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02.12.15

Government considers adding council tax support to Universal Credit

Former MP and council leader Eric Ollerenshaw will chair a review on behalf of the DCLG to assess if local council tax support (LCTS) schemes are acting as a fair and effective system countrywide, and whether it should become part of Universal Credit payments in the future.

The review will also examine how the reform of council tax benefit has been implemented and how it affects those reliant on this support.

All interested parties can submit evidence to be used as part of the review, which will focus on the key themes of system effectiveness, efficiency, fairness and transparency.

Ollerenshaw’s review team is particularly keen on hearing about council experiences designing and implementing an LCTS scheme, as well as what the main challenges were and how these have changed over time.

Information on the impact the scheme had on local autonomy, local finances and budgeting, and local residents is also welcome.

Local government minister, Marcus Jones, said: “As we continue our efforts to cut the deficit, we’re determined that support is available for those who need it most and councils, with their expert knowledge of their communities’ needs, are best placed to do this.

“That’s why we put power in the hands of local authorities to offer council tax support to people in their area. This independent review is about understanding how this has been implemented over the past two years, and how areas could learn from each other.”

Ollerenshaw said the review’s findings will be based firmly on the evidence gathered from a diverse range of sources, but he will also meet with a selection of councils to obtain practical insight into how the support scheme has been delivered to date.

Responses should be a maximum of six A4 pages typed, but respondents can also submit supporting document as part of evidence.

These should be submitted electronically to lctsreview@communities.gsi.gov.uk until 12 January. The group will report to communities secretary Greg Clark MP by the end of March 2016.

Background

Council tax benefit (CBT) was replaced by LCTS schemes in April 2013, at which point councils were handed 90% of their forecast CBT cost and the freedom to design individual schemes.

The aims of the policy were to denationalise power by increasing financial autonomy, but particularly to mitigate growing deficits by saving the Treasury £500m a year.

But the scheme was controversial from the start, with local authorities predicting that up to half of people on low incomes would refuse to pay council tax after switching from claiming benefits to paying a yearly bill of £247 from the month the reforms were kicked off.

Many also compared the reforms to the poll tax, with Peter Kenway, of the New Policy Institute think tank, saying ahead of its launch that it was “not scaremongering to say that this policy could be a repeat” of the botched Thatcher tax.

Other concerns have arisen since then, including criticism from the National Association of Local Councils that some local authorities were refusing to pass on £3.8m of funding to parish and town councils that would help them mitigate the impact of LCTS schemes. Former local government minister Kris Hopkins also wrote to 31 councils in particular who did not intend to pass any of their council tax support funding to their parishes.

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