Memorandum by Age Concern England (CTB
8)
1. INTRODUCTION
1.1 Age Concern England (the National Council
on Ageing) brings together Age Concern organisations working at
a local level and 100 national bodies, including charities, professional
bodies and representational groups with an interest in older people
and ageing issues. Through our national information line, which
receives 170,000 telephone and postal enquiries a year, and the
information services offered by local Age Concern organisations,
we are in day to day contact with older people and their concerns.
1.2 Age Concern welcomes the opportunity
to give evidence to the Committee. As recognised by the Lyons
Inquiry council tax is a major concern for many older people.
We receive many complaints from older people who have to meet
rising bills from fixed incomes. Age Concern has long believed
that a property based tax is particularly unfair for older people
and would like to see major reform to the council tax system to
make it more closely related to ability to pay. However in the
context of the current system we agree with the Lyons Inquiry
that reform and more effective delivery of council tax benefit
is key to improving the system for the poorest households.
1.3 Our main points are:
— Take-up of Council Tax Benefit
is a major concern as up to 2.2 million pensioners are missing
out on the benefit that is due to them.
— We support the idea of rebranding
the benefit as a rebate but this is only likely to have a significant
impact on take-up if accompanied by other measures.
— It is important that the Government
continues to promote and encourage benefit take-up in conjunction
with other organisations.
— There is a strong case for moving
towards a system of automatic delivery of benefits. In the shorter-term
the Pension Service telephone service should take claims for Council
Tax Benefit and Housing Benefit even if someone is not claiming
Pension Credit.
— We recommend that the £16,000
capital limit is removed for older people applying for Council
Tax Benefit (and Housing Benefit) to produce a fairer system more
closely aligned with Pension Credit.
2. TAKE-UP
Take-up of Council Tax Benefit is a major concern
as up to 2.2 million pensioners are missing out on the benefit
that is due to them
2.1 Under the current system many older
people are not receiving the Council Tax Benefit they are entitled
to. The most recent DWP estimates indicate that between 1.8 and
2.2 million pensioner households (53% to 58% of those entitled)
are missing out on between £1 and 1.4 billion of Council
Tax Benefit each year.i On average they are missing out on around
£600 a year.
2.2 Benefit take-up is particularly low
among homeowners. Only around 40% of eligible homeowners are claiming
as compared to around 80% of private tenants and 90% of local
authority tenants. Although these figures are for all age groups
pensioners are likely to make up a substantial proportion of homeowners
missing out.
2.3 Research and the day to day experience
of organisations such as Age Concern working with older people
point to a range of inter-related reasons why older people do
not claim their entitlements. Barriers include: lack of basic
knowledge, lack of perceived entitlement, concerns about providing
personal information, the general process of claiming, and attitudes
toward claiming means-tested support.
3. THE CASE
FOR REBRANDING
We support the idea of rebranding the benefit
as a rebate but this is only likely to have a significant impact
on take-up if accompanied by other measures
3.1 The Lyons Inquiry recommends that Council
Tax Benefit is re-named as Council Tax Rebate. We agree that rebate
would be a better description and that most older people would
prefer this term over benefit. However we do not believe that
rebranding alone will have a significant impact on take-up.
3.2 The Lyons Inquiry noted that under the
domestic rates system in the 1970s take-up of rebates was higher
at around 90% for pensioners. However we suspect that the name
was not the only factor influencing take-up. For example since
that time homeownership has increased markedly (from 49% in 1971
to 69% in 2002) and as seen above take-up is particularly low
among homeowners. We also note that a higher proportion of pensioners
(over 80%) claim help with their rent although this is called
Housing Benefit.
3.3 While we support rebranding we believe
that it is not so much the name "benefit" that deters
older people from claiming but the associated complexities about
understanding and claiming means-tested support. A name change
would need to be accompanied by other measures to address some
of the barriers to take-up set out above in order to be effective.
4. ROLE AND
EFFECTIVENESS OF
GOVERNMENT IN
INCREASING TAKE-UP
It is important that the Government continues
to promote and encourage benefit take-up in conjunction with other
organisations
4.1 We welcome the Government's attempts
to proactively encourage older people to claim the benefits to
which they are entitled. In recent years central government messages
have mainly focussed on Pension Credit although more recently
Council Tax Benefit take-up has also been encouraged. Some local
authorities have been actively involved in promoting take-up for
many years.
4.2 The introduction of Pension Credit represented
the first major Department for Work and Pensions (DWP) initiative
around benefit take-up for older people. The Pension Service has
carried out national advertising, sent personalised letters to
all pensioners, and the local Pension Service has telephoned and
visited many people who appeared to be eligible. It has also worked
in partnership with local authorities and voluntary organisations
to promote benefit take-up. This approach combined with the ongoing
work from other organisations has meant that whereas there were
1.8 million people entitled to Minimum Income Guarantee in 2003
there are now around 2.7 million pensioners who receive the somewhat
more generous Pension Credit and awareness of the benefit is high.
However despite all the ongoing initiatives there continues to
be between 1.2 and 1.7 million people entitled but not claiming
Pension Credit. ii
4.3 Age Concern is pleased that the approach
is now moving to one focussed on all benefits. The more that services
operate in a holistic way the more that eligibility to Council
Tax Benefit will be identified even if the individual makes an
inquiry about a different benefit. We also believe the DWP, Pension
Service, and local authority benefit services need to work closely
with other government departments to promote take-up. For example
many missing out on benefits will be in contact with health and
care services or different local authority departments and if
staff have some understanding of benefits they can provide basic
information, encourage claims and make referrals to specialist
benefit services where appropriate.
4.4 Age Concern believes it is essential
for the Government to continue to send out a clear message around
the importance of claiming benefits and to work with local authorities,
voluntary organisations and others to raise awareness and encourage
claims. However such measures are never likely to achieve full
take-up and we believe that in addition it is important to look
at improving the systems.
5. CASE FOR
IMPROVEMENTS TO
PROCESSING AND
DATA SHARING
There is a strong case for moving towards a system
of automatic delivery of benefits. In the shorter-term the Pension
Service telephone service should take claims for Council Tax Benefit
and Housing Benefit even if someone is not claiming Pension Credit
5.1 Age Concern strongly supports the need
to improve the processing of benefits and for the system to move
towards one where entitlements are delivered automatically. We
welcome the project being undertaken by the DWP looking at the
use of data sharing to identify entitlement to rebate. Ultimately
this could lead to bills being sent out with the rebate already
given and the individual either asked to respond if the information
held is incorrect or to verify that the information is right before
rebate is awarded. We endorse the Lyons Inquiry recommendation
calling for Ministers to examine the scope for data sharing to
proactively deliver council tax rebates. Age Concern accepts that
there are some risks with automatic delivery but we feel these
are more than outweighed by the very real need to make the council
tax system fairer for those on low incomes and to ensure that
people receive the entitlements for which Parliament has legislated.
5.2 However in the shorter-term there are
other steps that could be taken—in particular enabling the
Pension Service to take claims for Council Tax and/or Housing
Benefit from people not claiming Pension Credit as well as those
who are. We have welcomed changes that enable people claiming
Pension Credit to complete just a short three page additional
Council Tax and Housing Benefit claim form and the plans to further
improve the system by enabling the Pension Service to pass information
directly to the local authority. However currently people who
are not claiming Pension Credit, or who start a telephone claim
but are told that they are not entitled and advised not to continue,
must then contact their local authority for a lengthy paper claim
form.
5.3 If there was a single telephone point
to claim all three benefits this would make promotion of Council
Tax Benefit clearer and make the system much quicker and easier
for individuals. We believe this would be an important step towards
a more integrated system and would help improve take-up. Currently
if the local Pension Service visits an older person at home they
will provide help with claiming Housing Benefit and Council Tax
Benefit (and other benefits such as Attendance Allowance) and
we feel it is only fair that those contacting the Pension Service
by telephone receive the same level of service. While increasing
the scope of the telephone service would increase the workload
for the Pension Service this would be at least partly offset elsewhere
as local authorities would have to deal with fewer time consuming
paper applications.
6. THE CASE
FOR REFORM
OF BENEFIT
RULES
We recommend that the £16,000 capital limit
is removed for older people applying for Council Tax Benefit (and
Housing Benefit) to produce a fairer system more closely aligned
with Pension Credit
6.1 The main reform we would like to see
is the removal of the £16,000 capital limit for Council Tax
Benefit (and Housing Benefit). This would make the system fairer
for those with modest savings and low incomes, simplify the benefit
system by aligning capital rules with those for Pension Credit,
and remove current anomalies for those receiving different elements
of Pension Credit.
A fairer system
6.2 Removing the £16,000 limit would
assist those older people with low incomes but modest savings
who currently must spend down their savings before they can receive
any help with their bills and who often tell us that they feel
being penalised for having saved. This would include older tenants
who have built up some savings but have been unable to, or preferred
not to, use these to buy a home and can now receive no help with
council tax (or rent) if they have savings over £16,000.
Simplifying the benefit systems
6.3 Removing the capital limit would simplify
systems by aligning capital rules with those for Pension Credit.
Assessment of income and savings for Pension Credit and Council
Tax Benefit are similar in many respects but they have different
savings rules making it harder to put out simple messages promoting
take-up and causing confusion and increased administrative complexity.
For example the different rules can mean that an older person
receiving both Pension Credit and Council Tax Benefit whose savings
increase may need to: report this change to the Pension Service
but not the local authority; or may have to report it to the local
authority but not the Pension Service; or may not need to report
the increase at all.
Removing anomalies
6.4 Under the current system there is no
capital limit for Housing Benefit and Council Tax Benefit if someone
is receiving the guarantee credit element of Pension Credit. However
the £16,000 capital limit applies to people not receiving
Pension Credit and those only receiving the savings credit element
of Pension Credit. This can lead to people with similar financial
circumstances receiving markedly different levels of benefit as
in the following example.
Example
Mrs A is 63 and has an income from pensions totalling
£91 and £20,000 savings (for benefit purposes this is
assumed to produce £28 a week income). She is entitled to
just 5 pence a week Pension Credit guarantee but this enables
her to have all her council tax bill of around £950 paid
by benefit (around the average payment for a Band D property with
a single person discount).
Her neighbour Mrs B is in a very similar situation
except that her pension income is 10 pence a week higher taking
her income just above the level to receive Pension Credit guarantee.
Because of her savings she cannot receive Council Tax Benefit.
Her pension income is a couple of pounds a year higher than her
neighbour's but she loses out on a rebate worth £950 a year.
6.5 The Lyons Inquiry recommends that the
threshold is increased to £50,000 for pensioners and abolished
altogether over time. We agree that an increase to £50,000
would have an important impact although for the sake of simplicity
and being able to promote a clear message around entitlement criteria
we believe that it would be better to remove the limit altogether.
Any changes should also apply to Housing Benefit because otherwise
the complexity and unfairness of the current benefit system will
continue for tenants.
References
i Income-related benefits estimates of Take-up
2004-05 DWP, 2006.
ii Pension Credit estimates of take up in 2005-06,
2007.
June 2007
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