Councils responsible for council tax have to weigh the demands for lower taxes with the need to fund services, and protect their most vulnerable residents.

On 31 January Surrey County Council’s cabinet will consider a proposal to increase its council tax for 2017-18 by 15% to fund social care services. If approved, the plan will be reviewed by Members a week later and, if they approve it, a referendum will take place on 4 May to seek residents’ approval.

Surrey CC’s proposal has made headlines not least because local elections, this year being held on 4 May, tend to have the effect of curbing council tax rises.   

The impact of council tax changes to vulnerable households is of high importance to elected members and modelling how changes will affect people is no easy task. Add to that the need to consider the full impact of changes on households already hit by cumulative welfare reforms, at a time when Universal Credit is being rolled out, and the complexity of the task becomes clear.

How can council officers keep members happy?

The budget challenge

Last year, nearly 75% of councils cut council tax support budgets because of the funding pressures they faced. Writing at the time, Policy in Practice said that this was a predictable outcome from the decision to localise support in April 2013, whilst simultaneously cutting support by 10%.

Surrey’s bold move is, according to Simon Dudley, Conservative leader of the Royal Borough of Windsor and Maidenhead, the “canary in a coal mine” that illustrates the stark funding cuts and resulting difficult decisions faced by local authorities.

Recognising the pressure councils face in funding adult social care, the Government recently announced plans to allow councils in England to raise extra funds via the council tax social care precept by up to 3%.

Despite having made £450m of savings in its annual budget and with plans to save £700m by 2020, Surrey CC says this is not enough to maintain services. It estimates increased demand for adult social care alone will cost £24m per year. Because it proposes raising the council tax by more than the new 3% allowance, Surrey CC must hold a referendum.

Local elections may limit council tax rises

The 35 English local authorities holding local government elections on 4 May all have social care responsibilities and can therefore raise council tax by the 3% social care precept, if they choose.

However, analysis carried out by Incisive Health indicates that 32 out of the 35 councils up for election chose to freeze or cut council tax when they were last up for election four years ago. It says “Campaigns to ‘freeze council tax’ have been a common feature of local election campaigns in recent years, as council candidates seek to put themselves on the side of hard-working families.” If councils don’t increase council tax this could lead to a £500 million black hole in adult social care budgets, it argues.

Supporting the most vulnerable residents

As well as considering whether to raise council tax, local authorities also have to decide how to structure their localised council tax reduction schemes to provide the best support possible for their most vulnerable residents.

The majority of councils now require all working­ age residents to pay at least some council tax regardless of their income. Councils are making efforts to protect residents. However, as one council officer put it “We can’t see whether the people clobbered by cuts in national support are the same people that will be hit by local reforms.”

Policy in Practice is helping councils model the costs and impacts of future schemes. Looking ahead at schemes from April 2017, we are seeing a trend towards higher council tax liability, which has a knock-on effect on the amount that unprotected low income households have to pay. We are also being asked to model simpler schemes, and helping councils to look at who might be impacted by different schemes.

Designing the best council tax reduction scheme possible

This week we held a webinar to share the work we’ve done with local authorities to help them model CTR scheme options.  Steve Hill, Head of Benefits and Services, London Borough of Tower Hamlets, was our guest speaker. View slides and recording.

When will CTR schemes change?

We asked delegates about their own plans to change their CTR schemes. The majority are planning to change their schemes in the future but don’t know when, a third are changing their schemes in 2018-19 and a fifth are changing theirs in 2017-18. The rollout of Universal Credit appears to be driving the timeframe.

What are the biggest challenges to changing a CTR scheme?

Changing a CTR scheme is not easy. The main challenge that webinar attendees identified is the ability to model complex schemes, ensuring that future changes to household income levels as a result of welfare reforms are factored in. Stakeholder consultation is another significant challenge. Involving members and reducing administration costs are lesser challenges whilst designing schemes in the timeframe required is a minor challenge.

What’s driving the need to change CTR schemes?

It is no surprise that, as Surrey CC’s plans for increasing council tax highlight, reducing the cost of the CTR scheme overall is the number one driver for change.  Creating savings is more of a factor than preparing for the rollout of Universal Credit and the need to tackle administration costs. And all of these are a greater impetus for change than supporting vulnerable households.  

Policy in Practice has modelled CTR scheme options for 23 local authorities, each with their own unique combination of principal objectives and overarching local policies. Whilst the need to identify savings and reduce costs is common to all, we’ve also shown councils how changing details of a scheme can deliver on a council’s strategic objective.

For example, the CTRS modelling work we carried out for one city council in south England helped officers to reassure members that families would be protected, a strategic council priority. The proposals received cross party support and are currently with Cabinet for sign off.

How Policy in Practice has helped local authorities

Policy in Practice helps councils to design CTRS schemes that also consider the cumulative impact of current and future welfare reforms on residents, one of the recommendations made by an independent review of local council tax support (Three Years On: Independent Review of Local Council Tax Support Schemes, Eric Ollerenshaw, April 2016).

In the report Ollerenshaw said,

“A very limited body of evidence on the impact of LCTS on recipients and, crucially, the collective impact when considered alongside other welfare reforms. The point has been made by many. There is clearly a need for some in-depth and academic research in this area.”

We have permission from existing clients to share their reports with other local authorities who may be similar in structure, demographics or strategic vision to your council. To request and existing client report click here.

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  • This article was amended on 24 January 2017 to clarify that the Bedfordshire council tax referendum was on a proposal for a 15. Before you post, we’d like to thank you for joining the debate – we’re glad you’ve chosen to participate and we value your opinions and experiences.


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