Agenda item

Purpose of Report

To propose options for consultation on a 2023/24 Council Tax Support scheme, and an accompanying Exceptional Hardship Payments scheme.

Decision

(1)            That the potential options for a Council Tax Support scheme for 2023/24, as detailed in Section 5 of the report to the Executive, be approved for public consultation and scrutiny.

(2)            That a ‘no change’ scheme for 2023/24 be agreed as the preferred option for public consultation and scrutiny.

(3)            That further detailed modelling of a Universal Credit banded scheme with a view to adopting such a scheme from 2024/25 be undertaken.

(4)            That an Exceptional Hardship Fund of £25,000 for 2023/24 be approved.

Alternative Options Considered and Rejected

As set out in Section 5 of the report to the Executive, two options for a Council Tax Support Scheme would be subject to public consultation and scrutiny:

• Option 1: No change to the current scheme.
• Option 2: ‘Introduction of a ‘banded scheme’ for Universal Credit based on earnings income

There would be public consultation on the Exceptional Hardship Payments Scheme, as detailed in paragraph 5.8 of the report. 

The outcome of the public consultation would be considered by the Executive on 3 January 2023 and the proposed 2023/24 scheme would require a decision by Council by 31 January 2023.

Reasons for the Decision

The Council Tax Support Scheme (CTS), which replaced the national council tax benefit system on 1 April 2014, may be determined by each billing authority, after consultation with precepting authorities, key stakeholders and residents.

As at 24 August 2022, there were 8,441 residents claiming CTS in Lincoln, of whom 2,636 were pensioners and were protected under the CTS. There was discretion to determine the level of support to the remaining 5,805 working age claimants (including those classified as ‘vulnerable’ for CTS purposes) in a local scheme which could change the level of support provided.

Unless a decision by the Council was made to apply scheme changes to vulnerable working-age customers, the localised CTS scheme would historically only be applied to non-vulnerable working age.

The current, 2022/23 scheme had the following restrictions for working age customers:

• Capital limit £6,000;
• Minimum entitlement of £2 per week;
• Property banding capped at Band B, so that a customer residing in a Band C and above property, would only have their CTS calculated on Band B liability;
• Backdating restricted to one month; and
• Temporary absence from home in line with Housing Benefit regulations.

Modelling for each of the proposed Council Tax Support Scheme options was based on assumptions such as upgrading of benefit figures; Council Tax increases of between 1.9% and 2.5%; no increase in caseload for 2023/24, also a 5% caseload increase of no more than 5%; and a collection rate of 98.75%.

Another key factor to be considered was to ensure our software supplier, NEC, was able to accommodate the changes being proposed.  Normally, NEC would need to know about any potential significant changes required to the software system by the end of September 2022 preceding the new year a CTS scheme was being proposed – i.e. by the end of September 2022, for the 2023/24 scheme.

Exceptional Hardship Payments (EHP) assisted persons who had applied for CTS and faced ‘exceptional hardship’ – it was similar to the Discretionary Housing Payment scheme (DHP) for Housing Benefit shortfalls.  EHP provided a further financial contribution where an applicant was in receipt of CTS but the level of support being paid by the Council did not meet their full Council Tax liability.  The Council was required to provide financial assistance to the most vulnerable residents, who had been disproportionately affected by the changes made in 2023 to the CTS Scheme. 

Since April 2013, the Council has agreed to introduce an EHP scheme each year, in order to provide a safety net for customers, in receipt of Council Tax Support who were experiencing difficulty paying their Council Tax.  Exceptional Hardship fell within Section 13A(1) of the Local Government Finance Act 1992 and formed part of the CTS Scheme.

The cost of EHP awards was borne solely by City of Lincoln.  As at 26 August 2022, a total of £11,551.44 EHP had been awarded for 2022/23.  It was proposed that an EHP budget of £25,000 be in place for 2022/23.

The EHP scheme could be particularly vital if the option proposed in paragraph 5.6 of the officers report of a ‘banded scheme’ for Universal Credit based on earnings income’ was implemented – as this could potentially be used in appropriate circumstances to make payments to CTS recipients with reduced awards under the scheme resulting in exceptional hardship being suffered as a result.