The Government didn’t make life easy for local authorities when council tax reduction schemes were introduced in 2013. Local authorities were not given much time to prepare the way, so it was unsurprising that most schemes followed the default regulations and ended up very similar to Council Tax Benefit. Local authorities in England were also left to deal with the funding cut of over £400m as part of the ‘welfare reforms’, though there were no ‘reforms’ involved in this case – it was simply a funding cut with absolutely no rationale.
But this was not all. Central Government didn’t give local authorities the flexibility to introduce radical or integrated council tax reduction schemes. Two points in particular prevented real innovation.
First, the Government didn’t trust local authorities to protect pensioners. So, the pensioner scheme was prescribed, and local authorities had to include it in their scheme. The prescribed scheme is essentially the old Council Tax Benefit under a new name. This means that if local authorities want to introduce radical changes to the working-age scheme, they have to run two separate schemes with additional administrative complexity and inefficiency.
Second, there was little opportunity to combine the new council tax reduction scheme with the existing council tax discounts such as the single person’s discount. Again, this would have made it easier to administer and avoid duplication. It is not surprising that applicants don’t receive all the support that they might because it is difficult to navigate the various processes. A more unified approach to reductions and discounts could, for example, be a particular benefit for disabled people.
Both of these issues were looked at in an independent review of council tax reductions undertaken in 2016. The reviewer recommended that there should be more flexibility given to local authorities in both the pensioner schemes and in the relationship with discounts. But the Government rejected both these recommendations and left local authorities to deal with the continuing complexity.
Local authorities also found that the way Universal Credit works, with earnings information captured in real time via HMRC, means that often awards of council tax reduction could change from month to month, and by small amounts. This could lead to new bills going out each month which is both confusing to the applicants and administratively costly for the authority. This has led local authorities to introduce ‘income-banded’ schemes which means that, if income / earnings go up and down by a small amount, the award of council tax reduction is not affected.
Council tax reduction schemes were introduced after DWP lost the battle with the then Department of Communities and Local Government to include Council Tax Benefit in Universal Credit. Almost ten years later, it is unlikely that this decision will be reversed. So local authorities will need to do their best to manage council tax reduction schemes for the foreseeable future. What should they do?
First, I think local authorities should continue to lobby for the Government to allow then to integrate schemes for working-age applicants and pensioners, and to combine council tax reduction schemes with discounts.
Second, for working-age applicants, local authorities should move towards discounts in council tax reduction schemes so that some applicants, for example disabled people, get an automatic reduction. Receipt of other benefits such as Personal Independence Payment or Universal Credit as a qualifying condition can act as ways of keeping costs manageable. Some authorities are starting to do this, getting rid of aspects of the old means test such as applicable amounts, and simplifying the more complex rules.
Third, and I think it is well worth local authorities introducing a plain English version of their scheme to at least make it easier for everyone to understand. Accessibility and transparency are increasingly important in public services, and council tax reduction schemes written as if they were regulations in legalise language do no-one any favours. The public finds them impenetrable and difficult to understand what the authority’s full scheme means. Staff and tribunals also find the schemes difficult to understand. A plain English version will at least enable everyone to know what the schemes are about and may even encourage more people to apply. It can also help highlight where further reforms should be made.
Council tax reduction schemes are something of a hybrid – not quite a benefit and not quite a discount. For now, local authorities will need to do their best to administer schemes effectively, albeit with one hand tied behind their backs. At Visionary Network, we are ready to help!