2 Understanding how Council Tax support
will work in the future
16. We were concerned that some vulnerable groups
were being particularly affected by this reform, for example single
parent families.[37]
The Department told us that it relied on local authorities to
implement delegated powers in accordance with their existing statutory
duties, including the Child Poverty Act 2010, to ensure that vulnerable
groups, such as the disabled, carers, and single parents with
children under five, would be protected. The Department told us
that "the vast bulk of authorities recognise those duties"
and that so far "they have done the job it was intended they
should do".[38]
However, 133 local authorities have already made cuts to their
Council Tax support for working-age claimants in 2013-14 without
including protections for any vulnerable groups. We were concerned
that local authorities in poorer areas might find it harder to
absorb their funding cut, and thus be more likely to pass it on
in the form of reduced support for their claimants; although the
Department said it had not found such a link so far.[39]
17. The Department had sought to encourage local
authorities through its Transitional Grant to limit minimum Council
Tax payments to 8.5%.[40]
However, 114 local authorities implemented Council Tax support
schemes with minimum payments greater than 12% and up to 33%.[41]
Local authorities may opt to increase the minimum payments of
Council Tax from working-age claimants from 2014-15, after the
one-year Transitional Grant has expired, but the Department told
us that at the time of the hearing it was uncertain how many might
do so.[42]
18. The Department has reviewed local authorities'
Council Tax support schemes, to obtain information about the protection
local authorities offer vulnerable groups. It is aware that some
local authorities have not protected any vulnerable groups within
the rules of their schemes in the first year, other than pensioners
and war pensioners.[43]
However, it does not collect more detailed information on local
schemes, and so is not well placed to understand their full impacts
on claimants in the future.[44]
The Department told us it was in the nature of giving control
to local authorities that some would go "in a different direction",
but that they were all accountable to their local electorates
for the performance of their statutory duties.[45]
19. Council Tax support has connections with Universal
Credit, a programme led by the Department for Work & Pensions,
about which we reported recently.[46]
Universal Credit is a single benefit payment that will replace
six working age benefits, including Housing Benefit, which is
currently administered by local authorities.[47]
The Department told us there were three reasons why the Government
had decided to replace Council Tax Benefit with Council Tax support
schemes under local authorities' control, rather than include
it within Universal Credit. These were: it enabled the Government
to realise financial savings more quickly; the localisation of
Council Tax support was in accordance with the Department's localism
agenda; and including Council Tax Benefit in Universal Credit
could have made it more complicated for local authorities to collect
Council Tax from those on low incomes.[48]
20. The Department for Work & Pensions has forecast
savings of up to £565 million per year from local authorities'
costs, as a result of removing their responsibility to administer
Housing Benefit once this has been included in Universal Credit.
However, even after Housing Benefit is transferred into Universal
Credit, much of these administrative costs may remain. In 2012-13,
nearly 90% of Housing Benefit claimants also claimed Council Tax
Benefit, and local authorities administer Housing Benefit and
Council Tax support together, using the same people and IT systems.[49]
21. We heard from the Department that the key to
realising savings from rolling Housing Benefit into Universal
Credit was the establishment of effective data sharing systems
between local authorities and the Department for Work & Pensions.
Such systems would enable local authorities to process Council
Tax support claims automatically from people who had already claimed
Universal Credit.[50]
The Department for Communities and Local Government acknowledged
that this project would be challenging, but maintained it was
possible for Council Tax support and Universal Credit to operate
efficiently alongside each other. The Department told us it was
already working with the Department for Work & Pensions on
this, although this was only at "the very early stages".
The Department for Communities and Local Government reassured
us that the revised schedule for Universal Credit implementation
means that there is sufficient time to work out a solution together.[51]
22. The Department is required under legislation
to hold a review of all local Council Tax support schemes. The
Local Government Finance Act 2012, which received Royal Assent
on 31 October 2012, states this must take place within three years
of the Act taking effect. The Department said that the review
would look at the effectiveness and efficiency of the scheme,
its impact in terms of localism, and the relationship with Universal
Credit. The Department was unclear, however, about its preparations
for this review, and about when exactly it would begin. We asked
whether the Department would use this review to look again at
the principle of keeping Council Tax support separate from Universal
Credit, but the Department said that this would not be necessary.[52]
However, the note provided to us by the Department after the hearing
includes the relevant wording of the Local Government Finance
Act 2012, which confirms that the review is required "to
make recommendations as to whether such schemes should be brought
within Universal Credit."[53]
23. The Department is discussing with the local government
sector what data will be required to support the review, but has
not yet established what this will be. As the Department does
not collect detailed information about local schemes, it is not
well placed to understand the impacts of this reform on claimants.[54]
It is possible that these impacts may have grown by the time of
this review. The Department did not agree with our concern that,
if overall funding reductions continued, local authorities would
have less room to protect claimants in the future.[55]
However, it conceded that "probably a third" of local
authorities were already looking at making changes to their schemes
in 2014-15, only the second year of the reform.[56]
37 Qq 62-63. Back
38
Qq 66-67; C&AG's Report, para 3.11 Back
39
Qq 25-27; C&AG's Report, para 3.11. Back
40
C&AG's Report, para 2.9. Back
41
C&AG's Report, Figure 3. Back
42
Qq 8-12. Back
43
Q 62; C&AG's Report, para 3.14. Back
44
C&AG's Report, para 3.31. Back
45
Q 67. Back
46
Committee of Public Accounts, Thirtieth Report of Session 2013-14,
Universal Credit: early progress, HC 619. Back
47
C&AG's Report, para 5. Back
48
Qq 28-29, 34. Back
49
C&AG's Report, paras 3.15-18. Back
50
Qq 32-33, 37; C&AG's Report, para 3.19. Back
51
Qq 33-34, 36, 39. Back
52
Qq 32, 44-45. Back
53
Ev 13 Back
54
C&AG's Report, paras. 3.30- 3.31. Back
55
Q 31. Back
56
Q 9. Back
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