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.Jump to full report >>
As part of the 2010 Spending Review the Coalition 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. The Government used its regulation making powers to mandate that pensioners in receipt of Council Tax Benefit at April 2013, and future pensioners, would be no worse off under schemes introduced by local authorities. This has led to the charge that the funding cut has fallen disproportionately on people of working-age.
We have now entered the fourth year of Council Tax Reduction schemes – research shows that 259 (of 326) English authorities now require everyone to pay at least some Council Tax regardless of income, 9 more than in 2015/16 and 30 more than in 2013/14. This briefing paper provides information on implementation since April 2013.
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 was led by former council leader and Member of Parliament Eric Ollerenshaw OBE.
The review was published on 8 April 2016 and praised local councils for successful implementation of schemes. However, the review highlighted inefficiencies in the current structures, including the need for annual review of the schemes. It also recommended further devolution, including at least part of the prescribed scheme for pensioners, as well as academic research into the impact of localising support on recipients.
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; Chris Murphy