House of Commons Library

Council Tax Reduction Schemes

Published Tuesday, December 29, 2015

This House of Commons Library Briefing Paper provides information on the implementation of local Council Tax Reduction Schemes from 1 April 2013. These local support schemes have replaced the national scheme of Council Tax Benefit.

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The abolition of Council Tax Benefit

As part of the 2010 Spending Review the Government announced its intention to localise support for Council Tax from 2013/14 and to reduce expenditure on this benefit by 10% (representing a saving of £414m for central Government excluding implementation costs).

The Welfare Reform Act 2012 provided for the abolition of Council Tax Benefit (CTB). Provisions for the localisation of Council Tax support were included in the Local Government Finance Act 2012.

Since 1 April 2013 local authorities in England have been responsible for administering their own Council Tax Reduction Schemes subject to the Council Tax Reduction Schemes (Prescribed Requirements) (England) Regulations 2012 (SI 2012/2885). Some authorities have chosen to adopt the default scheme provided for in the Council Tax Reduction Schemes (Prescribed Requirements and Default Scheme) (England) Regulations 2012 (SI 2012/2886). Separate regulations apply in Scotland and Wales.

Localisation was accompanied by a switch from Annually Managed Expenditure (AME) to Departmental Expenditure Limit (DEL) funding with a 10% reduction against forecast expenditure for 2013-14.

Implementation of local schemes of support

We have now entered the third year of Council Tax Reduction schemes – research shows that 250 (of 326) English authorities now require everyone to pay at least some Council Tax regardless of income, 6 more than in 2014-15 and 21 more than in 2013/14. This note provides information on implementation since April 2013.

Government review

The Local Government Finance Act 2012 placed a requirement on the Government to conduct a review of all local Council Tax support schemes within three years of the Act taking effect. The review was launched on 2 December 2015 and is being led by former council leader and Member of Parliament Eric Ollerenshaw OBE. According to the accompanying press release, the review will look into “how local Council Tax support schemes are working across the country.” The review will also consider “whether it should be part of the Universal Credit payments in the future.” Council Tax support is not currently planned to form part of Universal Credit.

Background

Background on the proposal to localise this support and attempts to amend the legislation as it progressed through Parliament can be found in Library Briefing Paper 06101, Localising Support for Council Tax – background.

Commons Briefing papers SN06672

Authors: Wendy Wilson; Shiro Ota

Topics: Housing, Housing benefits, Local government, Working age benefits

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