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Changing your Council Tax Support Scheme: what are others doing ?

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Listen back to hear guest speaker Clive Jones, Luton Borough Council, talking about why modelling the impacts of different options is the key to designing new CTRS schemes and the importance of member involvement.

Zoe Charlesworth gives Universal Credit analysis updates and Juan Alvarez Vilanova outlines the 4 different approaches to modelling that we take.

For more information contact hello@policyinpractice.co.uk, visit www.policyinpractice.co.uk or call 0330 088 9242.

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Changing your Council Tax Support Scheme: what are others doing ?

  1. 1. CHANGING YOUR COUNCIL TAX SUPPORT SCHEME: WHAT ARE OTHERS DOING? Wednesday 17 October 2018 Policy in Practice
  2. 2. HOUSEKEEPING • Audio check • Please ask questions • Polls and a survey • Downloads available • Finish by 11:30
  3. 3. We make the welfare system simple to understand, so that people can make the decisions that are right for them
  4. 4. SPEAKERS Zoe Charlesworth Head of Policy Juan Alvarez Vilanova Policy Analyst Clive Jones Head of Revenues and Benefits Luton Borough Council
  5. 5. AGENDA • Background to council tax reduction and trends • Luton Borough Council’s scheme with Clive Jones • Objectives of CTR schemes and the impact of Universal Credit • 4 approaches to modelling CTR schemes • Questions and answers
  6. 6. 777 OVER TO ZOE
  7. 7. BACKGROUND: WHERE ARE WE NOW?
  8. 8. BACKGROUND: PROPORTION REQUIRING INCOME-BANDED OR DISCOUNT MODELS 0 10 20 30 40 50 60 70 80 90 2017/18 2018/19 Council Tax models 2017/18 to 2018/19 Amendments to default scheme Income-banded/discount
  9. 9. 101010 OVER TO CLIVE
  10. 10. Key Impact Groups - Numbers of Worse Off By the numbers shown here it’s clear that NiW Disabled Singles (1,407) are going to be hit hardest, with those that are tenants being the majority of this group. Families are next with Lone Parents In work (470) then Couples with Children following with (362). Of all the groups, it’s the NiW Disabled cohort which is the greatest (1,992) cohort, accounting for over half all UC Worse Off households.
  11. 11. Key Impact Groups - Worse Off Per Week £s By the average weekly amount each household has been calculated to be worse off, it’s clear couples without children are significantly worse off (94.58) than the average (48.28), though they are the smallest group (505) by household type. The next group of note here to be worse off per week, are the in work couples with children. They average worse off per week just above the overall average though represent nearly 10% of all, with 362 households out of pocket by £52.73. householdtype tenure In work Not in work - carer Not in work - disabled Not in work - lone parent Not in work - other Grand Total Couple with children Council tenant -57.13 -58.49 -25.85 -63.94 -42.09 Owner-occupier -51.57 -67.59 -36.91 -63.27 -51.16 Private tenant -54.29 -33.21 -29.50 -65.37 -52.42 Social tenant -52.54 -28.65 -33.29 -30.25 -42.75 Supported housing -120.29 -47.52 -96.04 Temporary accommodation -42.67 -33.50 -34.90 -44.17 -41.63 Couple with children Total -52.73 -48.65 -30.79 -58.27 -47.99 Couple without children Council tenant -77.64 -125.22 -44.17 -133.90 -86.33 Owner-occupier -55.09 -131.99 -77.84 -130.95 -114.41 Private tenant -75.37 -146.88 -38.64 -121.40 -85.81 Social tenant -62.91 -117.28 -37.55 -129.80 -70.37 Supported housing -133.56 -18.31 -75.93 Temporary accommodation -41.23 -47.41 -78.66 -58.67 Couple without children Total -68.48 -128.88 -48.67 -129.65 -94.58 Lone parent Council tenant -45.80 -27.62 -47.72 -21.10 -40.05 Owner-occupier -38.46 -33.53 -45.07 -36.84 -40.10 Private tenant -36.30 -31.61 -53.41 -16.31 -35.94 Social tenant -44.80 -34.22 -46.57 -15.61 -38.83 Supported housing -50.21 -14.89 -54.28 -15.00 -34.44 Temporary accommodation -54.20 -36.64 -47.73 -18.60 -44.19 Lone parent Total -43.22 -31.92 -48.60 -19.15 -39.02 Single Council tenant -45.34 -13.69 -41.50 -10.14 -40.66 Owner-occupier -32.95 -37.76 -8.20 -26.15 Private tenant -75.29 -18.79 -45.03 -20.40 -48.96 Social tenant -85.90 -11.69 -40.99 -37.10 -42.97 Supported housing -86.35 -40.27 -6.23 -36.81 Temporary accommodation -51.84 -39.27 -7.22 -32.27 Single Total -66.35 -13.99 -41.54 -11.14 -40.27 Grand Total -51.08 -68.81 -42.44 -19.15 -77.13 -48.28
  12. 12. CTR expenditure data Group lev 1 Group lev2 Group lev 3 No Cost Band 1 Band 2 Band 3 Band 4 Band 5 Band 6 Band 7 Working age Passported Disabled and carer 4,086 £ 3,872,422.28 4,079 2 1 0 1 3 0 Working age Passported Families 1,370 £ 1,232,869.06 1,342 2 5 7 8 6 0 Working age Passported Working 905 £ 618,204.75 870 4 8 6 14 3 0 Working age Non passported Disabled and carer 835 £ 765,610.48 507 43 53 71 93 68 0 Working age Non passported Families 3,891 £ 3,350,441.52 1,507 124 261 474 841 684 0 Working age Non passported Working 860 £ 425,546.16 452 34 76 119 108 71 0 Actual Total 11,947 £ 10,265,094.24 8,757 209 404 677 1,065 835 0
  13. 13. • Convinced members to change CTR scheme to protect households with children. • Consultation targeted key groups. Families and the disabled. • Still needed to cut expenditure and review all discretionary spending. • Minimum payment of 25% for most has not impacted collection rates but we know if it went higher it would cause hardship. • Looking to cut administration costs instead of support So what was the impact of this data?
  14. 14. • CTRS automation • Banded income scheme • Reduces the number of notices issued • Does not reduce assessment complexity. • Simple discount scheme • Reduces assessment • Can cause sudden jumps in liability unless there are many discounts for all household circumstances • May impact some households severely • To make fair it becomes complex • Periodic assessment • Reduces assessments • Winners and losers • Peaks and troughs in workload Administration cost alternatives?
  15. 15. • Need a tool to show the impact of the proposed changes • Policy in Practice data – For whole impact of welfare reform • Capita CTR Modelling for financial impact on CTR existing claimants Modelling expenditure is the key to any change
  16. 16. • The main drivers for change are grant reductions and UC full service • There is no magic solution. Each area has different demographic groups • Any scheme has to be fit for purpose. Has to deliver the expected expenditure and support. Modelling is key. • Reducing support will impact on council tax debt collection levels • Sudden changes cause real hardship for households • Is it time to change pension age legislation? • A banded income scheme is just one tool that can reduce costs. Luton Conclusions
  17. 17. 181818 QUESTIONS FOR CLIVE
  18. 18. 191919 POLL 1: WHAT WOULD YOUR MAIN OBJECTIVE BE IF YOU WERE CHANGING YOUR CTR SCHEME?
  19. 19. 202020 OVER TO ZOE
  20. 20. WHY INTRODUCE A NEW SCHEME WITH UNIVERSAL CREDIT? • Residents will need to re-assess income as they migrate to Universal Credit so changes in Council Tax Support can be part of this • Partial introduction as households migrate to Universal Credit • A scheme to go alongside Universal Credit or to support those who are adversely affected by Universal Credit • The opportunity to use the Universal Credit assessment of income • Realisation of the relative cost of administration against awards once Housing Benefit is removed • Re-assessments with monthly Universal Credit changes / RTI
  21. 21. . UNIVERSAL CREDIT: UNDERSTANDING THE NATIONAL PICTURE  2.8m households would receive less support under Universal Credit (38% of households) than under legacy benefits. The average loss is £52/week.  2.0m households would gain more support under Universal Credit (29% of households) than under legacy benefits. Average gain is £26/week.  2.2m households will receive similar levels of support (31% of households) if they were in receipt of Universal Credit or legacy benefits. The impact of Universal Credit Worse off Better off No change
  22. 22. Groups losing support: • People living with disability • Self-employed • Working homeowners in receipt of tax credits • Working lone parents • Families with more than two children UNIVERSAL CREDIT: UNDERSTANDING THE NATIONAL PICTURE -£76.00 -£42.00 -£43.00 -£16.00 -£40.00 -80 -70 -60 -50 -40 -30 -20 -10 0 Disabled Self-employed Working owner occupiers Working lone parents Familes with more than 2 children Average weekly change in support (£/week)
  23. 23. THE IMPACT OF UC ON CTR ADMIN Increased re-assessment under UC Data analysis of a full service site by Policy in Practice revealed the average number of re-assessments in one year is 3 The average re-assessments for households in receipt of Universal Credit is 6 Source: a seaside council in the East of England Alongside… • Reduction in cross subsidy from Housing Benefit administration • Proportionally more when CTR is standalone • Administration costs may be up to 25% of scheme costs once CTR assessment is standalone
  24. 24. DEFAULT SCHEME UNDER UC What is it? • Similar to current scheme but UC Max replaces the “Applicable Amount” • Income for UC purposes PLUS UC replaces income • No earnings disregards General outcomes • Will usually cost slightly less than the legacy benefit scheme • Households not in work are unlikely to see difference in support • Households in work will receive lower CTR as they will be receiving higher UC. Good news for LAs! BUT…… Sticking a default based scheme will not be neutral – there will be winners and losers in any case
  25. 25. SOME PEOPLE WILL LOSE A LOT • Employed households with a disability • Self-employed households • Lone parents working > 16 hours but < full-time on minimum wage
  26. 26. OTHERS GET REDUCED CT SUPPORT BUT HIGHER UNIVERSAL CREDIT • Most non-disabled employed households (but not lone parents) • Households whose needs have increased in UC assessment
  27. 27. 282828 POLL 2: ARE YOU PLANNING TO CHANGE YOUR CTR SCHEME SOON?
  28. 28. 292929 OVER TO JUAN
  29. 29. Your Housing Benefit / Council Tax data Our Benefit and Budgeting Calculator Rich, detailed impact assessment: who is impacted and by how much OUR APPROACH TO DATA ANALYSIS We use administrative data capturing detailed information on low income households We combine these datasets together over time, and model policies across four government departments combined, to examine the impacts both now and in the future CTR support now and in a future scenario, both under the current system or under UC
  30. 30. DEFAULT SCHEME: IMPACT ON COSTS Cost savings are dependant on local demographics Higher proportion of employed and self-employed = higher reduction in cost • London borough with 45% of caseload employed and self- employed (17% self-employed) saw a cost reduction of 12% when all households migrated to Universal Credit • A Borough Council with 13% of caseload employed and self- employed saw an insignificant reduction when all households migrated to Universal Credit. Analysis of your local data can provide an indication of cost savings
  31. 31. 4 APPROACHES TO MODELLING CTR SCHEMES 1. Do nothing 2. Make small tweaks 3. Income-banded schemes 4. Discount schemes
  32. 32. 1. DO NOTHING APPROACH • Shows council impact if nothing was changed, but the following occur: • Council Tax Liabilities increase • National Minimum Wage, Personal Tax Allowance increase • XX% of households are migrated over to Universal Credit • Rent prices, benefit rates increase • “Not doing anything is the most radical thing you can do”
  33. 33. 2. MAKE SMALL TWEAKS Model the social and financial impact of small tweaks, including: • Introducing band cap, capital limit • Changing max. support, taper rate • Reducing/removing non- dependant deductions • Introducing Minimum Income Floor to all self-employed Amendment type Numbers affected Capital limit reduction 35 Band cap 75 Changes to non-dep deductions 834 Application of MIF 174 Total 1,118 Example • A NW council made 4 small tweaks to make savings; modelling showed this allows reduced minimum payment from £3.50/week to £3.22/week • Impact broken down by demographics; which household types lose out and which gain. Useful for consultation
  34. 34. 3. INCOME-BANDED SCHEMES • Modelling the financial and social implications of sorting households into set income bands, each with corresponding discounts • Building in protection for larger households through different ways: • Disregarded earnings or incomes (e.g. Child Benefit, childcare element, housing element etc.) • Equivalising income – dividing by number of household members • Different bands for single people / couples with children • Reverse engineer income bands, and levels of discount for each, to keep scheme cost-neutral.
  35. 35. 4. DISCOUNT SCHEMES • Like income-banded schemes (not repeating assessment) but looking at basic household circumstances only • Avoid having to add up incomes for every household • Households sorted into small number of bands, for example: • Above, use of work allowance (which varies by household type) means larger households not penalised • Earnings level set to prevent large numbers gaining eligibility • Reverse-engineering to find discounts that keep cost same. Band Criteria % discount Band 1 households on UC and not earning 90% Band 2 households on UC and earning below work allowance 70% Band 3 households on UC and earning above work allowance 50%
  36. 36. SEE SOCIAL AND POLITICAL IMPACTS On different demographics -8.0% -8.6% -10.9% -15.5% -6.6% -3.5% -4.9% -4.4% -18% -16% -14% -12% -10% -8% -6% -4% -2% 0% Single Lone Parent Couple no children Couple with children % change in CTR compared to retention of current scheme, by household composition Household not on UC Households on UC On different tenures
  37. 37. CASE STUDY 1: ONE SIZE DOES NOT FIT ALL A council in the West Midlands wanted to understand the impact of a ‘ready-made’ income-banded scheme, based on the South Gloucestershire scheme • Very high rate of passported cases in Council meant that most households being classed into the highest bands, making South Gloucestershire’s scheme unaffordable • For households in work, high average number of children meant that more family-oriented income disregards would be needed to protect this group
  38. 38. CASE STUDY 2: SIMPLE DISCOUNT SCHEMES CAN SIMPLIFY ADMIN AND BE FAIR A council in the East Midlands wanted to reduce the burden of UC on the administration of its scheme, whilst maintaining support for vulnerable households and children • One of BDC’s models was a simple discount scheme sorting households into 5 different bands, determined by household circumstances • Modelling found that: • Lone parents and couples with children saw levels of support maintained • Although some saw support drop by over £5/week, these were non-vulnerable single people and couples without children • Considerable admin savings.
  39. 39. CASE STUDY 3: COUNTY-WIDE SCHEME MUST BE ADAPTED TO LOCAL REALITIES A seaside district council in the South East wanted to understand the local impact of an income-banded scheme proposed by East Sussex CC • Specifically interested in what income thresholds would be necessary to maintain support to most vulnerable groups • Modelling found that: • This district would require more generous income bands than those proposed by the CC in order to protect all passported claimants • Treatment of ESA claimants was not sufficient to protect such households, as disability premiums not disregarded
  40. 40. CONCLUSION Universal Credit is coming and the status quo will not be neutral The best scheme for a local authority will depend on: • Demographics • Current scheme • Political climate • Overarching policies and local priorities The effectiveness of your scheme can only be understood through detailed cost and social impact analysis
  41. 41. 424242www.policyinpractice.co.uk QUESTIONS
  42. 42. NEXT STEPS Short survey • We value your feedback • Ask questions • Request a closer look at our CTRS work Next events • Tues 23 October, Leeds: Northern Voices: Delivering Universal Credit and tackling homelessness • Wed 14 November, online: Universal Credit: how are frontline advisors responding? • Wed 12 December, online: Social policy: what we learnt in 2018 and what this means for 2019
  43. 43. www.policyinpractice.co.uk THANK YOU zoe@policyinpractice.co.uk juan@policyinpractice.co.uk hello@policyinpractice.co.uk 0330 088 9242

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