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Issue for Decision

Each year Full Council must approve the Council Tax Reduction Scheme for the

following year. Where there are changes proposed, it is necessary for a public consultation to take place.


This report advises on the outcome of the Public Consultation and makes a recommendation to Council that the 2021-2022 Council Tax Reduction Scheme be implemented.


Recommendation Made

That the 2021-22 Council Tax Reduction Scheme be implemented (Model 2).  

Reasons for Recommendations

In amending the scheme for 2021-22 the intention is to mitigate the impact

of Universal Credit (UC) on the administration of the Council Tax Reduction

Scheme (CTRS), together with the billing and collection of Council Tax.

Since its introduction in April 2013, our local scheme has been ‘refreshed’

annually and further changes introduced to ensure that the scheme

remains affordable whilst providing support for those most in need.

Universal Credit has introduced fundamental changes to how the welfare

System operates and replaces a number of existing benefits including

Income Support, Job Seekers Allowance, Employment Support Allowance,

Working Tax Credits, Child Tax Credits and Housing Benefit. CTR is administered as a local discount, putting it outside of the welfare system and scope of UC.


CTR provides financial assistance in the form of a rebate on the Council Tax

bill and whilst cost had reduced over recent years the economic impact of

Covid-19 has reversed that trend, with significant increases in demand and

cost over the current year.

·         2019/2020 £ 8,652,758


·         2020/2021 £ 8,500,000 (original estimated pre COVID)

£10,083,800 (revised estimated due to COVID)


·         2021/2022 £10,487,000 (estimated)

Council Tax Reduction cases for working age claimants have increased since

March by 675 from 5,486 to 6,161. A further increase is probable with the

end of the furlough scheme in March 2021. A further increase of over 500 households seeking support could increase the cost of award of Council Tax

Reduction by an estimated £500,000.

There are frequent changes in UC entitlement to mirror earnings which

provide a benefit to the recipient. However, this represents a challenge for

the administration of the CTRS due to the increase in reported changes

through UC and DWP.

CTR is calculated as a means tested benefit taking into account the

claimant’s income and wider circumstances. Earnings are averaged at the

start of the claim and reviewed periodically, with the claimant under a duty

to report material changes such as an increase in working hours, someone

moving in or out of the property. On average, customers report between 2-

4 changes per year.

The changes reported to the Council through UC and DWP are significantly

higher, reflecting the link between monthly earnings and benefit

payments, with many changes reported per customer annually. Changes

can occur each month.

Given the link between the calculation of CTR and collection of Council Tax,

this means some customers receive a new Council Tax bill every month

due to what could be minor variations in their earnings and UC award.

Such a situation provides confusion for customers, limits the effectiveness

of the Council in recovering unpaid Council Tax and adds further cost to

the administration of the CTRS.

At its meeting on 21 July 2020, Policy and Resources Committee was

advised many authorities have moved to income banded schemes and

these have been successfully in operation in authorities in Kent and across

the country for a few years now.


Policy and Resources Committee was advised that an analysis had been

carried out and an income banded scheme was the fairest and simplest to

administer and explain to customers. The only changes that would be necessary were if the claimant moved into a different earnings band.


Only employment earnings are used in the calculation. So for any claimant who is in receipt of a benefit such as Income Support, Job Seekers Allowance, Employment Support Allowance, Working Tax Credits, disability allowances/premiums child tax credits and maximum UC, these will not be included as income for the income banded scheme.


The objectives considered when looking at an income banded scheme were


·          Maintain the maximum basis of award of 80% of Council Tax liability

·         Protect disabled households

·         Simplify assessments and reassessments

·          Maintain costs of award in line with the current scheme had it been carried forward to 2021-22

·         Understand the impact on specific groups based on gender, disability and age.

3 models have been considered and outlined below.


Model 1:


·         Monthly income is based on net employment earnings

·         Working-age households with earnings above their respective thresholds, or with savings above £10,000, are not eligible for support

·         Cost of award estimated to be the same as the current scheme if it had

         been carried forward to 2021-22 (Model 1 was modelled on this


·         Introduction of lower-rate and higher-rate non-dependant deductions

         (these are deducted from CT liability):

o   Lower non-dependant deductions of £5/week

o   Higher non-dependant deductions of £10/week


The monthly earning bands and maximum award are:





Model 2:


Model 2 is the same as Model 1 except for an additional 5% uplift to

Council Tax Support for households in receipt of disability or illness

benefits in respect of the claimant or their partner (subject to a maximum

level of support of 80%), on top of the protection of benefits not being

taken as income.


·          5% uplift for bands 2-5 for households in receipt of disability or illness benefits (DLA/PIP or ESA in respect of claimant, partner or child). (Households in band 2+ are households that fall into band 2 (maximum award 65%) but receive an uplift of 5% taking them up to 70%).

·         This model is estimated to cost £15k per annum more than the current

          scheme if it had been carried forward to 2021-22.


The monthly earning bands and maximum award are:


Model 3:


Model 3 is a further model but with maximum support of 70%, except for

households in receipt of disability or illness benefits which will have

support uplifted by 10% to 80% in band 1.

·         This model will cost £288k less than the current model had it been carried

forward into 2021-22.



The income banded scheme makes it a fairer scheme for all claimants, but to mitigate any significant impacts an Exceptional Hardship Scheme will be in place

(Appendix 5).


Although full migration to Universal Credit is not expected until 2024,

more and more people are being moved onto UC. With the Exceptional

Hardship Policy in place, this will protect those who might otherwise

experience severe financial hardship, especially with the change to a new

Council Tax Reduction Scheme.





Decision makers are reminded of the requirement, under the Public Sector

Equality Duty (section 149 of the Equality Act 2010) to have due regard to


(i) Eliminate unlawful discrimination, harassment and victimisation and      conduct prohibited by the Equality Act 2010,

(ii) Advance equality of opportunity between people from different groups

(iii) Foster good relations between people from different groups.


An equality impact report covering the implications of amending the current scheme and introducing a revised scheme from 1 April 2021 is detailed in Appendix 2. A full EQIA is in Appendix 6.


Alternative Considered and Why Not Recommended

Option 1 (Model 1) This would be the most straightforward model to

implement and administer, and the simplest to explain to customers. Those

in receipt of disabled and illness benefits are protected as these benefits,

which can make up a significant amount of household income, are not

taken into account when calculating CTR.


Option 2 (Model 2) In addition to the protection received under

Model 1, an additional 5% uplift in support is given to those in receipt of

disability and sickness benefit who do not fall into Band 1 (maximum award

80%). This was the favourite model of the public consultation.


Option 3 - Implement Model 3. This was the least favourite model. For the

claimants that are not in receipt of disabled/sickness benefits the maximum

award would be 70% rather than 80%. Those in receipt of disability/sickness benefits would receive maximum award of 80%. This means the majority of claimants will only receive maximum support of 70%.


Option 4 - do nothing and continue with the current CTR Scheme.

The option of ‘do nothing’ will be administratively time consuming, with an inevitable increase in printing and postage. Policy and Resources Committee took the decision on 21 July 2020 to introduce a new simplified income banded

scheme and carry out a public consultation with the 3 models shown in

Appendix 3.

Background Documents



Appendix 1 - Consultation Results

Appendix 2 – Full Banded Scheme Report

Appendix 3 – Banded Schemes 1, 2 and 3

Appendix 4 – Model 1 Case Scenarios

Appendix 5 – Exceptional Hardship Policy

Appendix 6 - EQIA