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Webinar: Council tax support Models that Members can sign up to

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Listen back to hear Policy in Practice in conversation with Allan Clark, Barnet Council, to learn how they're changing their council tax support scheme for Universal Credit.

We cover how Policy in Practice's comprehensive impact modelling provided the data that Barnet Council's Members needed to agree amended schemes with confidence.

Listen back to learn:

- How LAs’ CTS schemes have evolved since they were first introduced
- What factors Barnet modelled, and why
- What schemes Barnet considered, rejected and implemented

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

Published in: Data & Analytics
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Webinar: Council tax support Models that Members can sign up to

  1. 1. Policy in Practice Webinar Council tax support: Models that Members can sign up to Wed 20 March 2019
  2. 2. Housekeeping • Audio check • Please ask questions • Polls and a survey • Aim to finish by 11:30
  3. 3. A team of professionals with extensive knowledge of the welfare system who are passionate about making social policy work We help local authorities use their household level data to identify vulnerable households, target support and track their interventions We develop engaging software that helps people to increase their income, reduce their costs and helps them to build their financial resilience
  4. 4. Today’s speakers Zoe Charlesworth Head of Policy Policy in Practice Allan Clark Revenue and Benefits Manager Barnet Council Megan Mclean Policy and Operations Analyst Policy in Practice
  5. 5. Agenda • Background to Council Tax Reduction schemes • Significant issues to consider when changing • Why Barnet Council wanted to changed its Council Tax Reduction scheme • How Barnet Council involved their Members in their scheme change • What we model when looking at CTR schemes, and why
  6. 6. 666 Poll: What would your Member's main objective be if you were changing your CTR scheme?
  7. 7. 888 Over to Zoe
  8. 8. Council Tax Support is significant Findings from IFS: The impacts of localised council tax support schemes, 2019 ● Paid to 4.9 million households in 2017–18 – more than any other means tested payment ● It cost LAs £4.1 billion - 11% of gross council tax bills ● 2.4 million working-age claimants - £1.8 billion - average award for those claimants of £770 per year Source: IFS The impacts of localised council tax support schemes https://www.ifs.org.uk/publications/13827
  9. 9. Where are we now? • 90% of English councils made changes to their CTS scheme by 2018– 19: - almost all of them cuts - up from 82% in 2013–14 • The most widespread change is the introduction of minimum council tax payments: - most common level of minimum payment is 20% - a fifth of councils have no minimum payment - fifth have minimum payments of over 20%, (highest being 50%) • In general, minimum payments have increased since 2013-14
  10. 10. Where are we now?
  11. 11. Where are we now? Other changes • Reducing capital limit (104 councils) • Band caps (105 councils) • Changing the taper rate (21 councils) • Changes to non-dependant deductions (94 councils) • Protecting vulnerable groups (113 councils) • In practice, many LAs have changed their schemes in multiple ways
  12. 12. Implications for claimants • Working-age households in England are now eligible for 24% less (£196 a year) on average • 1% of their income • £706 million reduction in entitlements: • Cuts are now 70% more than in 2013–14 • There are now 1.4 million households who have to pay some council tax who would not have had to pay • 63% must pay more than £100 • 33% must pay more than £200 • 10% pay more than £300 • Reducing a household’s CTS entitlement significantly increases the probability that it reports being in arrears on its council tax • CAB enquiries increased by 15-20% when minimum payments introduced, mostly relating to council tax debt
  13. 13. Implications for collection / arrears • A quarter of the additional council tax liability is not collected • For council tax claimants this is 10 times higher than the 2.5% in 2012–13, before the cuts to CTS • The effect on the aggregate rate of non-collection is still relatively modest increasing it from 2.5% to 2.7% on average • Arrears twice as likely in those moving from zero payment to those increasing payment • previous research showed a jump at 14% and 25% • Lone parents and renters are more likely than average to fall into council tax arrears as a result of changes in support
  14. 14. Where are we going? Evaluating new scheme types 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
  15. 15. Where are we going? Change in response to UC • Residents will need to re-assess income as they migrate to Universal Credit so changes in Council Tax Support can be part of this • 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
  16. 16. Universal Credit roadmap Direct payments to landlord to continue under UC, if transferring from HB  End of UClive service DEC2017 No new claims for UClive service after 01/01/18 UCadvances repayment period increases to 12 months UCadvances increases to 100%of UCaward  JAN 2018 All claims migrated to UC DEC2023 National Living Wage likely to rise to £8.80 p/hr Housing benefit to 'run-on' for the first 2 weeks of UC Payments for temporary accommodation improved Support for Mortgage Interest (SMI) becomes a loan National Living Wage set at £7.83 p/hr for over 25 Personal tax allowance up from £11,500 to £11,850  APRIL 2018 www.policyinpractice.co.uk  UNIVERSAL CREDIT ROADMAP Details subject to change Details correct at 20 Feb 2019 FEB2018 7day waiting period for UCabolished 2017 2018 2019 2020 2023 2018 2018 Mixed age couples must make new claims for UC instead of Pension Credit MAY2019 JULY2019 Self-employed familiies moving to UCwon’t be affected by minimum income floor for the first 12 months of their claim. Managed migration pilot will begin (starts in full end  2019) 2019 2019 2019 End of Full Service roll out  JAN 2019 New UCclaims for households with 2+ children FEB2019 APRIL2019 NLW will increase to £8.21p/hr for over 25s Personal tax allowance will increase to £12,500 Higher rate tax threshold will increase to £50,000 UCWork Allowances will increase by £1,000/year. 2019 APRIL 2020
  17. 17. Where are we going? Key concerns of Members • Cost • administration • payment • Impact on collection rates • Fairness • Schemes fitting within overarching council objectives • Supporting the aims of UC or mitigating against loss under UC • Elections
  18. 18. 191919 Poll: How actively involved would your Members be in your CTR scheme design?
  19. 19. 212121www.policyinpractice.co.uk Over to Allan
  20. 20. Council Tax Support Schemes Allan Clark MSc, FIRRV, MCMI Revenues and Benefit Manager London Borough of Barnet Our approach to a revised scheme
  21. 21. Drivers for change… • To tackle the increased administration owing to frequency of UC notices. • To provide opportunity for better collection levels by reducing the monthly rebilling for those on UC. • To simplify the scheme for officers and citizens. • To reduce the overall scheme costs.
  22. 22. Process, Timeline & Member Engagement • March 2018 – Full Council approved the Medium Term Financial Strategy which included a £2m saving on CTRS. • June 2018 – Policy and Resource Committee considered revised financial position. • June 2018 to September 2018 – Further savings considered across council. • August 2018 – Policy in Practice provides 4 CTRS models. • September 2018 – Revised financial position highlights a required £3.2m savings to be found from CTRS. PinP asked to provide a further model. • October 2018 – Urgency Committee asked to consider models and approve consultation. • October 2018 – Consultation begins. • December 2018 – PinP asked to provide further modelling following end of consultation. • December 2018 – Policy and Resources Committee agree proposed scheme and onward referral to Full Council for approval. They also approve changes to our combined DHP and DCTH Policy. • January 2019 – Full Council agree revised scheme.
  23. 23. Modelling
  24. 24. Adopted Scheme – April 2019 • Introduce an income banded scheme, based on earned income. • Reduce the maximum capital limit to £6,000. • Two non dependent deductions: • Income under £200 per week = £5.00 deduction • Income equal to or over £200 per week = £11.00 deduction • Introduce a minimum income floor. • No longer apply a disregard if paying child care costs.
  25. 25. Bands and Awards Income Band Discount off CT liability Earnings threshold (monthly) 1 72.00% No earnings 2 52.00% <£500 3 44.00% £500.01-£800 4 36.00% £800.01-£1100 5 28.00% £1100.01-£1400 6 20.00% £1400.01-£1700 7 12.00% £1700.01-£2000
  26. 26. Questions
  27. 27. 303030 Poll: Are you planning to change your CTR scheme soon?
  28. 28. 323232www.policyinpractice.co.uk Over to Megan
  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. 4 approaches to modelling CTR schemes 1. Do nothing 2. Make small tweaks 3. Income-banded schemes 4. Discount schemes
  31. 31. 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”
  32. 32. 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
  33. 33. 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 or to make savings
  34. 34. 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%
  35. 35. See social and political impacts
  36. 36. Comparison of weekly support (£ / week)
  37. 37. See social and political impacts On different economic groups On different tenures
  38. 38. 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 • Members’ objectives and local priorities The effectiveness of your scheme can only be understood through detailed cost and social impact analysis
  39. 39. 434343www.policyinpractice.co.uk Questions and answers
  40. 40. Next steps Download Council Tax Support Schemes flyer Download the Universal Credit Roadmap Follow up email with this recording and slides, with links Short 5 question survey now: • We value your feedback • Ask questions or clarifications • Request a more in depth look at our CTR modelling • Auto sign up to our next webinar: Using data analytics to understand child vulnerability, Wed 17 April
  41. 41. www.policyinpractice.co.uk Thank you Zoe Charlesworth zoe@policyinpractice.co.uk Allan Clark Barnet Council Megan Mclean megan@policyinpractice.co.uk hello@policyinpractice.co.uk office 0330 088 9242

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