Agenda Item No


The Vale of Glamorgan Council


Cabinet Meeting: 17 December 2012


Report of the Managing Director


Council Tax Reduction Scheme


Purpose of the Report

1.         To consider and recommend the Council Tax Reduction Scheme for consultation. 


1.         That the national scheme is adopted with the following discretions -

·               that the Council should continue to allow extended payments up to a maximum of 4 weeks;

·               that the Council should continue to disregard War Widow and War Disablement pensions in assessing income for Council Tax Reduction;

·               that the Council should continue to allow backdated benefit for a period of up to 26 weeks.


2.         That the scheme is put forward for consultation and for consideration by Council in January 2013.

3.         That in the light of the timescale the Council’s urgency procedure is used.

Reasons for the Recommendations

1-3    To enable the Council Tax Reduction Scheme to be approved by Council by 31 January 2013 and be in place for implementation from 1 April 2013



2.         As part of the UK Government's Welfare Reform Agenda, with the enactment of the Welfare Reform Act 2012, the existing Council Tax Benefit scheme has been abolished with effect from 31 March 2013.  The Local Government Finance Act 2012 enables the Welsh Government to make regulations to establish a Council Tax Reduction Scheme in Wales.  From 1st April 2013, a new scheme called Council Tax Reduction will be introduced.  There are two sets of regulations governing the scheme, which a currently in draft and are due to be considered by the assembly on 19th December 2012.  Given the timescales, the draft regulations have been used to form the basis of the scheme for consultation.

·               The Council Tax Reduction Schemes (Default Schemes) (Wales) Regulations, which establish a single national framework scheme which would be imposed on any council that fails to adopt its own scheme by 31 January 2013, and

·               The Council Tax Reduction Schemes and Prescribed Requirements (Wales) Regulations, which set out the national requirements that each billing authority must satisfy and also enable additional areas of local discretion that authorities might wish to implement.

Relevant Issues and Options

3.         Welsh local authorities have until 31 January 2013 to adopt a scheme exercising any of the discretions permitted under the Prescribed Requirements Regulations. This requires a decision by full Council.  If the authorities fail to adopt a Council Tax Reduction Scheme by that date the default scheme will apply.  With regard to the areas of discretion under the Prescribed Requirements Regulations, the local authorities will only be able to implement discretionary elements that are more generous than the minimum requirements set out in the regulations, and that any flexibility is to be locally funded. 

4.         The main difference with the new scheme is in relation to funding - in that the Council Tax Reduction Scheme will not provide a 100% reduction to the council tax bill.  All households with a council tax liability will be required to make a contribution. Further technical changes are set out in Appendix A.

5.         The discretionary elements outlined in the prescribed scheme regulations are:

·               the ability to increase the standard extended reduction period of 4 weeks given to persons after they return to work where they have previously been receiving a council tax reduction that is to end as a result of their return to work;

·               discretion to disregard part or the whole amount of War Disablement Pensions and War Widow’s Pensions when calculating income; and

·               the ability to backdate the application of Council Tax Reduction with regard to late claims prior to the new standard period of three months before the claim.

6.         In relation to the discretions, the position is as follows -

Extended reduction period (Extended Payments)

7.         In the year 2011/12, £24,180 was paid out for extended payments for Council Tax Benefit customers.  This year up to 3rd December 2012, £20,692 has been paid out.

8.         In prescribed circumstances, an award of Council Tax Reduction will be extended for a period of up to 4 weeks where entitlement to certain qualifying benefits ends due to -

·        starting employment either employed or self-employed, or

·        a claimant increasing working hours to 16 hours or more, or

·        a partner increasing working hours to 24 hours or more, or

·        increasing earnings to an amount that ends entitlement to Income Support/Job Seekers Allowance (Income Based)/Employment Support Allowance (Income Related) or (Income Based)/Severe Disablement Allowance / Employment Support Allowance (Contribution Based).

9.         The aim is to help incentivise long-term unemployed, sick or disabled people to take up work, earn more income or work more hours.

10.      To qualify for extended payments:

·               The claimant must expect their job or increased hours to last at least 5 weeks;

·               The claimant or their partner has been entitled to Employment and Support Allowance – Income Related (ESA (IR)), Jobseekers Allowance – Income Based (JSA (IB)), Jobseekers Allowance – Contribution Based (JSA (C) ) or Income Support continuously for at least 26 weeks (or any combination of these);

·               Immediately prior to starting work the customer or partner must have been on ESA (IR), JSA (IB) or Income Support.

11.      They may also qualify if:

·               The claimant or partner has been entitled to Employment and Support Allowance (Contribution based), Incapacity Benefit or Severe Disablement Allowance and again their job or increased hours is expected to last for 5 weeks or more and they have been entitled to the above benefit continuously for 26 weeks.

12.      In both cases their benefit must cease due to the result of them starting work or increasing their hours.

War widow and war disablement pensions

13.      The council currently disregards the whole amount of War Widow and War Disablement pensions when calculating income for Housing and Council Tax Benefit.  Currently £15,460 p.a. is paid in Council Tax Benefit for war pensions and the council receives 75% subsidy from the DWP.  The net additional cost of continuing to disregard war pension is £11,595.

Backdated Benefit

14.      In the year 2011/12 £12,869 was paid out for back dated benefit for Council Tax Benefit customers.  This year up to 3rd December 2012 £13,343 has been paid out.  The current rules for backdating of a working age customer are:

·               The claimant must make a request in writing;

·               the customer must show continuous good cause for his or her failure to make an earlier claim;

·               The claim cannot be backdated more than 6 months before the date of the written request.

15.      ‘Good cause’ has been explained by tribunals and courts.  The main principles are:

·               ‘It includes any fact that would have probably caused a reasonable person to act as the claimant did’, but they are expected to take reasonable steps to ascertain what their rights may be.

16.      Case Law establishes that good cause normally falls into four categories:

·               The claimant was so ill (physically or mentally) or otherwise unable to act that they could not claim and could not ask someone to do it for them.

·               Someone the claimant should have been able to rely on (such as the Local Authority, the DWP, an advice agency and possibly others) advised them they could not get HB/CTB when in fact they could.

·               There were good reasons for the claimant not believing they could claim, amounting to more than just not thinking or caring.

·               Some external factor prevented the claimant from making a claim (e.g. failure of the postal service, imprisonment).

Proposals – extended payments

17.      It is proposed that the Council should continue to allow extended payments up to a maximum of 4 weeks for the Council Tax Reduction Scheme because this incentives people to work or take on extra hours of work and any claimant moving into employment is likely to receive their first payment from their new employer within this timescale.

Proposals – War pensioners disregard

18.      It is proposed that the council should continue to disregard War Widow and War Disablement pensions in assessing income for Council Tax Reduction.

Proposals – backdated awards

19.      It is proposed that the council should continue to allow backdated benefit for the Council Tax Reduction Scheme for a period up to 26 weeks. It would be difficult for ‘good cause’ to be proved continuously by the customer for any longer period.  Also under the Housing Benefit rules backdating is for a maximum of 26 weeks which would align the two schemes.  If both schemes are not aligned it would be very confusing for the customer as it would be very difficult to explain the differences in the two schemes.  Since April 2012 Benefits have only had two backdated requests for a period of 26 weeks for working age people.  The average request is 8-12 weeks.

Consultation and equality impact assessment

20.      The UK Government and the Welsh Government have consulted in relation to the national requirements.  The Council needs to consult in relation to the decisions on exercising discretions for the locally based scheme.  It will also be necessary to inform existing recipients of Council Tax Benefit of the implications of the changeover to the Council Tax Reduction Scheme.  It is therefore proposed to write to all existing Council Tax Benefit claimants informing them of the changes and the proposals in relation to the new scheme and the exercise of discretion.  The proposed letter setting out the changes and the subject of consultation is attached at appendix B.  Simultaneously the information and consultation will be posted on the council's web site with a hard copy being available at local libraries.  This will provide the information to council taxpayers who are not currently in receipt of benefit.  The outcome of the consultation will be included in the report to council when the final proposals are considered.

21.      The Council will be required to undertake an equality impact assessment in relation to the decisions to be made regarding the exercise of discretions.  In addition to consultation with existing Council Tax Benefit customers the Council will also need to consult with local interest groups.  These following questions would need to be included in addition to the main consultation document:

·               “The Council welcomes your opinion of the discretions and would appreciate your feedback to inform its duty to promote Equality”

·               “In your opinion should the Council offer these discretions”

·               “Please advise how these discretions will affect the services you provide”

·               “Please advise how these discretions will affect how you operate your services”

·               “Will the discretions require a significant commitment of your resources”

·               “How will the discretions have an effect on a specific group that you represent”

·               “Have you any other comments about the discretions that you would like to make”


Resource Implications (Financial and Employment)

22.      The existing Council Tax Benefit scheme is funded by the Department of Work and Pensions, through Council Tax Benefits subsidy. 

23.      The UK government has transferred responsibility and resources for Council Tax Reduction to the Welsh Government.  The Welsh Government is funding local authorities, who are responsible for delivering Council Tax Reduction thorough the Revenue Support Grant.  A revised amount of £222m has been identified for Council Tax Reduction in Wales following the Chancellor’s Autumn Statement, an increase from the provisional amount of £214m .  The funding will be distributed 50% on the basis of updated caseload figures and 50% on the latest available actual spend (2011-12).  On this basis £7,946,965 has been allocated to the Vale of Glamorgan Council. The final figures will be confirmed in the RSG settlement. 

24.      In the draft regulations the Welsh Government has set the prescribed maximum liability rate at 90%.  The estimated expenditure on council tax benefit for the current year is £8.756m.  The Council will need to collect the element of the bill not supported by the scheme.

25.      The costs of exercising the discretions as proposed in the report are estimated as follows-





War pensions disregard


Extended payments







26.      It should be noted that the costs of extended payments and backdated awards would be offset against collection losses. Total costs will be absorbed within the available budget and kept under review.

Sustainability and Climate Change Implications

27.      There are no direct climate change implications, however, the council needs to ensure that measures put in place for council tax reduction are financially sustainable.

Legal Implications (to Include Human Rights Implications)

28.      The council will be required to implement the Council Tax Reduction Scheme in line with Welsh Government Regulations and primary legislation.

Crime and Disorder Implications

29.      Future changes to benefit may have implications.

Equal Opportunities Implications (to include Welsh Language issues)

30.      Central Government and the Welsh Government have assessed the equality implications of the welfare reforms nationally.  The council will undertake an equality impact assessment of the final proposals as agreed by Council.

Corporate/Service Objectives

31.      The service objective is to administer and pay Council Tax Reduction to eligible claimants

Policy Framework and Budget

32.      The final decision on the adoption of the Council Tax Reduction Scheme will need to be made by the full Council.

Consultation (including Ward Member Consultation)

33.      It is proposed that consultation is undertaken as outlined in the report.  The report will be considered by the Task and Finish group and any comments will be referred to Cabinet.

Relevant Scrutiny Committee

34.      Corporate Resources

Background Papers

Directorate records

Contact Officer

Clive Teague

Officers Consulted

Nigel Smith - Revenues and Benefits Manager

Maureen Neave - Benefits manager

Paul Russell - Council Tax Manager

Robert Jones - Consultation Officer

Responsible Officer:

Siân Davies – Managing Director