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Is your post COVID-19 Council Tax Support Scheme sustainable?


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The £500 million Hardship Fund allows councils to give extra support to help people affected by Coronavirus. Councils are expected to use this welcome funding to reduce the council tax bills of working-age people who are already receiving council tax support, by £150 in 2020/21.

In this webinar, Zoe Charlesworth presented new nationwide analysis on the Hardship Fund allocations and discussed what this means for collection rates. Megan Mclean explored what this means for those who become newly unemployed, as well as CTR support schemes. Finally, Deven Ghelani looked at what councils can do now to proactively support people.

Review the slides to learn:

- How the Hardship Fund and council tax collection rates interact
- What the future looks like, and how you can plan for future vulnerability
- How to identify the most vulnerable households in your area so you can target additional support

Published in: Government & Nonprofit
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Is your post COVID-19 Council Tax Support Scheme sustainable?

  1. 1. Is your post COVID-19 Council Tax Support Scheme sustainable? Wednesday 3 June Policy in Practice webinar
  2. 2. Housekeeping ● Audio check ● Please ask questions ● Poll and a survey ● Aim to finish by 11:30 ● Slides and recording will automatically follow ● We’re live tweeting via @policy_practice with hashtag #HelpfulPolicy
  3. 3. Today’s speakers Zoe Charlesworth Head of Policy Policy in Practice Megan Mclean Senior Analyst Policy in Practice Deven Ghelani Director Policy in Practice
  4. 4. Give the best support you can to help people on their way policy software analytics
  5. 5. Agenda ● How the Hardship Fund and council tax reduction interact ● What the future looks like, and how you can plan for future vulnerability ● How to identify the most vulnerable households in your area so you can target additional support ● Questions and answers
  6. 6. 666 Poll 1: Do you think the Hardship Fund will cover your additional CTR claims?
  7. 7. 777 Over to Zoe
  8. 8. Background The economic fallout from COVID-19 ● increase in unemployment now and in 21/22 The Hardship Fund ● initial and ongoing allocation Collection rates and pressure on council finances ● differences across councils ● pressure to reduce generosity ● relationship to collection rates How to support those who need it most? ● reactive or proactive?
  9. 9. The economic fallout from COVID-19 OBR forecast unemployment to peak at 2.5M in 2020/2, average 2.1M in 2021/22 ● An increase in unemployment of 92% in 2020/21 and 80% by next year ● Average earnings reduce and inflation increases until 2024, then slight recovery ● Unemployment predicted to be higher than pre-Covid19 until at least 2024
  10. 10. The impact for councils In the last 3 months, councils have lost: ● £470M in business rates ● £506M in council tax payments ● Total loss of £0.5bn from collection funds This is in addition to income loss due to revenue reductions and investment returns
  11. 11. The Hardship Fund £500M for councils to support low-income residents ● Guidance suggests up to £150/year for all households in receipt of CTRR ● Remainder for new claims and for discretionary support Most councils are following guidance ● Some are looking at targeted support (eg to prevent homelessness) Proportion for initial allocation differs between councils ● Proportion for new claims and discretionary support differs between councils ● Councils with higher max awards (eg 100%) use less Hardship Funds for initial allocation ● Councils with most generous CTR schemes also have sufficient to support new claims and discretionary support
  12. 12. The Hardship Fund
  13. 13. The Hardship Fund Taking account of estimated new caseload:
  14. 14. The challenge for councils Unavoidable tension between the cost to the council and supporting the increased number of residents in need of support
  15. 15. Impact on CTR design, 2021 onwards In-year collection rates are still key PFI for Councils ● Pressure to increase in-year collection at the same time as numbers with ability to pay reduces Is it time for councils to move towards more customer-focused collection practices? ● Income maximisation and targeted support ● CTR schemes that support the most vulnerable CTR scheme and levels of poverty are correlated with collection rates. We could find no correlation with moving towards customer-focused practices or CT charge
  16. 16. 161616 Over to Megan
  17. 17. Arrears were already rising before COVID-19 ● 90% of English councils had made changes to their CTS scheme by 2018/19, almost all of them cuts. ● A quarter of the additional council tax liability was not collected ● Lone parents, single people and renters are more likely than average to fall into council tax arrears as a result of changes in support
  18. 18. 181818 Options for targeting support
  19. 19. 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: ● Different bands for single people / couples with children ● Reverse engineer income bands, and levels of discount for each, to keep scheme cost-neutral or to make savings
  20. 20. Small tweaks to the scheme All of these measures would lower costs overall ● Changing maximum support, taper rate ● Introducing band cap, capital limit ● Introducing Minimum Income Floor to all self-employed ● Flat-rate non-dependent deductions ● De-minimis rules
  21. 21. Protecting vulnerable groups These measures would protect support for key groups ● Usually include those in receipt of disability benefits, lone parents with younger children, those in LCWRA, carers. ● Protection is typically based on 100% of liability; distributing reduction in support to other groups. ● In income banded schemes, councils can raise the income threshold for households with certain protected characteristics ● A new groups is emerging as vulnerable: younger single households with no dependents.
  22. 22. 222222 How data analysis can help you design the best scheme for your local authority
  23. 23. Why use modelling when comparing schemes? 1. To understand the impacts at a household level to inform Member decisions. 2. Comprehensive data to cover Member’s questions, inform final scheme design and have information ready for public consultation. 3. Future scheme models can take into account changing caseloads and other economic changes in benefit rates, inflation, wages (etc) for accurate modelling - even more important on a post-COVID world. 4. To target support to those most in need and protect collection rates. 5. To avoid excessive gains and losses in support, and protect vulnerable residents.
  24. 24.
  25. 25. Key considerations The best scheme for your local authority will depend on: ● Demographics ● Current scheme ● Members’ objectives and local priorities ● The economic impacts of the pandemic in your local area Your scheme will almost certainly need to change in April 2021 We can consider economic and caseload impacts on the cost and social impacts of your scheme on the lowest income households in our modelling
  26. 26. 262626 Poll 2: What actions are you actively considering to tackle the impact of the COVID-19 fallout?
  27. 27. 272727 Over to Deven
  28. 28. Your Hardship Fund must stretch to cope with … ● The welfare safety net falling away in April 2021 ● Rising unemployment of between 190% (OBR) to 480% (NIESR) ● Gaps in rent affordability and PRS evictions ● The impact on children and adults with care needs ● Changing caseloads as people claim benefits and return to work
  29. 29. Are you sure support is getting to those most in need? More than eight in ten DHP applications are paid, but of those most in need, only one in five apply
  30. 30. 303030 Use data analysis to: 1. Identify household in receipt of council tax support that have fallen into arrears 2. Filter down further to focus on vulnerable groups such as single private renters, people under 35 3. Proactively contact them to offer benefit support in order to bring down arrears and see what other support they may need to get through the pandemic
  31. 31. Forward looking analysis from June Housing and homelessness challenges ● The Local Housing Allowance won’t cover all rents. ● The moratorium on evictions is set to end in September of this year. ● Visibility over PRS households, gaps in rent affordability and arrears is something our clients have found useful. Child and adult services ● We can show the impact of the above measures on households with children, and potential extend this to Adult Social Care Employment and the economy ● Monthly updates to LIFT, so they can keep track of the rising number of people in receipt of CTS and UC. OBR / NEISR economic scenarios
  32. 32. Future modelling in LIFT dashboard The future is uncertain but projections help us to see implications for demand for council support and services, and indebtedness. We’ve changed our policy modelling due to COVID-19. We have two approaches: 1. What's happening to current cohort? 2. What’s the new cohort of households going to be? This can help you to: ● Identify people you can help back to financial independence quicker ● Ensure your service is designed around need and impact
  33. 33. 333333 Questions and answers
  34. 34. ● For up to date information on the welfare support available see ● Access your council’s COVID-19 Hardship Fund allocations here ● Follow up email with webinar recording and slides, with links ● Short survey to follow ● Next webinars: ○ NHC: Covid-19: Changes to the Welfare System - stories from the frontline on Thurs 4 June at 10:30 - 12:30 ○ How data analytics helps councils look to recovery on Wed 17 June at 10:30 ○ How to simplify the complexity of surplus earnings on Wed 1 July at 10:30 Practical tools that can help
  35. 35. 353535 Thank you Zoe Charlesworth, Head of Policy Megan Mclean, Policy and Data Analyst Deven Ghelani, Director and founder Policy in Practice 0330 088 9242