Council Tax Reduction Scheme Consultation 2023

Overview

Have your say on Hackney’s proposed changes to the Council Tax Reduction Scheme

Hackney Council is consulting residents on proposals to revise the current Council Tax Reduction Scheme (CTRS). Please read this consultation summary to find out more about the proposed changes, and what this could mean for you.

What is the Council Tax Reduction Scheme?

The CTRS helps residents on a low income to pay their Council Tax. Under the current scheme, a Hackney resident liable for Council Tax could get up to 100% of the charge paid through the scheme if they are a pensioner, or up to 85% of the charge paid if they are of working age (i.e. the Council Tax Bill Payer is under pension credit age).

The amount of support a household can get through the scheme is determined through a “means test” – this means we look at your total income and any money that you and your partner (if you have one) have as savings. We then compare it against the minimum allowance that you need to live on, depending on your circumstances.

At the moment, the Council Tax Reduction Scheme helps around 27,000 Hackney residents on a low income to pay their Council Tax.

Why are we reviewing the current Council Tax Reduction Scheme?

When Hackney’s Council Tax Reduction Scheme was last changed in 2019 we promised to keep the scheme under review and in his manifesto the Mayor, Phillip Glanville, promised that the council would reduce the minimum contribution for the lowest income households. 

Hackney Council is proposing to increase the amount of support it provides to those struggling to pay their Council Tax. The changes would mean that those who qualify for the Council Tax Support Scheme (CTRS) will get up to 90% paid if they are of working age - up from 85%.  Pensioners and young people leaving care will continue to get up to 100% of their Council Tax  paid. The Council has committed to regularly review its CTRS, to ensure the borough’s poorest residents are not disproportionately affected by Council Tax increases. 

Whilst Hackney Council want to provide additional financial support to our poorest residents, due to the cut in money available to the Council, the options available are limited. Over the period 2010-11 to 2023-24, it is estimated that the Council suffered a £150m real terms reduction in its Spending Power (the Government’s measure of our resources) which is equivalent to 33%. The Council therefore needs to strike a balance between the need to provide extra support to residents who we think need it, while maintaining a scheme that is financially sustainable for the Council’s wider budget and limits the impact on our ability to deliver essential front line services that residents depend on. For these reasons, the Council wishes to review the current arrangements to develop a scheme that is affordable and fair to both Council Tax Payers and to those who benefit from the support. It is intended that these changes will take effect from 1 April 2024.

How do the proposed changes affect me?

If you are of working age and currently receive help through the Council Tax Reduction Scheme you are going to be directly affected. However, even if this is not the case, as a Council Tax payer you have an interest in ensuring the Council is spending the money it receives through both government funding and through Council Tax receipts appropriately. It is important that the Council gets the views of all Hackney residents regardless of whether they receive Council Tax Reduction or not.

The Council is legally required to consult with its residents when it makes changes to some of its services, and the Council Tax Reduction Scheme is one of those services.

What is the Council’s preferred option for amending the Council Tax Reduction Scheme?

Our preferred option is to:

• Decrease the minimum contribution which all working age CTRS recipients have to pay from 15% to 10% of their Council Tax liability, regardless of income and circumstance.

Why is this the Council’s preferred option?

While the amount of money the Council gets from the government to fund the Council Tax Reduction Scheme has been reduced year on year since the scheme began, the Council recognises that the impact of welfare reform has been greatest on our poorest residents and the council feel that we can no longer pass so much of this on to our poorest households.

The option of decreasing minimum contributions from 15% to 10% balances both the increasing financial pressures that our low income households face, against the ongoing cuts in government funding.

The Council’s long term ambition is to reduce minimum contributions to 0, returning it to a fully paid benefit as it was before Government reforms in 2012. We will be bringing forward proposals in future years that will take us towards this.

The proposed change increases total scheme costs by £1.25m in comparison to costs if the current scheme were to be retained into 2024/25. Average Council Tax Support for working age households under the proposed scheme increases by 6.41% compared to the current scheme maintained into 2024/25. Scheme costs for UC households increase by 6.54%, whilst costs for households on legacy benefits increase by 6.29%.

Why does the proposed change only affect Working Age households?

All pension age applicants who qualify, will continue to receive the same level of support. You are classed as a pensioner if you have reached the qualifying age for pension credit or if you are a couple and one of you has reached the qualifying age for pension credit.

Where will the Council find the money to fund the increased expenditure on the scheme?

The increased cost to the scheme under our preferred option could be funded through the Council’s General Fund budget, while still allowing other front line services to manage the savings required due to ongoing reductions in our funding and increasing demand.

What alternative changes to the current Council Tax Reduction Scheme were considered?

The Council considered leaving the existing Council Tax Reduction unchanged, but recognised the severe financial pressures which the borough’s low income households are currently facing.

What will I be asked to pay?

We have worked out what impact the proposed change would have based on an assumed  increase of 4.99%, the actual change to Council Tax for 2024 may be different to this. 

* Based on assumed Council Tax increase of 4.99%

The following scenarios are examples of how residents of working age will be affected by the proposed scheme.

Other help available to pay your Council Tax

There are other avenues of support to help you pay your Council Tax bill that are separate from the Council Tax Reduction Scheme.

The Council has in place a discretionary hardship scheme for those who have difficulty paying their Council Tax and cannot get any assistance through the CTRS, or the assistance received still does not fully cover their bill. Additional help can be given to households that are vulnerable and/or under particular stress. Each application is considered on its individual merits and will be based on your Council Tax bill after any discounts, exemptions, reductions for disabilities or support have been deducted.

In addition, the Council provides extra help to Hackney’s Care Leavers - young people aged 18 plus who have been looked after by Hackney Council for a certain amount of time.

Care leavers will continue to get 100% of their Council Tax paid, provided:

• They are under the age of 25
• They live in the London Borough of Hackney
• They have claimed all the Council Tax discounts and support to which they are entitled, such as a single person discount, student exemption or assistance from the Council Tax Reduction Scheme

Taking part in the consultation 

The consultation will run from 14th August 2023 to 24th September 2023.

If you would like to speak to someone about the scheme or to request a paper copy, call 020 8356 5594 or email benefits-temporary@hackney.gov.uk.

What happens when the consultation closes?

After the consultation closes, all responses will be analysed and considered by the Council.  The Council is required to approve any new scheme by 31 January 2024. Any changes to  the scheme would affect current and future claimants from 1 April 2024.