19 January 2026 (12:02pm)
The group marked “Blue Monday” with a mixture of humour and hard reality: policy change arriving at speed, year-end pressures stacking up, and councils trying to keep services stable while funding assumptions shift under their feet. Malcolm Gardner chaired the session, with contributions from Naomi Armstrong, Kirsty Brooksmith, Nicki Duckworth, Michael Fisher, Robert Fox, Paul Howarth, Gareth Morgan, Julie Smethurst, Rachael Walker, Sean O’Sullivan, and others.
Two child limit: what changes, and what councils can actually do
Malcolm Gardner opened with the practical impact of the removal of the two-child limit from key benefits and how that interacts with CTR schemes that have duplicated the restriction. The timing was central: many councils are constrained by scheme change rules and cannot adjust quickly.
Rachael Walker described the problem councils now face. Some schemes will respond automatically through changes in applicable amounts, but others have hard coded restrictions which, in effect, keep the two-child limit alive locally. With consultation timetables already locked in, the immediate options are limited, and the political optics are becoming harder to defend.
Paul Howarth drew the distinction between scheme types. Default style schemes may see fewer issues because changes flow through nationally, but income banded schemes can recreate the restriction unless bands and tapers are reviewed.
Naomi Armstrong highlighted the risk of “unintended consequences”: UC increases do not always translate cleanly into improved outcomes once CTR tapers are applied, and households can see confusing shifts in liability. She stressed the mismatch between DWP change and the time councils need to consult properly.
Julie Smethurst noted her authority still applies the two child limit this year, and it is too late to consult on change for the next scheme year. Their short-term approach is to monitor the impact case by case, and revisit scheme design when time allows.
Gareth Morgan suggested councils can be more proactive by using modelling to identify households most likely to be affected, including interactions with the overall benefit cap, rather than waiting for contact from residents after bills change.
Michael Fisher commented that some schemes can absorb the change without major disruption, but he sympathised with councils where design constraints and limited discretionary funding leave very few levers.
Pension age changes, habitual residence, and “public funds”
Paul Howarth gave a short update on the annual amendment package, flagging changes that affect habitual residence and the concept of being treated as not in Great Britain. He noted this is relevant beyond pension age applicants.
Sean O’Sullivan questioned how this sits legally, given CTR is technically a reduction rather than a welfare benefit, and asked whether the position has been tested.
Paul Howarth responded that CTR is treated as a public fund in practical and regulatory terms, and councils have to apply the rules as drafted unless and until challenged successfully.
Gareth Morgan added a helpful comparison: general council tax discounts (such as single person discount) are not public funds, but CTR reductions are treated differently. Malcolm Gardner said he would look further into the question, noting it has not attracted much challenge to date.
Fair Funding Review: real world consequences
Malcolm Gardner invited reflections on Fair Funding and what it means for spending priorities.
Kirsty Brooksmith described the impact locally as severe, referencing a gap of around £34 million and the need to brief members on consequences. She said the council is seriously considering council tax increases in a way it has not previously.
Rachael Walker emphasised that council tax rises are regressive in any part of the country. She also described the risk created by late decisions on Exceptional Financial Support, with knock on impacts for scheme deadlines, billing readiness, and organisational planning. She noted that local government reorganisation can distort narratives around reserves and “ability to cope”.
Sean O’Sullivan argued for damping mechanisms that cap gains and losses, warning against destabilising shocks. He also challenged the “London equals wealthy” assumption, pointing to significant deprivation in many boroughs.
Julie Smethurst described her authority as a “winner” only in relative terms, noting the scale of demand pressures still exceeds funding movements; maximum council tax increases remain built into planning.
Paul Howarth questioned whether allocation metrics properly reflect deprivation and service needs across regions, reinforcing the importance of managed transitions but acknowledging councils need certainty to plan. Naomi Armstrong added that smaller authorities can be particularly exposed due to tighter budgets and fewer economies of scale.
Year-end readiness: business rates and systems risk
Malcolm Gardner asked what is driving year end pressure this time.
Naomi Armstrong said NNDR is the main flashpoint: changes are disrupting what used to be a predictable timetable, with teams re sequencing work and absorbing extra demand because supplier releases and data are not ready early enough.
Julie Smethurst reinforced this, describing ongoing modelling as difficult due to changes in relief eligibility and poor-quality data, particularly among smaller businesses. She argued that repeated short-term fixes have left the system fragile.
Michael Fisher recalled the last time small business rate relief drove large scale rebilling, warning that the same operational disruption can quickly return.
Sean O’Sullivan predicted more workload from definitional disputes, for example what qualifies as hospitality or a pub, and warned that expanding reliefs can mean repeated billing cycles.
Kirsty Brooksmith described an extreme operational situation: loss of access to DWP systems following a cyber incident, thousands of missing files since late November, and heightened risk that billing goes out wrong because councils rely on DWP notifications to process changes. She also noted backlogs and manual workarounds creating strain across the service.
Robert Fox linked current volatility to the long tail of Covid reliefs, which changed expectations and made business rates a recurring crisis topic. He noted the growing need for clearer communication with businesses, including more senior involvement, and referenced organisational cost savings such as restructuring management layers.
Gareth Morgan contrasted Wales, where a more standardised approach reduces local variation and can make administration simpler than in England.
NHS pilots, waiting lists, and “economic inactivity”
Malcolm Gardner briefly raised NHS initiatives aimed at reducing waiting lists and supporting people back into work, asking whether the group had seen impacts locally.
Paul Howarth noted he had not seen the specific pilot but mentioned reports of waiting lists dropping during resident doctors’ strike action, possibly linked to senior clinicians making quicker decisions.
Sean O’Sullivan shared a recent positive experience of being seen quickly, including faster access to physiotherapy compared with historic waits.
Rachael Walker cautioned against treating “economic inactivity” as a simple outcome measure, linking long term sickness, waiting lists, and poverty, and arguing that solutions need to address root causes as well as operational throughput.
Banking data and early warning signs
Closing the session, Malcolm Gardner flagged an Institute for Fiscal Studies paper using banking data to understand what households stop paying first when finances tighten. He noted the relevance for local government: council tax often becomes one of the early missed payments, offering a potential prompt for earlier engagement and support.
Please note that the handout contains additional slides covering other items of interest in the news and job adverts, which are provided in partnership with Business Smart Solutions (https://www.businesssmartsolutions.co.uk/).