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Review launched to make council tax benefits in B&NES fairer

Date published: 2023-09-18 | Category: Council Tax

Review launched to make council tax benefits in B&NES fairer

Proposed changes to Bath & North East Somerset Council’s Local Council Tax Support Scheme will be scrutinised by councillors tomorrow (Tue Sep 19).

The aim is to make the scheme fairer for the most vulnerable members of our community, in particular people receiving Universal Credit who rent their homes or receive support for their childcare costs. 

A report before the council’s Corporate Policy Development & Scrutiny Panel on September 19, sets out three options for consulting on adjustments to the scheme to improve its fairness. There is also the option to remain with the current scheme.

Councillors who sit on the cross-party panel will scrutinise and give their feedback on the report.

Local Council Tax Support (LTCS) helps low-income households with their council tax. Until 2012 the scheme was funded by central government, but since then local councils have had to fund it themselves and to devise their own schemes. One of the groups targeted for support is working-age people in receipt of Universal Credit. Currently around 4,000 Bath and North East Somerset households in this category are receiving this.

Our local scheme was last revised in 2017 when Universal Credit was in its early stages of rollout. The scheme offers support to this group split into bands based on weekly income. Council research shows that the way the banding takes account of the housing and childcare elements of Universal Credit may be leading to an unfair distribution of support.

Councillor Mark Elliott, cabinet member for Resources, said: “Council Tax is a regressive tax but we have to make the best of the system we’re currently required to operate. It is six years since the support scheme was last reviewed, and this took place  when there was very little experience of how Universal Credit would operate in practice. Having looked at the research we’ve carried out,  including comparisons with schemes run by other councils., there may be a case for change to improve the fairness of the scheme. However, I value the cross-party scrutiny provided by the panel and will listen very carefully to the feedback from them before taking any further steps.”

Sample checks were carried out on 650 cases to determine the effectiveness of the current scheme which includes claimants who receive the Housing Cost Element and Childcare Element of Universal Credit - designed to cover specific expenses.

Currently, the support scheme treats these elements of the Universal Credit payment as income. The Housing Costs Element is intended to be primarily used to pay rent, which is considered by Welfare Rights organisations as a priority debt, keeping people in their homes. By counting this as income for LCTS purposes this implies that residents should use that income to pay their council tax, which is obviously not the intention and is now under review.

The Childcare Element of Universal Credit is intended to partially reimburse residents who have had to pay childcare costs upfront in order to enable them to work. Counting this as income is unfair because it provides extra support for childcare through Universal Credit, only for the recipient to be penalised by reducing their council tax support, in contradiction to the intent of the policy.

Council research also shows that many residents who receive the Housing Cost and Childcare elements of Universal Credit and LCTS are struggling to keep up to date with their council tax. This in turn generates more collection costs for the council. Many households who receive the Housing Costs Element of Universal Credit have also needed to seek help from the council’s Welfare Support Team, which supports families in financial crisis.

A better-targeted LCTS scheme could mean that the level of arrears and the demand on the Welfare Support Team is reduced because more residents should be able to afford to pay.

 A report on the Local Council Tax Support Scheme review and proposed changes before the Policy Development & Scrutiny Panel can be found here.


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