Agenda item

The Executive received a report on the setting of the Council Tax Base for 2016/17 which reviewed the changes to Council Tax made in 2013/14 and the Local Council Tax Support Scheme introduced in April 2013. 

Members noted that there had been an increase in the tax base of 289.70 which would generate an additional income of £61,500 based on the current Band D council tax charge.   The Executive received detailed breakdowns of the calculations of the Tax Base for each part of the Borough and a breakdown of the calculation of the Tax Base for the whole area.

Technical changes to Council Tax had been introduced from April 2013 under the Local Government Finance Act 2012 which meant that the Council was empowered to set a number of changes to Council Tax discounts and exemptions as well as introduce a premium for long term empty properties.

On 1 April 2013 the Council had introduced a new Local Council Tax Support Scheme (LCTSS) to replace Council Tax Benefit, for working age claimants. The new scheme operated as a Council Tax discount and the Council was able to vary the value of discount on Council Tax granted to working age claimants. Pensioner claimants were protected and would continue to receive help towards their council tax based on regulations set by Central Government.

The funding given by Government to fund the new scheme was insufficient to pay the full cost of granting all claimants 100% discount.  Members had taken the view when setting the scheme in January 2013 that the cost of the LCTSS should not fall on local tax payers and so had set the discount level at 70% for working age claimants, subject to a number of specific exemptions for defined vulnerable groups.

Members had also agreed to put £10,000 into a hardship fund for individual cases for 2015/16.   An increasing number of hardship payments had being refused as the current procedural guidance required the applicant to have been in receipt of council tax benefit as at 31 March 2013. It was proposed that the guidance be amended to remove the reference to this requirement.

In 2013/14, a separate grant of £419,000 had been received from the Government to fund the scheme. This however had been included within the overall support grant from 2014/15 onwards and was not separately identifiable.  It was anticipated that the loss of income to the Council would amount to £416,000 in 2016/17 as a result of the discount given for the LCTSS. Given that overall government funding was being reduced it was likely that the reduced grant paid would not meet the cost of the LCTSS.  If reductions in funding continued it was likely that the scheme might have to be reviewed in 2016/17 with a view to increasing the amounts claimants paid from the existing 30% to 40%.   However this would need to be balanced against claimants’ ability to pay any additional council tax.

In addition, the Department for Communities and Local Government had launched a review into how local Council Tax support schemes were working across the country.  It was recognised that any revisions to the scheme would need to reflect government changes.

For ease of administration it was important that there was alignment in respect of treatment of income and calculation of applicable amounts between housing benefit and the local council tax support scheme. Each year the Government made minor changes to its scheme to reflect uprating of benefits etc. In order that the housing benefit and LCTSS remained aligned, it was proposed that the Executive Head of Finance be authorised to make such minor changes as may be necessary to the LCTSS for all types of claimant.

The introduction of the LCTSS in April 2013 had had the effect of reducing the Council Tax base since it operated as a discount rather than a benefit.   In order to recognise the effect that this had on parishes the Government had provided a grant to in 2013/14 to give to parishes to ensure they were no worse off because of the introduction of the LCTSS. This amounted to £22,923. The grant had again been provided in 2014/15 but as it had not been separately identifiable the Council had agreed to reduce the parish element by 13% in line with the overall reduction in funding received by the Council.  It was proposed that no reduction be made in the current financial year and that the situation be reviewed again in 2016/17 in the light of further anticipated Government funding reductions. This would also mean that Parishes would not have to increase their precepts in 2016/17 just to cover any grant reduction.

Resolved

(i)              to note the calculations of the tax base in Annexes A to F summarised below:

(ii)            to note that the changes to Council Tax discounts made by Executive on 7 January 2014 under the freedoms given in the Local Government Finance Act 2012 and relevant statutory instruments remain unchanged for 2016/17;

(iii)          that £19,943 be given to Parishes in 2016/17 to offset the effect on the tax base of the Local Council Tax Support scheme; and

(iv)          that the final setting of the Tax Base be delegated to the Executive Head of Finance.

Recommended to Full Council that

                                     (i)                the Local Council Tax Support Scheme for Surrey Heath, approved by Council on 22 January 2013, be amended to remove the award of a Family Premium for any new claims or new births after 31 March 2016;

                                    (ii)                the Executive Head of Finance make any further minor changes to the Local Council Tax Support scheme so as to ensure that where applicable to income and applicable amount calculation it remains in line with Housing Benefit changes introduced by legislation; and

                                  (iii)                incomes and applicable amounts and non-dependant deceptions be uprated, in line with the percentages and amounts supplied by the Department of Work and Pensions and the Department of Communities and Local Government, and applied to Housing Benefit claims.