Agenda item

Purpose of Report

To propose options for consultation on a 2025/26 Council Tax Support scheme, and an accompanying Exceptional Hardship Payments scheme.

Decision

(1)          That the following options for a 2025/26 Council Tax Support scheme be moved forward for public consultation and scrutiny:

·       ‘No change’ scheme, and/or

·       Banded scheme for all working age customers

(2)          That an Exceptional Hardship Fund of £25,000 for 2025/26 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 all working age customers.

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 30 June 2024, there were 8,278 residents claiming Council Tax Support in the City of Lincoln. 2,546 were pensioners who were protected under the legislation and received Council Tax Support as prescribed by the Government (broadly similar to the level of Council Tax Benefit). It was the 5,732working age (including those classified as ‘vulnerable’ for CTS purposes) claimants where a local scheme could be determined 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 customers. The definition of vulnerable working-age customers was clarified within the officer’s report.

The current split of the 5,732 (30 June 2024) working age CTS recipients was as follows:

• Working age (vulnerable): 3,357;
• Working age (not vulnerable): 2,375.

The current, 2024/25 scheme contained 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.

The Council was actively involved in benchmarking with other local authorities, the latest exercise in relation to Local Taxation provided information regarding City of Lincoln Council’s CTS scheme 2023/24 and its impacts, as detailed at paragraph 4.2 of the officer’s report

In this Council’s Medium Term Financial Strategy (MTFS), the budgeted cost of the 2025/26 CTS scheme was £1.304m (i.e. City of Lincoln Council’s share 14.3%, - (with the estimated total scheme cost of c£9.369m dependent on increases in the main preceptors levels of Council Tax).

Changes to the CTS scheme may be made for both non-vulnerable and vulnerable working age customers, however pension age residents were ‘protected’ and the ‘default’ government scheme effectively applied. If the Council wished to continue protecting vulnerable working age CTS recipients, then any changes to the CTS scheme would only apply to 2,375 customers or 28.69% of the caseload.

Based on the current core elements of the existing scheme, a caseload decrease of 1%, 0% change, and an increase of 5% had been modelled, along with Council Tax increases of 1.9% and 2.9%. These were summarised in Appendix 1 of the officer’s report, giving an indication of the potential cost and savings to City of Lincoln Council. Also included was the potential value for non-collection, based on the collection figure currently included in the MTFS of 98.75%, in light of current collection rates, this may be reviewed as part of the refresh of the MTFS.

As a billing authority the Council could decide whether or not to amend core elements of its scheme each year. Proposed options for consultation were included in Appendix 1 of the officers report.

For 2025/26, an option was put forward for consideration to make a fundamental change to the way CTS was calculated for working age customers, as detailed at paragraph 5.6 of the officers report

This could be a more streamlined, efficient, and easier to understand scheme based on specified income bands and percentage awards.

Another key factor to be considered was to ensure our software supplier, NEC, could accommodate the changes being proposed.  NEC had already indicated they would need to have known of any prospective software changes for a 2025/26 CTS scheme, by the end of June 2024. NEC had already developed a potential banded scheme as part of City of Lincoln’s 2024/25 scheme options, although this was delivered too late to be considered for adopting for 2024/25 – and as at the time of writing this report, continued to be tested by officers.

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 had 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 Council. As at the end of June 2024, a total of £1,292.99 EHP had been awarded for 2024/25. It was proposed that an EHP budget of £25,000 be in place for 2025/26. If a banded scheme was adopted, EHP could potentially help assist in mitigating the transition to cases where there was a reduced level of award.