9.1
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The Senior Revenues and Benefits
Manager submitted a report that provided the Committee with details
of the Council’s review of its Council Tax Reduction Scheme.
Approval was sought for the 2024/25 scheme, which had been amended
to include the statutory changes that the Council was required to
make, and the Council Tax Hardship Scheme for 2024/25.
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9.2
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RESOLVED
UNANIMOUSLY: That Finance Committee:-
1.
notes the review of the Council’s Council Tax
Reduction Scheme, detailed in this report;
2.
agrees that, in line with the review, the
Council’s Council Tax Reduction Scheme is not revised, apart
from the changes the Council is required to make by
statute;
3.
approves the amendments to the Council’s
Council Tax Reduction Scheme to accommodate the changes the Council
is required to make by statute;
4.
agrees that the Council’s Council Tax Hardship
Scheme continues to operate as detailed in this report;
and
5.
agrees that officers begin a further detailed review
of its Council Tax Reduction Scheme and bring a paper back in the
new year to consider options for its 2025/26 scheme.
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9.3
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Reasons for Decision
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9.3.1
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Legislation requires each Billing
Authority to annually consider whether to revise or replace its
Council Tax Reduction Scheme. For that purpose, we have carried out
a review of the Council’s scheme.
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9.3.2
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Following from this review, it is
recommended that the CTRS remains unchanged, as whilst reducing the
support offered through the scheme may help with the
Council’s financial situation, this is countered by the fact
that the burden will fall on vulnerable households who are
experiencing financial hardship as a result
of the cost-of-living crisis. It is also considered that
maintaining the scheme in its current form and at the same level of
support provides certainty during what are uncertain times.
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9.3.3
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In reaching this decision,
consideration has been given to both increasing and decreasing the
level of support provided under the CTRS, and to moving away from a
scheme based on the previous CTB scheme. Further detail on these
considerations is provided in the main body of the report.
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9.3.4
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Given the current financial position
of the Council, the Council is not able to introduce a more
generous scheme in 2024/25.
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9.3.5
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By maintaining the CTHS, the Council
will be able to continue to offer targeted support to those in the
most severe financial need including those who are least able to
change their financial situation.
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9.4
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Alternatives Considered and Rejected
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9.4.1
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The Pensioner element of CTRS is
prescribed by Government so cannot be changed by the Council.
Consequently, the following options relate to the discretionary
element of the scheme that provides support to Working Age
households.
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Changing the Cap on Liability
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9.4.2
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Support offered to working-age
customers is capped at 77% of their net Council Tax liability.
Perhaps the simplest change we could make to our scheme would be to
amend the 77% cap.
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9.4.3
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However, although a less generous cap
would produce some savings for the Council it is highly likely that
these would be offset by increased arrears, higher debt recovery
administration costs and added pressure to the CTHS.
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9.4.4
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A more generous cap would come at a
significant cost, which would negatively impact the Council’s
ability to maintain funding of other vital services.
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Introduction of an Income Branded Scheme
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9.4.5
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Under this scheme the level of
support provided would be based on household income set between
certain bands and could include variations on the level of
reduction and the level of income in the income bands.
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9.4.6
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The advantages of this scheme
include:
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It gives stability to those whose wages fluctuate each month.
·
All non-dependents are asked to contribute the same amount. Some
applicants may have to pay less.
·
It moves away from the complex means test that currently
exists.
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Once established it will probably be simpler to administer and may
therefore make administrative savings.
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It is less complex and easier for applicants to understand.
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9.4.7
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The disadvantages of this scheme
include:
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It would require a software change that would come at a cost to the
Council.
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Depending on the income bands introduced and the maximum income
level used, some current CTS recipients may see a reduction in
support and depending on the maximum level of income, some may no
longer qualify.
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Those customers at the “cliff edge” of the income bands
may struggle to cope with the level of support provided as they
move from one band to another. However, this could be mitigated by
the CTHS.
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Introducing a de-minimis income change
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9.4.8
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Under this approach any change in
income which resulted in a change in the award of CTS by a certain
amount would be disregarded therefore would not result in a change
to the level of CTS.
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9.4.9
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If we were to adopt this scheme, we
would need to decide what level of changes in income would be
de-minimis.
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9.4.10
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The advantages of this scheme
include:
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All the other current entitlement rules are still maintained so
there is no significant divergence from the way HB claims are
processed.
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It gives a degree of stability to those whose wages fluctuate each
month.
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9.4.11
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The disadvantages of this scheme
include:
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Although some people with an increase in their income would not
lose support, others with a decrease in their income would not
receive extra support.
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We are foregoing more Council Tax than we otherwise would.
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It would require a software change.
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Incorrect awards of CTS are granted if customers become confused
about what changes in their income need to be reported.
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Having a scheme which sets fixed assessment periods
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9.4.12
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This scheme would see an award of CTS
fixed for a certain period of time,
regardless of any income changes within that period.
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9.4.13
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The advantages of this scheme
include:
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It would be simple for customers to understand.
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It would mitigate any impact that regular fluctuations in income
have on Council Tax billing and collection.
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9.4.14
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The disadvantages of the scheme
include:
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Claims would still have to be reassessed periodically, and
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Depending on whether changes on reassessment are applied
retrospectively or not we could:
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be making customers worse off.
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be missing out on Council Tax revenue as we are awarding more CTS
than necessary or be impacting Council Tax collection rates as
customers may have more Council Tax to pay over a shorter
period of time.
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Maintaining the current scheme
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9.4.15
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Maintaining the current scheme in
2024/5 continues to offer the following advantages:
a.
it is closely aligned to the Housing Benefit scheme and the
statutory Pension Age CTRS
b.
It will continue to spread the burden of the reduced funding for
CTS equitably across all working- age claimants and, by applying
the means test already established by CTB, ensure that those with
greatest need continue to receive the greatest level of
support.
c.
There will be no requirement to change ICT systems, undertake
training, amend documentation, and produce publicity material, all
of which increase costs and would be required if the current scheme
were to be amended.
d.
It maintains consistency of support to working age CTRS households
by not subjecting them to any changes in support that an amended
scheme may bring. This provides valuable assurance at a time when
the current cost of living crisis is placing an enormous strain on
the finances of households in Sheffield.
e.
There is insufficient time to properly develop options for an
alternative scheme in 2024/25, and consult and prepare for any
system, administrative and staffing changes required
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9.4.16
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Given the above advantages of
maintaining the current scheme into 2024/25 the alternatives have
been disregarded.
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9.4.17
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However, it is recommended that work
starts now on developing options for an alternative scheme in
2025/26, to allow sufficient time for consultation and preparation
for any required system, administrative and staffing changes should
the Council decide to change its scheme.
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