How viable is your council tax support scheme?

How viable is your
council tax support
scheme?
Policy in Practice
Zoe Charlesworth
Megan Mclean

www.policyinpractice.co.uk
Hello
Zoe Charlesworth
Director of Policy and Operations
Megan Mclean
Senior Policy and Data Analyst

A team of professionals with extensive knowledge of the welfare
system. We’re passionate about making social policy work
We help over 100 local authorities use their household level
data to identify vulnerable households, target support and track
their interventions
Our benefit calculator engages over 10,000 people each day.
We identify the steps people can take to increase their income,
lower their costs and build their financial resilience
Policy in Practice: What we do

How viable is your CTR scheme?

Agenda
● The background and context of CTR scheme design
● Some relevant background analysis:
○ New analysis for the Welsh Government on the impact of Universal
Credit on rent and council tax arrears
○ The impact of flexible collections
○ Analysis of CTR Hardship Funds
○ An early intervention case study
● Planning for the future
● Questions and answers

Context to CTR scheme design
COVID-19 presents new challenges
The pace of the COVID-19 crisis has meant adjusted forecasts - a shift from
relative stability to ever-changing ‘possible scenarios’
● Out of work benefits doubled to 2.7m by July 2020
● 15% of the 9.6M on furlough are estimated to become unemployed soon
● Labour market stats: redundancies have doubled in the last quarter
Key upcoming changes:
● End of furlough
○ new Lockdown Job Support Scheme and Part-time Job Support Scheme
● COVID-19 benefit changes to expire
● Brexit

● Councils are seeing an increase in caseload (typically 20 - 50% by July
2020)
○ But scheme design sometimes results in a reduction as households
move to UC
○ Difference between councils with automatic claim through UC start
● Council Tax collection has suffered
○ Latest information shows a 0.9% decrease compared to the same
quarter last year
● Arrears are increasing
○ 1.3 million households in arrears, worth £500 million (25 June)
○ Reduction to income is primary (although not the only) reason for arrears.
Being a key worker and having to shield were also factors
The story so far ...

Caseloads are changing
COVID-19 is changing caseloads
Lower prevalence of disability Less likely to be working
More claimants in receipt of Universal Credit

Future changes
What we know:
● November 2020 - Minimum Income Floor to be reinstated
● April 2021 - other COVID-19 measures to expire:
○ £20/week increase to UC Standard Allowance, Housing Benefit income
disregard and Tax Credits
○ LHA rates reflect cheapest 30% of rents
What we know might vary:
● The unemployment impact of furlough
● Impact of local lockdowns
● Brexit
● Will there be a last-minute u-turn on welfare uplift? Party pressure for the
Chancellor to keep the £20/week uplift

Uncertainty demands change
Economic uncertainty means that the analysis councils require is changing
● Pre-COVID-19 change was driven by:
○ Cost
○ Impact of UC
● Recent analysis has required greater contextual information to inform
scheme design
○ the drivers of scheme redesign
○ the impact of scheme design

Factors affecting scheme design

Recent analysis to consider
www.policyinpractice.co.uk/publications
● The impact of Universal Credit on rent and council tax arrears (research for
the Welsh Government)
● The impact of flexible collections (research for the GLA)
● Analysis of CTR Hardship Funds (research for the GLA)
● An early intervention case study (research for the Cabinet Office)

Universal Credit in Wales
www.policyinpractice.co.uk/wales

Four key lessons learned
Key lessons
● A generous CTR scheme pays off
● Universal Credit has resulted in
council tax (and rent) arrears
● Awareness of CTR, and take-up,
are still too low
● The impact of Universal Credit on
CTR can be mitigated

A generous scheme pays off
A generous CTR scheme pays off
● Welsh Government funded 10%
budget cut in 2012-13
● CTR scheme covers all 22
authorities in Wales
● All awards based on 100% liability
● Collection rates and council tax
arrears have remained broadly
constant
● But emerging evidence of
increased council tax arrears under
Universal Credit.

Impact on arrears
Universal Credit has resulted in council tax (and rent) arrears
● Council tax arrears more prevalent amongst households in receipt of
Universal Credit.
● Amongst those with arrears, Universal Credit is associated with a higher level
of council tax arrears compared to legacy benefits.
● Most households that are not in council tax arrears under legacy benefits
remained with no arrears under Universal Credit.
● Council tax arrears were more likely to increase under Universal Credit than
legacy benefits.
● Reasons: lower benefit amounts, five week wait and monthly budgeting

Awareness and take up
Awareness and take up of CTR are
still too low
● Take-up of CTR estimated to be
around 60% in Wales
● Welsh Government mounting an
active campaign
● Our survey indicated that some
people thought CTR was part of
UC
● Others didn’t know whether they
were receiving CTR
● And some were not applying for
fear of overpayment recoveries

Ways to mitigate
The impact of Universal Credit on
CTR can be mitigated
● Reduce taper rate
● Ignore changes in income below a
certain threshold (could roll-up)
● Don’t carry forward two-child limit
or Minimum Income Floor into CTR

Further analysis underway
Project Extension: The impact of Covid-19 on CTR in Wales
This will provide a unique insight into the impact of the economic consequences of
Covid-19 across Wales.
Phase 1:
● Impact on caseload across Wales and by regions
● Changes in demographic characteristics
● Impact on cost across Wales and by regions
● Breakdown of total cost by demographic characteristics

Forecasting
Phase 2: Forecasting
● Application of latest economic forecast of impact by OBR to the dataset,
adjusted for demographic impact to date, to provide a forecast of caseload
and cost by year end.
● Estimate the impact on arrears of CT collection. This will be informed by
previous work undertaken for the Welsh Government and will be based on
average arrears by demographic group.

CT Collection policies in London
● Council tax rates and collection practices (as captured by adherence to the
Citizens Advice and LGA Council Tax Protocol) were not significantly
associated with collection rates
● Only council tax reduction scheme (CTRS) generosity and local poverty levels
were significantly associated with collection rates

Impact of CTR on collection
● The GLA research showed that there was a correlation between CTR
scheme generosity and collection rates
● Average difference between the most generous and least generous is
£45/month (16% of standard allowance)
● A recent analysis for a London Borough showed a clear relationship between
level of arrears and level of support:
○ Households receiving the most support under the current working-age
CTR schemes (working households in receipt of Universal Credit and
protected groups) are also those households with lowest CT arrears.
○ Households who see the greatest reduction in CTR support compared to
the default scheme (working households in receipt of legacy benefits)
are the group with the highest CT arrears.

CT Collection policies in London
Interaction of poverty and
collection rates
● Local authorities with
higher levels of relative
deprivation tended to
report lower council tax
collection rates

www.policyinpractice.co.uk/hardship-fund-allocations
● Local discretionary may not be able to plug the gap
● The ability of a council to do this using COVID-19 hardship funding will
depend on their local CTR scheme
Impact of the Covid-19 Hardship Fund

● Re-Imagine Debt wanted to prove whether proactive approaches are more
effective in tackling debt and reducing arrears
● Data analysis via LIFT identified households in arrears eligible for the pilot
● We tracked debt journeys and compared results with a control group
● Newcastle City Council focused on those most at risk and identified 20
households already in serious debt, owing more than £20,000. Of these, 14
households engaged and were offered holistic support and debt guidance
● LB Barking and Dagenham took an early intervention approach and
identified 28 households with combined government debt of below £8,000. Of
these 25 people were seen and 17 experienced a positive outcome
Re-imagine Debt

Outcomes achieved
Arrears fell:
● People in arrears of £250+ fell from
74% to 58%
● Rent and council tax arrears fell by
£1,216
● 17% became wholly arrears free
● Arrears fell by £200 more in the
treatment group than control group
Income rose:
● Benefits income increased by £115
● Average income rose by £124
Arrears fell:
● People in arrears of £250+ fell from
18% to 8%
● Rent and council tax arrears fell by
£174
● Arrears fell by 3x more in the treatment
group than control group
● Half of participants became arrears free
Income rose:
● Benefits income increased by £171
● Average income increased by £108
● Unemployment fell from 91% to 67%

Re-imagine Debt
www.policyinpractice.co.ukwww.policyinpractice.co.uk/reimagine-debt

The context for CTR redesign
The context in which your CTR operates is changing rapidly. This will have an
impact on
- Caseload
- Cost
- Household income
- Arrears & Collection rates
- Front-line services and support for residents
It is important to understanding that context in order to set objectives for scheme
redesign

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Over to Megan

Why plan ahead?
Immediate impacts
● Benefits caseload and resource impacts
● Demographics of the new low-income cohort (unemployed or working
reduced hours) - who will need support?
With these implications
● For councils:
○ Council Tax Reduction - caseload, cost and arrears
■ Cost per household increasing since more households out of work
○ Local service delivery
○ Budgets and financial planning
● For households:
○ Wider issues around debt and arrears
○ Homelessness
○ Financial resilience and poverty

How data analysis and modelling helps
Data analysis and modelling of change allows councils to
● Understand the impact of current CTR scheme design on residents
● Understand the relationship between CT arrears and CTR scheme design
● Understand the impact of CTR scheme change and who will be affected
● Take account of future changes (including welfare support & macro-economic
changes)
● Understand the cost of scheme change

Understand current impact

Model impact of scheme redesign

Forecast the impact of caseload change
Previe
Feb 2020
Aug 2020
April 2021 - best case
April 2021 - worst case

Forecast caseload change
● Complicated situation: interaction of COVID-19, move to UC, CTR scheme
change
● Total HB and CTR caseload has dropped between Feb and Oct 2020

Forecast cost
We are modelling the cost of CTR in 2021 based on:
● Actual current CTR awards
● Scheme redesign if relevant
● Projected awards in 2021 based on:
○ Average CTR awards awarded by the council for different demographic
groups (e.g. in work, unemployed and out of work)
○ Projected numbers in the demographic groups from 2021 (using OBR
and other estimates)
○ Expected changes in welfare support (eg reinstatement of MIF)
○ Expected migration to UC
○ Expected CT rise
● We can also merge benefits data with CT arrears data to predict impact on
arrears in 2021

Finally…
Designing a viable CTR scheme
● Understand the current national and local picture
● Understand the drivers and context of scheme change
● Forecast the likely range of change in the near future
● Understand the impact and cost of your proposed CTR scheme
Amidst all the uncertainty, it is important to get as much as possible out of
the data you have.
Data analysis can help

Please visit our virtual stand to:
● Download more information
● Chat to us live online
● Book a meeting or just get our contact details
● Enter our prize draw to win a donation to your
favourite charity

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Thank you
We look forward to your questions.
Zoe Charlesworth, Policy in Practice
Megan Mclean, Policy in Practice
hello@policyinpractice.co.uk
0330 088 9242

How viable is your council tax support scheme?

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