Members received the report of the Revenue and Benefits Manager which outlined a proposed consultation with both the public and the Major Precepting Authorities in respect of proposed changes to the Council’s Council Tax Reduction (CTR) Scheme with effect from 1 April 2024.

The current CTR scheme administered by the Council was divided into two schemes, with pension age applicants receiving support under the rules prescribed by central Government, and the scheme for working age applicants being determined solely by the local authority. When CTR was introduced in 2013, for working age applicants, the Council broadly adopted the previous means tested Council Tax Benefit (CTB) scheme as the basis of awarding support.  However, due to the reduction in funding from central Government, the Council had, since 2016, also required working age applicants, even those on the lowest income, to pay a minimum payment of 20%.

Significant improvements had been made to the working age scheme with the introduction of a banded scheme in 2019; consideration of further changes was now required to improve the scheme further, given the financial pressures being experienced by low-income households.

Under the CTB scheme, almost 75% of working age applicants would not have been required to pay any Council Tax and would have received full (100%) support. Since the CTR scheme’s introduction, low-income taxpayers, the poorest households, had been unable to pay the balance leading to additional costs, court, enforcement action and, in some cases, the amounts demanded had been written off as uncollectable. Whilst the overall level of council tax collection had remained relatively stable at around 98%, the collection levels for working age CTR applicants was significantly lower.

With the difficulties in collection experienced, the relatively high level of arrears and the administration costs, it may have no longer made the amounts economically viable to collect, notwithstanding the negative effects to those poorest households. In addition, the costs of administration of these cases by the Council had increased significantly over the years; these costs were borne mainly by the Council.

The proposed changes in the scheme for 2024/25 were to increase the working age maximum to 100% and to remove the £5 per week minimum payment. The minimum payment was where any entitlement below £5 was not currently paid.  When CTR was first introduced in 2013, this resulted in a significant cost reduction.  However, with the introduction of Rother’s current scheme in 2019, it now effected very few CTR recipients and therefore should have been removed when the banded scheme was introduced. The proposed 2024/25 discounts available based on current income thresholds were outlined in the report for Members’ information.

The current scheme cost the collection fund around £8.2m.  The proposed changes, taking into account an estimated 5% overall increase in the Council Tax charge for 2024/25, would increase costs to around £9.48m. The costs of the scheme were borne directly in accordance with the percentage received from the collection fund. The proposals would increase the cost of the CTR scheme for 2024/25, however the general increase in the taxbase plus the potential additional income allowed by new legislation (Levelling Up and Regeneration Bill) could offset all the additional costs.

The Council was required to undertake a consultation with both the public and the Major Precepting Authorities when changes to the CTR scheme were proposed. It was therefore proposed to run a six-week consultation exercise during November and December. The consultation would take the form of an online survey, asking stakeholders for their views on the proposal. Details of the consultation documentation were attached to the report at Appendix A and the consultation results would be reported to Members during early 2024.  

With the imminent Royal Assent of the Levelling Up and Regeneration Bill, it was the Government’s intention to allow English billing authorities to: reduce the minimum period for the implementation of a premium for empty premises from two years to one year; and to allow Councils to introduce a premium in respect of second homes (dwellings that are unoccupied but furnished), of up to 100%.  The first could be introduced from 1 April 2024 and the second would require a notice period of one year and therefore the expected start date will be 1 April 2025. The estimated additional income was outlined in the report for Members’ information.

Members had the opportunity to ask questions and the following points were noted during the discussions:

•     it was suggested that all residents should pay a minimum rate of council tax, as the removal of such a requirement would have an adverse effect on all the preceptors;

•     the consultation paper should explain the consequences of amending the scheme and offer alternative options;

•     the estimated additional income that the Council could receive from introducing a premium for second homes should not be included in the consultation paper as a way to offset the reduction in council tax received, because this was yet to receive royal assent;

•     any change to the scheme would affect all preceptors;

•     the Council’s Exceptional Hardship Fund and Household Support Fund were available to support residents experiencing financial difficulties, without the need to amend the scheme;

•     the current economic climate and cost-of-living crisis disproportionally affected the vulnerable, resulting in many of those residents now not being able to afford to contribute. The Council had a duty to support its residents; and

•     officers would provide Members with details of the costs involved with chasing unpaid bills after the meeting.

RESOLVED: That Cabinet be requested to consider that the Council consult with the public and Major Precepting Authorities on proposed changes to the Council Tax Reduction Scheme for working age applicants with effect from 1 April 2024.

(Councillor Clark declared a personal Interest in this matter as a Member of East Sussex County Council and in accordance with the Members’ Code of Conduct remained in the meeting during the consideration thereof).

(Councillor Maynard declared a personal Interest in this matter as an Executive Member of East Sussex County Council and in accordance with the Members’ Code of Conduct remained in the meeting during the consideration thereof).