Memorandum by the Institute of Revenues
Rating and Valuation (CTB 11)
The IRRV is the professional body concerned
with all aspects of local taxation in the United Kingdom. Its
members are engaged in local authority benefits administration,
the valuation of property for taxation, local tax administration,
the appeals process and financial management in local government.
The Institute represents the professional interests of its 5,000
members who work within this broad church. The Institute strives
to bring about improvements in the benefits administration processes;
a recent example of this is its well-regarded and detailed Committee
of Enquiry findings regarding local authority benefits administration—a
copy of which has been submitted electronically with this letter
for reference.
THE CASE
FOR REBRANDING
COUNCIL TAX
BENEFIT AS
A "REBATE"
Replacement of the word "benefit"
with the word "rebate" would remove a barrier for people
who view benefits as state aid but rebates as legitimate tax savings.
Practitioners who suggested this change as part of the IRRV's
recent Benefits Committee of Inquiry suggested this as a result
of liaison with older taxpayers. It is widely accepted by a significant
proportion of practitioners that the term "benefit"
has a degree of stigma attached to it, which puts many customers
off claiming their entitlements. One authority has even taken
to using the terms "rebate" and "relief" in
promotional activities, though no quantifiable results are available.
Hand in hand with the stigma argument however,
goes the view that people are often put off claiming their entitlements
because of the complexities of the system and the need to divulge
large quantities of personal information. Also, over recent years,
the Government has placed such an emphasis on tackling fraud in
the system that some customers are reluctant to claim because
they feel that they will get into trouble if they fail to pick
up on an error, or notify a relevant change of circumstance on
time. There is also a lot of fear in the public conscience about
identity theft and fraud which does not help when they are asked
to hand over their last two months bank statements, their passport
etc. Obviously from the local authority perspective these checks
are necessary. Perhaps the case for using the Pension Service
as a portal for all claims is a serious option for consideration.
A change of name from benefit to rebate is important,
but the Government needs to do more than this to increase take-up.
It needs to take steps to promote the fairness and successes of
the scheme. High levels of publicity given to fraud cases by the
media often put older customers off claiming. However, the media
has been less willing to promote "good news" stories,
such as the recent take-up campaign in the East Riding of Yorkshire
Council. The shift in emphasis should be tackled at a higher level.
We recognise that rebranding may have minimal
impact on DWP direct customers—who being accustomed to claiming
benefits are unlikely to be affected by any negative view of welfare
benefit entitlement. The group primarily targeted by the proposal
are the potential direct claim customers on the grounds that rebranding
may remove some resistance to claiming.
THE ROLE
AND EFFECTIVENESS
OF GOVERNMENT
IN INCREASING
COUNCIL TAX
BENEFIT UPTAKE
LEVELS
There are several reform measures that can be
adopted that would increase eligibility and thus would improve
take-up: targeted relief, removal of capital limits and revision
of the rules on derived income; and abolition of non-dependant
deductions and a review of status discounts.
The IRRV would recommend the removal of the
capital limit of £16,000 and a review of the derived income
from capital. These two elements are major barriers to eligibility
and thus take-up.
Reviews of the 20% taper and the disregard for
earned income are long overdue. Both act as disincentives to taking
up paid work and they have been largely ignored by government
since 1987.
Abolition of non-dependant deductions and the
second adult rebate should also be implemented. Non-dependant
deductions have been used by successive governments to cut the
cost of benefits and serve no useful purpose in a modern rebate
system. The second adult rebate has a poor take-up and is an administrative
nuisance to local authorities.
The Government should consider the introduction
of a new application process for older taxpayers and those of
pensionable age. This would be based on modern use of data sharing
and would remove the need for most formal applications made by
older people. Data would be drawn from social security, HMRC and
local authority sources and subjected to a sophisticated matching
process, enabling entitlement to be calculated automatically.
This would then be used to add data on entitlement to council
tax bills. An award would be triggered by a similar "passport"
process to the one used in the original housing benefit (HB) scheme
in 1982. If taxpayers did not want the rebate, they would have
to opt out. The data would be held on the council tax record as
a code which would enable entitlement to be calculated automatically
in future years. In-year adjustments to entitlement would be achieved
by data matching and the taxpayer would be notified. This approach
is in line with the report on data sharing in the public sector
published by the then Department for Constitutional Affairs and
the efficiency reviews arising from the Gershon report. We understand
that the DWP have been looking at these issues in various studies
that have been taking place in the north of England and the Glasgow
"solutions" centre.
We also recommend that the government considers
a targeted relief scheme to meet specific claimant needs. This
would vary the measurement of need as part of the annual uprating
to include particular claimant groups. The effect would be to
target assistance and scarce resources to those most in need,
avoiding the scatter gun approach of the current status discount
scheme. An alternative would be a local scheme fixed each year
as a charge to the tax base, although we are concerned at this
degree of local discretion and the impact on local administration.
For people living in higher value properties who have low fixed
income, the market value of the property is not reflected in the
household income; a targeted relief scheme would assist households
like this, including those just above the benefits threshold.
The focus would be on ability to pay and the need to target those
in greatest need. Such a scheme has been introduced successfully
in Northern Ireland
It is important to note that, while the proposed
special relief scheme would run in parallel with the current CTB
system, it would not be a state benefit itself. Rather it would
be funded from the exchequer or the local tax base. As a result,
the better off would pay a little more to support those on low
incomes. The relief would be additional to, and separate from,
any means tested benefits. In fact, those who have applied but
not been eligible for HB might still be entitled to assistance
through this scheme. This would target support where it was most
needed and create maximum impact.
Given a population demographic in which the
proportion of those of pension age is increasing in comparison
with those of working age, and the inevitable financial pressure
this will create for the welfare state in the future, the Government
needs to take a leadership role in redefining the role of the
state and the individual when it comes to financial responsibility,
thus enabling it to target financial support to those in greatest
need.
It also needs to do much more to end the stigma
associated with support from the welfare state, to encourage partnership
working and to end the barriers that exist to the exchange of
information. It also needs to encourage its own agencies, most
notably the Pensions Service, to make much better use of local
authorities in the administration of all benefits, not just HB
and CTB. Local Authorities have a ready-made network of local
offices available to their customers and teams of visiting staff.
Therefore if the Government is serious about
increasing CTB take-up and indeed the take-up of other welfare
benefits available to pensioners, it needs to put local authorities
at the forefront of that strategy: after all local authorities
have a proven track record of managing and delivering change,
including major IT projects. They are innovative and have greater
flexibility and speedier decision-making processes than the larger
government agencies currently delivering services to pensioners.
It also makes more sense to put local authorities
at the forefront of services for pensioners, given that they are
largely responsible either directly or indirectly for the provision
of home care, housing support and accommodation, be it main stream
or sheltered housing or nursing home care for pensioners.
Local authorities are told that there are a
great number of people not claiming benefit, but they are not
told where the data come from and who these people may be. Authorities
would welcome good statistics and clear advice in this area. Pro-active
measures to ensure that referrals from other benefits are claiming
all they should could be carried out centrally as a spin-off from
the data matching exercises that are done. A lot of non-dependants
are not eligible for HB/CTB in their own right but still claim
other benefits. We need the data to be clearer and used effectively
to allow us to target and individually approach people in an authority's
area. Data Protection provisions should be used to help not hinder
this aim.
Improved data sharing is key. Authorities already
receive assistance with identifying discrepancies to combat fraud
(through the Housing Benefit Management System). There could be
opportunities for that information to be used to identify gaps
in take-up. Government should play a role in funding the appropriate
IT to enable improved and sophisticated data sharing to assist.
HMRC hold information that would indicate entitlement but it is
not used pro-actively.
The effectiveness of the Government in the area
of take-up is questionable due to the poor results. The data-scans
that authorities have received, designed to aid CTB take-up, have
been reported as being far from accurate. Often customers either
have no liability, have long since moved out of our area or have
even died several years ago. However, through local partnerships,
authorities are reaching residents that they have identified as
having a potential entitlement to benefit.
THE CASE
FOR IMPROVEMENTS
TO THE
PROCESSING OF
PENSION CREDIT
CLAIMS TO
ENABLE THE
PENSION SERVICE
TO ACT
AS A
PORTAL TO
REBATES FOR
ALL CALLERS,
REGARDLESS OF
PENSION CREDIT
ELIGIBILITY, AND
TO EXAMINE
STEPS TO
IMPROVE DATA
SHARING
This is a good idea - but it should flow
both ways. Local authorities are just that—local; and the
Pension Service is not—local authorities could be the conduit
for all benefit claims as well as other agencies.
It makes sense for the eligibility for CTB to
be identified at the earliest point. The Pension Service is an
ideal point of contact to reach this demographic group. Checks
should be made when a customer applies for their State Retirement
Pension, regardless of Pension Credit eligibility to ensure that
they receive, or are at very least aware of their full range of
entitlements. As outlined earlier, the importance of sharing correct
data in a timely and effective manner is key.
Local authorities however are very good at identifying
where customers are not receiving their correct entitlements.
They can see where people are below their applicable amounts,
can visit customers in their homes and can very quickly identify
where there are needs. As local authorities are experienced and
effective in this area, they deserve the same investment as other
agencies. There are numerous examples of take-up initiatives that
have been very successful—these should form a basis for
a higher degree of sharing of good practice. The IRRV is particularly
keen to promote this area.
THE CASE
FOR REFORM
OF THE
COUNCIL TAX
BENEFIT ELIGIBILITY
CRITERIA INCLUDING
THE CASE
FOR CHANGING
OR ABOLISHING
THE SAVING
LIMIT IN
COUNCIL TAX
BENEFIT FOR
PENSIONERS, AND
THE CASE
FOR ALIGNING
COUNCIL TAX
REBATE THRESHOLDS
WITH OTHER
PARTS OF
THE TAX
SYSTEM
These issues have been raised earlier in this
letter, but it should be reiterated that there is a strong case
for reforming the eligibility criteria, particularly the savings
thresholds and tariff income from capital calculation, as these
do not appear to have any basis in reality. The capital limits
are out of date and should be revised or abolished across the
board. If the benefits are based on income, income should
be the factor and not (inappropriate) assumed levels of income
from capital.
Many pensioners who pay Council Tax and feel
aggrieved that they do not qualify for benefit have too much capital.
But the capital is not liquid and as the increases in Council
Tax outstrip the rate of inflation their position is eroded. Had
the level of capital been increased with the rate of inflation,
rather than been held at £16,000, then more people would
have been eligible for benefit. Through having realistic levels
of tariff income for capital above set values we could effectively
increase the level of benefit that people would receive where
they have what could be considered excessive savings.
However the reform of council tax eligibility
criteria should not be solely confined to pensioners because if
it is, the situation could arise whereby a working age person
with exactly the same income, capital and household circumstances
as a pensioner receives less HB and CTB. This would not be sustainable
in terms of the age equality legislation.
Another consideration would be to simplify the
scheme to just have bandings of income for main CTB so that it
is really clear how much people will qualify for. This could operate
in a similar way to second adult rebate and have set percentages
of discount, dependant on the level of assessed income.
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