Written submission from Kirklees Council
1. What are the advantages and disadvantages
of localisation of council tax benefit? Are concerns that it will
undermine the intent of Universal Credit valid?
1.1 The main advantage of localising CTB is the
removal of the uncertainty and difficulties that a nationally
administered scheme might bring. A nationally administered scheme
that simply recognised liability and paid a cash sum to those
entitled, would introduce significant risk of non payment. This
in turn could have a catastrophic effect on LA revenue.
1.2 However, a nationally administered scheme
that relied upon a system of computer interfaces would to all
intents and purposes preserve the status quo, subject to any decisions
around the maximum support provided in individual cases or classes
of case.
1.3 It is difficult to see how localisation of
CTB brings any real advantage over a nationally administered scheme
that operated as a rebate and preserved the status quo. We know
however that localisation is expected to bring with it a 10% saving
on CTB spend for the Treasury. That saving in itself brings with
it enormous difficulties for LAs.
1.4 Regardless of any decision the authority
makes about eligibility criteria, a sum equivalent to that 10%
must be collected to preserve the revenue stream. That 10% amounts
to £3.5 million in this borough and at the lowest CT payable
would amount to a sum of £70 per year.
1.5 If certain groups (for example pensioners)
are protected from any increased liability arising out of localisation
then the burden of the 10% cannot be evenly spread. If the intention
is that the additional burden becomes part of the incentive to
find work, then the inference is that those not in work will shoulder
the burden. If we were to assume that the burden for those out
of work will approach 20% because of the uneven spread, the risks
identified around collection and impact on the revenue stream
will be amplified. Council tax is not as progressive as income
tax and shifting the cost of welfare benefits on to council taxpayers
will increase this.
1.6 Without further information it is very difficult
to see how a localised scheme might operate any differently to
the current system of support. Means testing of additional financial
support appears to be the only option. If the system operates
as a means test then it is conceivable that local decisions about
eligibility criteria could operate to undermine the intent of
Universal Credit. That fear might be unfounded if LAs are prevented
from increasing the burden for those starting work.
1.7 In summary it would appear that the 10% saving
could increase the burden on those least able to pay and in so
doing could compromise LA revenue streams.
2. Will localisation of Community Care Grants
and Crisis Loans resolve identified problems with these funds?
(such as uneven distribution of funding, variation in success
rates for applicants with similar needs across the country, high
administrative costs, questions over the standard of decision-making
processes)
2.1 According to figures produced in the government's
response to the recent consultation[51]
two thirds of applications by people in this borough are successful
with an average award across both grants and loans of £122
per household. With awards of that magnitude administrative costs
will always be high in comparison.
2.2 It is also anticipated that the number of
awards will decrease before decisions about distribution are made
suggesting that the value of the un-ring fenced grant from government
will not equate to £122 per household given the same number
of successful applications. If we were to assume that funding
was equivalent to £100 per successful application, the costs
of administration would still be considerable.
2.3 Questions over the standard of decision-making
processes are unlikely to be answered by simply reducing the money
available for administration. Any scheme, regardless of how transparent
or simple it might be in design, will bring with it an administrative
burden.
2.4 Linking administration of a local CTB scheme
with a localised CCGs and CLs might be desirable but for many
LAs might be unachievable. It is proposed by government that localised
CCGs and CLs are reserved for Upper Tier LAs whilst local CTB
will be the responsibility of a Billing Authority.
2.5 Localisation cannot be expected to address
any concerns around variation in success rates, particularly if
LAs have freedom to design their own criteria.
2.6 The flexibility around the nature of provision
is welcome but brings with it serious concerns about how appropriate
that provision might be. LAs will need to be in position to provide
a range of provision, from payments in kind (maybe refurbished
white goods and furniture) to cash payments.
2.7 Designing a scheme that responds to successful
applications with a number of possible outcomes will increase
the administrative burden, introduce greater variation and increase
the number of challenges to decision making through whatever review
mechanism is established.
2.8 If localisation is intended to address the
issues identified in brackets in the question 2 then it is our
belief that those problems will be amplified.
3. How much local discretion will/should be
allowed in criteria, systems, decision-making and so on? What,
if anything, should be off-limits to local decision-making? (For
example, DWP has committed to ensuring that localisation of council
tax benefit does not jeopardise the single taper feature of Universal
Credit)
3.1 We have serious concerns about the capacity
of authorities to make the decisions necessary in the time available.
It is conceivable that many authorities (given absolute discretion)
will purchase a ready made scheme from a third party with associated
software, or pool resources in order to realise the efficiency
such an approach might bring. This approach, whilst expedient,
would undermine the principle of localisation, if in effect a
national or regionalised scheme evolves.
Equally, a heavily prescriptive scheme might negate
any perceived advantages of localising support.
3.2 LAs will want to balance the risks of non
payment arising out of the 10% saving, with targeting support
for those in greatest need.
A means tested scheme appears to be the only sensible
approach. It is impossible to contemplate a scheme that is any
less complex than the current scheme, indeed additional criteria
will make it more complex.
3.3 Timing is extremely important, an April 2013
start will mean that the scheme needs to respond initially to
circumstances pertaining at that time, in the knowledge that from
October 2013 it will also need to take account of Universal Credit
and respond to both the current Social Security System and Universal
Credit at the same time and would do so for a period of around
four years.
3.4 In designing the scheme in 2012 LAs will
need to fully understand the mechanics and value of Universal
Credit, something that will be very difficult to do if those details
are being developed at the same time.
3.5 The taper in UC is fundamental to the design
of localised means tested support for Council Tax. Regardless
of how a household net CT liability is calculated, increased liability
on commencing work could act as a disincentive. The extent of
the effective taper will be increased.
In promoting the taper rates in Universal Credit
comparisons are made between the current rate of around 97% with
the expected UC rate of 65%, rarely is it explained that a full
20% of the 97% referred to is the current CTB taper rate. It is
inevitable that any scheme of CT support that is means tested
will impact on the UC taper rate and may go a long way to undermining
the intention of Universal Credit. It is important to note that
this will not be because of any negligence in the design of local
CTB, if anything this effect is due to the current inadequacy
in the description of the anticipated UC taper rate.
3.6 Theoretically LAs could use data obtained
for Local CTB in decision making for a localised scheme of CCGs
and CLs, however not all CCG/CL applicants will be householders
and indeed many upper tier LAs will not hold that information.
Criteria used in one might be relevant in the other but for the
same reasons any synergies would be limited to Unitary and Metropolitan
LAs.
3.7 Discretion around the design of localised
support for CCGs and CLs is perhaps less crucial than for CTB
given the one off nature and value of the awards.
4. How vulnerable will the funds available
be to pressures on general local authority finances?
4.1 CTB is demand led, it will be difficult to
accurately predict demand.
Changes to the financial regime meaning that funding
is reduced by 10% in year one says nothing about how the scheme
would be financed in future years. The implication of the localisation
of business rates is that this will be the source of funding for
any increase in CTB, however, this is likely to move in the opposite
direction—ie closure of an employment site increases benefit
claims and reduced business rate income.
4.2 A scheme designed to achieve that 10% reduction
in year one must be financed by way of subsidy in full in future
years. Whilst the number and profile of recipients will change
each year as a response to economic and demographic changes certainty
as to subsidy must be maintained. It would be impossible to redesign
the scheme each year to maintain a 10% reduction against some
theoretical assessment of what might have been paid out under
the old CTB scheme.
4.3 Demand for localised CCGs/CLs will also be
subject to those same pressures. Whilst it might be desirable
to link grants in future years to spend in previous years this
will be extremely difficult if LAs choose to direct grants into
complimentary services rather than individual awards. By implication
spend will always equal or exceed grant. The continued viability
of those services will be contingent on grant, if an LA chooses
to contract with the voluntary sector certainty as to funding
will be crucial to both design and sustainability.
5. What, if any, changes will be needed to
the working relationship between local authorities and DWP for
the reforms to work effectively? What will the requirements be
in terms of information sharing between DWP and local authorities,
and how should these be managed?
5.1 As a minimum current arrangements for the
transfer of data should be maintained. DWP have put significant
effort into making the transfer of data efficient and appropriate
for the purposes of HB/CTB. LAs have access to DWP systems through
CIS and are about to go live on 4 July with ATLAS, a system enabling
high level integration between LA and DWP systems. Those systems
have been developed at considerable cost and should be retained
and extended. It is our understanding that the Welfare Reform
Bill will broaden the purposes for which that data can be used.
6. Are local authorities equipped to deal
with the attendant workload, and what new systems will they have
to put in place?
6.1 Localised CTB—In the short term the
answer must be, no. Over time LAs will cease to be responsible
for Housing Benefit and could redirect those resources into administration
of the new scheme(s).
6.2 If we are to have live running of a localised
CTB scheme by April 2013, experience suggests that some assessment
must be made around individual liabilities prior to budget setting
in February 2013. That is important so that once CT levels are
known, individual liabilities can be established and bills issued
before the start of the financial year.
6.3 We would want to have completed most assessments
by January 2013. That in itself would mean that we would need
to convert current recipients, plus undertake a data take on/
publicity exercise much earlier than that. In this borough that
amounts to in excess of 45,000 assessments on current case load
alone.
6.4 The scheme itself and any software would
probably need to be complete and tested by September/October 2012.
6.5 It is impossible to know how much of that
would be new work, how much data might be reusable and therefore
how much additional work is required, without knowing the nature
of what it is that will be required. What we do know is that the
complexity of what we do now in relation to Housing Benefit is
changing in 2012 making those assessments more frequent and onerous.
6.6 Our assessment is that we will have insufficient
resources to do both pieces of work at the same time. The Government's
assurances about funding the burden of assessment of localised
CTB must understand the very peculiar nature of 2012. They must
also understand the associated costs of procurement of software
and the fact that existing software for HB/CTB will be insufficient/inappropriate
and that HB/CTB software will remain in use until 2017 for the
purposes of a decreasing HB caseload.
7. Will these changes make is easier or more
difficult for claimants to access assistance? Will they complicate
the system overall, or just improve its responsiveness to local
circumstances?
7.1 It is our assessment that both changes will
complicate the system and that they will make it more difficult
than it needs to be. It is difficult to say that it is any more
complex than the current system. Many claimants already contact
both the LA and DWP to claim benefits, however, many in work currently
only contact the LA for HB/CTB support. In future more people
will contact both and in that sense it becomes more complex.
7.2 Without greater understanding of what is
meant by "responsiveness to local circumstances" it
is impossible to express an opinion. It is possible however to
state that any system that is responsive (subject to change) will
by definition be more complex.
8. Is the timescale for change (including
the rolling of Housing Benefit into the Universal Credit) realistic?
8.1 In our opinion the localisation of CTB support
by April 2013 is unrealistic. We understand that the bill introducing
such a scheme is unlikely to get its first reading until December
2011. Given the concerns we have set out about our activity in
2012 it would appear wholly unachievable without significant risk
across the sector, particularly given the number of decisions
required of each authority.
8.2 Universal Credit is different in that the
programme of transfer will be dictated by the rate at which individual
circumstances change combined with a programmed approach. For
example, abolition of Tax Credit means that those starting work
after abolition will claim UC and therefore HB support through
UC, and at that point they will transfer. The programmed approach
could accommodate LA or regional transfer, or claim type approaches.
This mixed approach will mean a very gradual reduction in LA workloads
and timescales are less important.
8.3 If this question is more about whether a
UC system can be fully functional by October 2013 then we think
that is doubtful. This is very important given our concerns about
UC's very real integration with a scheme of localised CT support.
9. How is the process of policy formation
reflecting, in your view, on the working relationship between
DCLG and DWP?
9.1 We had expected to have received much more
information about a localised scheme by now. The DWP Business
Plan for May 2011 says at 1.7(i) and 1.7(ii) that it's actions
are complete.
1.7(i) Work with the Department for Communities
and Local Government to develop implementation plan for localising
Council Tax Benefit.
1.7(ii) Develop communications and stakeholder
engagement strategy.
Those actions are crucial and of great interest to
LAs. I attach the DWP's response to a freedom of information request
as annex A, that response suggests that those actions are not
complete and no longer constitute part of their plans.
9.2 It is difficult to know exactly why the responsibility
was transferred however it would appear that the plans of DCLG
are less well developed than they might have been under DWP.
The DCLG business plan is less clear with only one
Action to be completed April 2013:
1.1(viii) Lead the localisation of Council
Tax Benefit, working with DWP, to enable local authorities to
develop local rebate schemes for the most vulnerable people in
society. Consider what flexibilities local authorities should
have to keep overall levels of Council Tax down.
9.3 We hope that our description of the activity
required in 2012 suggests that completion is achieved very much
earlier than planned.
SUMMARY
We have a number of concerns about the localisation
of welfare support. Our main concerns are around the timing and
our capacity to deliver existing support whilst implementing and
delivering new systems. We are a large authority, with a good
record of delivering change, our concerns are likely to be amplified
for much smaller districts where capacity will be an even greater
problem. Dual running of schemes both at design and implementation
will bring significant additional cost and risk to LAs, in the
current climate those additional burdens must be fully funded.
July 2011
Annex A
| Julian Hobson | Caxton House
|
| Policy Officer | Tothill Street
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| Kirklees Council | London |
| SW1H 9NA |
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| Tel: 020 7340 4000 |
| Date: Tuesday 14 June 2011 | www.dwp.gov.uk
|
EOI Ref: VTR1574
Dear Mr Hobson
Thank you for your Freedom of Information request received on
6 June. You asked to see a copy of the plan referred to at 1.7(i)
on page 10, and the strategy referred to at 1.7(ii) on the same
page of the DWP business plan. These referred to an implementation
plan and a communications and stakeholder engagement strategy
for localising Council Tax Benefit.
DWP were (and still are) responsible for the legislation to provide
for the abolition of Council Tax Benefit (CTB). Initial activity
revolved around working with solicitors, and through them Parliamentary
Counsel, on the drafting of a clause for inclusion in the Welfare
Reform Bill in time for the Bill's presentation to Parliament.
This work was completed on time and a clause providing for the
abolition of CTB is in the Welfare Reform Bill currently working
its way through Parliament.
Responsibility for the localisation of council tax support (the
schemes that will replace CTB) passed to the Department for Communities
and Local Government in February 2011, from that date DWP were
not responsible for the production of an implementation plan and,
as DWP's action on the drafting of legislation, had been successfully
achieved the action was described as completed in the Department's
Business Plan. DWP continue to work with DCLG, supporting them
in the work they are doing to develop proposals.
DWP facilitated initial contact between DCLG officials and stakeholders
including the Local Authority Associations but more detailed work
on communications and stakeholder engagement now rests with DCLG.
If you have any queries about this letter please contact me quoting
the reference number above.
Yours sincerely
David Gleave
Deputy Head of Housing Delivery Division
51
http://www.dwp.gov.uk/consultations/2011/local-support-replace-ccg-cl.shtml Back
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