Council Tax Support - Public Accounts Committee Contents

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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Prepared 11 March 2014