Memorandum by Citizens Advice (CTB 6)
SUMMARY
— Council tax benefit (CTB) is
the critical factor in ensuring that council tax is fair and affordable
for people on low incomes. Low take-up of CTB undermines public
acceptance of council tax as a fair and reasonable means of paying
for local services. Reform is therefore urgently required.
— Citizens Advice agrees with
many of the recommendations made in the Lyons Review in relation
to CTB. In the short-term, a number of changes should be made
to make it easier for those eligible for assistance to receive
help in paying their council tax bill. Specifically:
— Council tax benefit should be rebranded
as a rebate rather than a benefit to help avoid the stigma associated
with claiming benefits which puts some people off receiving what
is rightfully theirs;
— Local authorities should be required
to take positive steps to identify who should be eligible for
CTB and local authority staff, particularly those working in council
tax arrears and enforcement, should have sufficient knowledge
of council tax benefit to identify possible entitlement and help
people make claims.
— Staff at the DWP's Pension Service
should also take proactive steps to identify CTB eligibility,
even where callers may not be eligible for Pension Credit;
— The process for claiming council
tax benefit should be simplified since the length of the CTB application
form and its complexity continues to deter many people from submitting
applications. For this to be effective reform of the CTB calculation
is also required, particularly in relation to tariff income and
non-dependent deductions.
— Over the longer-term, we would
be supportive of proactively delivering council tax rebates to
those who are entitled, thereby removing the need for the overly-complex
and off-putting benefit application process. This is likely to
be of particular benefit to pensioner householders whose income
is fairly stable. Such a change would, at a stroke, overcome the
problem of low take-up which currently bedevils CTB.
1 INTRODUCTION
1.1 Citizens Advice welcomes the opportunity
to submit written evidence to the Communities and Local Government
Committee Inquiry into council tax benefit (CTB).
1.2 Citizens Advice is the national co-ordinating
body for Citizens Advice Bureaux in England and Wales. We co-ordinate
the largest independent network of free advice centres in Europe,
providing advice from over 3,000 outlets, ranging from GPs' surgeries,
hospitals, community centres, county courts and magistrates courts.
Citizens Advice Bureaux (CABx) are rooted in almost every local
authority area in England.
1.3 The CAB service has two equal aims:
— to ensure that individuals do
not suffer through lack of knowledge of their rights and responsibilities
or of the services available to them, or through an inability
to express their needs effectively; and
— equally, to exercise a responsible
influence on the development of social policies and services,
both locally and nationally.
1.4 In 2005-6 the CAB service dealt with
over 5.2 million new enquiries. Of these enquiries:
— over 1.4 million were debt related,
with council tax debt accounting for 89,000 enquiries, and overpayments
of council tax benefit and housing benefit generating a further
15,000 enquiries; and
— 52,000 related to tax and of
these almost 17,000 related to council tax. Analysis of this data
reveals that the largest topics dealt with under council tax related
to discounts/reductions/exemptions (estimated 5,500 issues) and
payment disputes (3,000).
1.5 In addition, bureaux dealt with 166,000
enquiries about council tax benefit (an increase of 7,000 on the
previous year). Analysis of all types of benefit cases bureaux
dealt with shows:
— 54% of all Benefit issues relate
to determining clients' eligibility and entitlement;
— 8% involve form-filling and
checking;
— 6% involve appeals. Two out
of three of all Benefits Appeals advice issues involve disability
benefits; and
— 2% of all issues relate to poor
administration of the benefit (delays, lost forms, mistakes, etc).
1.6 Many of our clients are on low incomes
or benefits, or are disadvantaged in some way. For example, research
by MORI for Citizens Advice found that CAB users tend to be in
social grades DE and the unemployed, or living in social housing.
[15]
2. THE CASE
FOR REBRANDING
CTB AS A
REBATE
2.1 The Lyons Report points out in the starkest
terms that while CTB has the potential to alleviate the burden
of council tax for low income households, currently it is failing
to achieve this. This is because of the low level of take-up of
CTB, with just 62-68% of those eligible actually receiving CTB.
Such disappointing levels of take-up mean that many of those on
the lowest incomes currently have to pay council tax bills which
can account for up to 8% of their net household income. [16]This
can cause severe financial hardship:
A Central London CAB Westminster 62874604 reported
that their client, a 59 year old woman who has been a widow for
two years, was in receipt of incapacity benefit and full housing
benefit but was still paying council tax. The client lives on
a meagre income and is struggling to make ends meet as she has
to pay rent arrears. Payment of council tax has meant that her
income has been significantly reduced. When the client's husband
died, she continued to pay council tax and did not know she could
claim CTB.
2.2 Given these circumstances, we are supportive
of proposals to rebrand CTB as a rebate as part of a package of
measures to boost take-up. Research by Citizens Advice on benefit
take-up campaigns for older people found that one of the deterrents
in claiming benefits—particularly for elderly people—was
the stigma associated with claiming means-tested benefits. [17]
2.3 Rebranding CTB in this way would also
seem to bring the terminology employed into line with other reductions
offered to certain groups in paying council tax, such as the single
person discount.
2.4 The rebranding exercise should not be
seen simply as a cosmetic change but one that might have important
positive consequences for take-up. We note with interest that
take-up of the rebate available against the old domestic rates
reached 75%, with pensioners having take-up rates of approximately
90%[18]—a
striking difference to the current situation where take-up of
CTB among pensioner households accounts for just 53-58% of those
who are eligible.
2.5 To maximise the effectiveness of any
rebranding exercise, the change should not be carried out in isolation
but should form part of a package of measures to achieve a significant
boost in the number of people claiming CTB, such as improvements
in local and central government activities in relation to take-up
and simplification of the process for claiming council tax benefit.
We discuss these in more detail below.
3. TAKE-UP—ROLE
OF LOCAL
AUTHORITIES
3.1 Positive and sustained encouragement
of CTB take-up by local authorities can have a positive impact
on the number of people in receipt of CTB. Good practice exists,
such as that undertaken by Halton Borough Council and Milton Keynes
Council. In addition, a number of local authorities have pro-actively
funded CAB initiatives to encourage the take-up of benefits, and
this has proved very successful. As well as ensuring that council
tax liabilities reflect ability to pay, clients often obtain other
benefits to which they are entitled. Research by Citizens Advice
on benefit take-up campaigns for older people found that: [19]
— Deterrents to elderly people
claiming benefits include the isolation from mainstream sources
of information, the stigma associated with means-tested benefits
and the complexity of forms and the length of procedures.
— Face-to-face contact is essential
for this client group to overcome these deterrents.
— Targeting generates a higher
proportion of successful awards. For this to be successful, advisers
need to go to places where elderly people live or gather regularly
such as pensioner groups, sheltered housing or surgeries.
— It is not sufficient for the
take-up campaign to focus solely on identifying unclaimed benefits
and helping people complete claim forms. Older people need ongoing
support and advocacy when claiming to ensure they receive their
benefit entitlement and can access services.
— Co-operation with a partner
agency or agencies was vital to the success of the campaign.
— The average benefit gain per
£1 spent was £85.
3.2 However, although good practice exists,
it is patchy and examples of poor practice continue to be reported
by bureaux on a regular basis:
A CAB in Lancashire reported that a man had got
into debt when he had to give up work due to ill-health four years
earlier. He went along to the DWP office to find out what benefits
he could claim, and was told that as his wife was working more
than 16 hours per week, he was not entitled to anything, even
though he should have been entitled to some council tax benefit
and possibly disability living allowance. The client fell behind
with his council tax payments and eventually the council issued
a means-enquiry summons. At the hearing, the magistrate remitted
part of the debt, as he felt that the client should have been
entitled to council tax benefit for the period the debt covered.
However, the local authority did not follow up on this to make
sure that the client claimed council tax benefit.
A CAB in North London reported that their client,
a single person with two dependent children living in temporary
assured short-hold property, submitted a claim for council tax
benefit and housing benefit in September 2006. The client had
still not heard anything from the council about their decision
by the end of January 2007, despite submitting all the documentation
requested of her. The client informed the CAB adviser that she
has now received her yearly council tax bill, which states that
she has to pay an outstanding balance of £470. Since the
client had received no communication from the council about her
claim she was unsure whether she has been awarded CTB.
3.3 Citizens Advice considers that local
authorities should be required to take positive steps to identify
who should be eligible for Council Tax Benefit. As part of this,
local authority staff, particularly those working in council tax
arrears and enforcement, should have sufficient knowledge of council
tax benefit to proactively identify possible entitlement and help
people make claims. One effective way of boosting take-up levels
for CTB would be through the funding of long-term take-up campaigns.
4. TAKE-UP—ROLE
OF DWP
4.1 Steps that have been taken by the Pension
Service to simplify the claims process for CTB, such as pre-populating
CTB claim forms for pension credit claimants, are welcome. However,
the DWP, and particularly the Pension Service, needs to do more
to boost take-up of CTB.
4.2 Evidence from CABx shows the impact
of lack of information about potential eligibility for other benefits
on pension credit entitlement letters which are sent to customers.
In some cases Pension Service staff visiting pensioners to help
them make a claim for pension credit do not seem able to identify
possible claims for CTB:
A Dorset CAB reported that they visited an elderly
disabled woman at home to advise her on entitlement to attendance
allowance and to help her complete the form. In the course of
discussion the adviser discovered that the client and her husband
received guarantee pension credit and were therefore entitled
to council tax benefit. The client told the CAB that at the time
pension credit was launched an officer from the DWP called at
the client's home to help with completion of pension credit application
forms. However the officer did not tell her that her and her husband
would be entitled to council tax benefit. The CAB helped her to
apply for the benefit and request backdating.
A CAB in South London reported that a client
in receipt of savings pension credit successfully claimed attendance
allowance. This entitled her to guarantee pension credit. The
award letter the client received from the Pensions Service did
not include any information about her possible entitlement to
council tax benefit. The CAB helped the client successfully apply
for CTB to be backdated to the date she became entitled to guarantee
pension credit.
4.3 Citizens Advice recommends that the
Pension Service ensures that letters of entitlement to guarantee
pension credit include information about entitlement to council
tax benefit, and that all staff visiting claimants or helping
them complete claim forms for pension credit should have sufficient
knowledge of CTB to identify potential claims.
4.4 Citizens Advice Bureaux also report
many cases which reveal the confusion caused by the treatment
of income from the savings credit element of pension credit, and
the negative impact that this can have on eligibility for CTB.
Ultimately, the knock-on effect is that even where clients are
found to be eligible for savings credit they can decide not to
proceed with their application in order to avoid the hassle of
claiming and dealing with changes to their existing award of CTB
(and housing benefit).
A CAB in the Midlands conducted a benefit check
for a client which showed that they could claim the savings credit
element of pension credit but that this would mean that they would
lose some council tax benefit and housing benefit. Despite the
fact that the client would have been £4 per week better off
overall, he did not wish to proceed with the claim as he did not
consider that completing the claim form and having to start to
organise the payment of small amounts of rent and council tax
was not worth the effort.
A CAB in Greater Manchester dealt with a case
in which their clients, a couple both aged 85 with the husband
suffering from a terminal illness, although eligible for savings
credit had decided not to apply. The clients were currently receiving
£41.02 housing benefit and £13.88 council tax benefit
per week. Although the clients were entitled to claim savings
credit worth approximately £9 per week, this claim would
reduce the amount of HB and CTB they received, so that they would
only be about £3 per week better off. The clients decided
not to claim the savings credit because of the impact on their
HB/CTB, since it will be too much trouble to deal with a new claim
and to changes to their existing award of HB/CTB.
4.5 The process for notifying people about
changes in eligibility to pension credit (and hence to CTB and
HB) can also be far from straightforward, leading some clients
to receive overpayments through no fault of their own.
A Surrey CAB reported a case in which their client
had been receiving incapacity benefit topped up by pension credit.
When the client turned 65 he received notification of the payment
of his state retirement pension plus his revised pension credit
notification. The client took all this paperwork to his local
authority to show how his income had changed so they could calculate
his CTB and HB eligibility. The revised pension credit notification
gave the amount to be paid from age 65 but provided no breakdown
of the calculation. The local authority responded by sending the
client four different letters, each with different calculations,
with the last letter seeking repayment of overpayments. The client
made several phone calls to both the local authority and the Pension
Service and was told that while in receipt of pension credit he
would get full HB/CTB. The CAB adviser finally discovered that
the client's revised entitlement to pension credit was for the
savings credit only as the client's state retirement pension exceeded
the pension credit guarantee applicable amount. The Pension Service
agreed that the revised notification did not specify this or provide
a breakdown from which the local authority could deduce this significant
change. This had led to the client receiving overpayments of CTB.
The client currently has to appeal the recoverability of these
CTB and HB overpayments.
4.6 Citizens Advice recommends that there
should be a review of the way the pension credit savings credit
is treated in the calculation of CTB/HB. Ideally the system should
be clear, fair and provide strong incentives to encourage people
to claim what they are entitled to. More immediately, we recommend
that the Pension Service review their awards letters so that they
outline not just how much income someone is to receive but what
this figure is made up of.
4.7 In addition, it would seem eminently
sensible if the Pension Service were able to deal with claims
for CTB eligibility, even where callers were not entitled to Pension
Credit.
4.8 Over the longer-term, efforts to improve
the processing of CTB claims would be assisted greatly by data
sharing among agencies including DWP, Her Majesty's Revenue and
Customs (HMRC) and local authorities, which would mean that local
authorities were aware of the people in their area who were getting
means tested benefits. Such an innovation, which would obviously
require appropriate safeguards to be built in about the use of
personal data, would pave the way for achieving a step-change
in the take-up of council tax benefit since, rather than relying
on eligible pensioners claiming CTB, the process would be automated
with CTB paid to people automatically. In this way, council tax
payers would only receive a bill for what they actually owe and
would not have to claim money off or money back.
5. SIMPLIFICATION
OF THE
PROCESS FOR
CLAIMING COUNCIL
TAX BENEFIT
5.1 Citizens Advice considers that the process
for claiming council tax benefit needs to be simplified. CAB evidence
shows that some people feel that the length and level of detail
needed to complete a claim form can dissuade them from making
a claim:
A CAB in Cumbria reported that a couple with
children on a low income were put off claiming council tax benefit
due to the length of the claim form and the level of the detail
requested. They were particularly concerned about the question
asking for details of their children's savings, which they felt
were irrelevant to the claim and designed to deter people from
claiming.
An elderly woman with arthritis sought help from
a CAB in Kent Tonbridge with filling in a state pension form as
she found it difficult to write, and to find out if she was entitled
to pension credit. When the CAB asked if she received any other
benefits, the client said that she and her husband had given up
on claiming council tax benefit because the form was too long
and complicated.
5.2 Greater clarity is also required in
relation to the guidance given to people considering applying
for CTB about their potential eligibility. At present, the application
form is not clear enough and this deters people from submitting
applications.
A CAB in Greater Manchester reported a case in
which they assisted their client to submit a claim for carers
allowance and pension credit. While carrying out a benefit check
the adviser noticed that the client would also be eligible for
full council tax benefit. However, the client considered that
he was unable to claim this as he has more than £16,000 in
savings, and the application form states (on page 10 section 4)
"if you have £16,000 or more you will not qualify".
The form fails to make it clear that people who receive guaranteed
pension credit will qualify no matter what their savings are.
5.3 However, in order to make the claiming
process more effective, it is not enough to look at simplifying
the claim form or the process of claiming. Citizens Advice considers
that reform of the calculation of council tax benefit is required,
particularly in relation to capital limits, tariff income and
non-dependent deductions. We examine each of these issues in turn:
6. CAPITAL LIMITS
AND TARIFF
INCOME
6.1 Citizens Advice is sympathetic to the
recommendation in the Lyons Report that the Government should
increase the savings limits on council tax rebate eligibility
to £50,000 for pensioners. While Citizens Advice does not
have a view as to what the capital limit should be for CTB, the
current benefits system, which has different capital limits for
certain benefits, throws up anomalies in entitlement which can
cause confusion and resentment.
A CAB in Hertfordshire reported a case in which
their client's father-in-law, who is 86 years old and lives alone
in council property, is not eligible for CTB because he has an
income of £122 a week from state and private pensions and
also has savings of £20,000. The client's father-in-law has
to pay full rent and council tax as he is only eligible for the
savings element of pension credit, not the guarantee PC. This
means he is caught by £16,000 capital limit for CTB. If his
pensions were £3 a week less, he would qualify for guarantee
pension credit and have all his council tax covered by benefits,
and so would be over £100 a week better off.
A CAB in the Midlands reported a case in which
their client, a single pensioner, had a weekly income of just
£119.05 which meant that she was eligible for the savings
element of the pension credit. However, because she had £16,500
in savings she was unable to claim CTB or housing benefit. The
adviser calculated that if the client's savings were below £16,000
the client would have been entitled to CTB and HB and her weekly
income would have increased to £174.24.
6.2 This perplexing state of affairs has
been summed up by Help the Aged in their submission the Lyons
inquiry into local government where they state: "You are
left with the bizarre anomaly that someone could be claiming guarantee
credit with £40,000 of savings in the bank and therefore
be passported to full council tax benefit. If on the other hand
they have £16,100 savings but only receive savings credit
they will receive no help with council tax at all." [20]
6.3 The impact of making a change to the
capital limits was quantified in the Lyons Report, which concluded
that "raising the upper savings limit to £50,000 could
have a significant impact for many pensioner households whose
savings currently make them ineligible for CTB, who would gain
rebates of around £10 per week on average. Around 370,000
pensioner households would be brought into eligibility for CTB
by such a change, including 135,000 of the poorest pensioner households."
[21]
6.4 Citizens Advice would therefore support
raising the upper capital limit to £50,000 for pensioners.
However, Citizens Advice also considers that it is also vital
to examine two additional issues:
— Tariff income from capital between
£6,000 and £16,000; and
— Non-dependent deductions.
7. TARIFF INCOME
FROM CAPITAL
BETWEEN £6,000 AND
£16,000
7.1 The rules for CTB (and other means-tested
benefits) state that every £250 of savings over the £6,000
is assumed to produce a weekly income of £1. These rates
of return are unrealistic. Currently, once a person has £6,000
in capital, they are assumed to be receiving a rate of return
of 10.4%, even though the current base rate is 5.5%. For example:
A CAB in Sussex reported that an 87 year old
widow sought advice about entitlement to council tax benefit.
She had £16,000 in savings, and had a pension of £115
per week. The client would have been entitled to council tax benefit
if it had not been for the £40 per week tariff income from
her savings.
7.2 In contrast, the tax credits system
takes into account actual income from savings and investments.
Citizens Advice considers that this is a much fairer system, which
should be adopted by the benefits system.
8. NON-DEPENDENT
DEDUCTIONS
8.1 If a person lives with other people,
an amount may be deducted from their council tax benefit for any
non-dependant living with her/him. This deduction is made on the
assumption that the non-dependant should make a contribution to
the client's council tax of at least the amount of the deduction.
8.2 The rules are complex, requiring the
local authority to collect a lot of information about the circumstances
and income of the non-dependent. For example, there are four rates
of non-dependant deduction, but a non-dependant deduction will
not be made for certain categories of people (eg someone who lives
with a client to look after her/him or her/his partner and who
is employed by a voluntary body which charges the client for this
service) or for people disregarded for council tax discount purposes.
When a deduction is made, the amount depends on:
— whether the non-dependant works;
— the hours the non-dependant
works; and
— the amount of the non-dependant's
gross income.
8.3 This information may be difficult for
the CTB claimant to provide if the non-dependent is uncooperative.
For example:
A CAB in South-East Wales reported that a woman
with severe mental health problems sought advice about a liability
order summons for council tax arrears, even though she was on
income support and should receive maximum CTB. It transpired that
the council had discovered that her adult son and daughter were
living with her and had imposed non-dependent deductions. The
client could not persuade her son and daughter to reveal their
income or pay a contribution to household expenses.
A CAB in Buckinghamshire reported a case in which
the client's son, aged 40, had moved back to his mother's house
after a relationship breakdown. The client's son had told her
that she did not need to advise the council, so she did nothing
for over 2 years. This led to the accumulation of £1,500
in rent arrears and £900 in council tax arrears due to overpayment
of housing and council tax benefit. The client is struggling to
meet the council tax payments for the current year and for the
arrears as she is living on a very low income, made up of income
support of £51.65 per week plus £7.50 per week maintenance.
The council would not accept the payment of £3 per week towards
the client's council tax arrears as they know the son's income
and advise that he should be making the payments as per the non-dependant
deduction rate. However the client's son has refused to do so,
and so the client has ended up agreeing to payments of £10
per week to cover the arrears plus £30 per month for current
council tax liability, causing her real financial hardship.
8.4 Where there is no information on the
circumstances of the non-dependent, the maximum level of deduction
is imposed. From 1 April 2007 the maximum level of deduction imposed
is £6.95 per week. Any failure to act on a change of circumstances,
or lost information can therefore result in council tax arrears:
A CAB in Greater Manchester reported that a client
had received a demand for council tax arrears. She could not understand
why as she got full housing and council tax benefit. When the
CAB contacted the council tax office, it transpired that the client's
adult son had moved in with her, but she had not supplied them
with information about his income, so they had applied the maximum
deduction to his benefit.
A CAB in Northumberland reported that a lone
parent who worked part time found it difficult to cope with bureaucracy
and benefit applications. Her rent and council tax arrears problems
appear to have begun when her daughter left school and her benefit
entitlement was therefore reduced. She failed to communicate her
daughter's earnings to the local authority so housing benefit
overpayment resulted. Although her daughter had since moved out,
her son stopped working and refused to sign on for jobseekers
allowance. This affected the client's housing/council tax benefit
as they required proof of his income and he refused to cooperate.
During this time she was feeding and keeping him on her meagre
income.
8.5 Citizens Advice considers that the rules
for non-dependent deductions from council tax benefit should be
reformed. Options for change might range from removing the right
to make non-dependent deductions to reducing the number of rates
of non-dependant deduction so there is a single rate and setting
this at a more affordable maximum level, such as £2 or £3.
9. DEFRA CONSULTATION
ON THE
INCENTIVES FOR
RECYCLING BY
HOUSEHOLDS
9.1 In May 2007 the Department for Environment,
Food and Rural Affairs (Defra) published a consultation document
entitled Incentives for Recycling for households. The consultation
seeks views on government proposals to give local authorities
the power to introduce a scheme to incentivise householders to
recycle and to reduce waste.
9.2 While we welcome efforts to promote
recycling and more efficient use of resources, we are concerned
that proposals which seek to reward "good" behaviour
(and, by implication, punish "bad" behaviour) may have
a negative impact on people in receipt of CTB, who may be incentivised
through reductions in their CTB payments.
9.3 The consultation states that "authorities
will be required to design schemes to avoid disadvantaging certain
groups. Those that could be covered include householders receiving
Council Tax benefit".[22]
Citizens Advice considers that it is essential for this to be
the case. Since decisions on the mitigation of distributional
impacts will be devolved to local authorities, some form of compliance
monitoring will also be required to make sure that CTB recipients
do not disproportionately lose out under measures designed to
boost recycling. It is also essential for Defra to consider how
charging extra for refuse collection will fit with the council
tax benefit system. It is not clear from Defra's consultation
paper whether this is on their agenda.
June 2007
15 Financial Overcommitment, research study conducted
for Citizens Advice by MORI, July 2003. Back
16
Lyons Inquiry into Local Government-Final Report, p 250. Back
17
CAB campaigns for benefit take up among older people, Citizens
Advice, 2002. Back
18
Lyons Inquiry into Local Government-Final Report, p 249. Back
19
CAB campaigns for benefit take up among older people, Citizens
Advice, 2002. Back
20
Submission to Lyons Inquiry into local government, Help the Aged,
March 2006. Back
21
Lyons Inquiry into Local Government-Final Report, p 257. Back
22
Consultation on the Incentives for Recycling by Households, defra,
May 2007, p 21. Back
|
