THE FULL FACTS

From 1 April 2013 this will change as the Government will no longer manage a national scheme but is telling local councils they will need to set their own local ones.

The new scheme, called Council Tax Support will see the Government cut Plymouth City Council's funding by at least £2 million. At the same time the responsibility for the benefits will be transferred from the Department of Work and Pensions to local councils.

Council Tax Benefit changes

The Government proposes to replace Council Tax Benefit in England with ‘localised support’ through local councils from April 2013.
Aim

At the moment local councils administer Council Tax Benefit in their areas based on rules set centrally.

Under the new scheme, councils would be put in full charge of setting the Council Tax rates, collecting payments and providing financial support to pay Council Tax using a new form of discount.

The aim is to reduce the current £4.8 billion annual Council Tax Benefit bill across Great Britain by 10%.
Objectives

The Government believes this new system will:

* simplify the complex system of criteria and allowances
* establish stronger incentives for councils to get people back into work
* save the taxpayer up to £480 million a year.

How the new scheme will work

A fixed amount of money will be provided to local authorities by central government to operate the new schemes.

Pensioners will be protected against any reduction in support, so savings will have to be made from the assistance the working-age population receives with their Council Tax. It will be up to the individual councils to decide exactly how to achieve these savings within the design of their scheme. This will involve looking at which people who are of working age will be eligible for assistance and how much this help will be worth.

If each council has its own scheme with its own qualifying criteria, there will be a ‘postcode lottery’ whereby a person might receive assistance from one authority but would not qualify for assistance if they moved to another.

Local councils should be able to make adjustments to their schemes each year to accommodate for changes in need in their area.
Challenges

Finding the best ways to:

* protect vulnerable groups who can’t increase their income through work
* withdraw support from people of working age while supporting the ‘better off in work’ message of Universal Credit
* handle appeals – currently Council Tax Benefit appeals are dealt with by an independent 'first-tier' tribunal but they might be handled locally under the new scheme.

The next step

Central and local government departments will start work on model schemes. The plan is for the new system to be in operation by Spring 2013.
Council Tax Benefit reforms in Wales and Scotland

Although Wales and Scotland are not covered by this new scheme, the target to reduce Council Tax Benefit spending by 10% affects all parts of Great Britain. Therefore separate proposals for these countries are likely to be made.
Further information

* Joseph Rowntree Foundation Reforming Council Tax Benefit report (link opens in a new window)

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