Agenda item

Councillor Ron Ower, Cabinet Member for Housing Company Development & oneSource Management, introduced the report

Cabinet was reminded that at its meeting on 3 September 2014, Members were made aware that a review of the Council Tax Support Scheme was being initiated due to anticipated reductions in settlement funding for 2015/16 which included the rolled-in CTS grant and the consequent need for the Council to consider a range of spending reductions or realignment of budgets.

The provisional settlement which had been announced in December for the 2015/16 financial year had seen a 17% reduction to the upper and lower tier funding allocations.  From 2013/14, Council Tax Support had been rolled into the formula and was therefore no longer separately identifiable.  If the upper and lower tier reduction was to be applied to the already reduced Council Tax Support allocation, the funding would reduce by a further £1.9m.  Cabinet had, as a consequence, initiated consultation on a series of proposals to reduce Council spending and to consider Council Tax levels.  Consultation on proposed reductions to the Council Tax Support Scheme formed part of these proposals.  The Council would also need to consider its use of reserves and balances in coming to a decision on the Council Tax Support Scheme.

Full Council on 17 September 2014 also considered increasing the Council Tax level for properties which had been empty for more than two years to 50% above the standard Council Tax rate.

The report considered responses to the consultation about the budget position overall and specifically with respect to Council Tax Support and made proposals in relation to both the Council Tax Support Scheme and empty homes.  Formal consultation with residents, persons affected and the Greater London Authority (GLA) had been appended to the Council’s Financial Strategy.

Reasons for the decision:

The Council had consulted on a broad package of savings and an overall budget strategy which included changes to the CTS Scheme and this consultation has provided broad support for the strategy.

The proposed CTS scheme for 2015 would bring Havering into line with neighbouring borough schemes.  The scheme itself had been designed to assist people on low incomes pay their council tax. Certain vulnerable groups faced barriers to work which resulted in less earning power and entitled them to claim CTS.  An even distribution of the 15% reduction did not therefore disproportionately impact any specific single vulnerable group.

A CTS bill at only 15% of the standard rate was felt to be reasonable for a CTS claimant who may also be a first time council tax payer to pay over the course of a year.

In making their recommendation, officers noted that approximately 10,000 consultation questionnaires had been posted to working-age CTS claimants and not to a corresponding number of residents who were not in receipt of CTS.  It was possible that respondents may have found it more important and convenient to fill in and return a paper survey rather than go online to complete the same survey.  

While the consultation response had shown 363 respondents were not in favour of reducing CTS by 15% or reducing the capital limit from £16,000 to £6,000, the majority of the 2,000 people responding to the wider budget strategy supported the overall priorities contained in it, which included £1.2m savings coming from the CTS scheme.

By applying the Empty Homes Premium, Havering would fall into line with other London Boroughs which had already introduced this increase in council tax and encouraged owners of these empty properties to bring them back into occupation. 

Other options considered:

Eight options were considered at Cabinet and reconsidered by Officers in light of the consultation responses.  The CTS options could be found in the Cabinet report of 3 September 2014. 

Five of these alternatives options reduced expenditure by varying degrees but not sufficiently to make significant savings and so would fall outside of the strategy and priorities set by the Council and consulted on.  Two alternatives did provide the savings through the scheme but would have placed a significant burden on the CTS claimant to pay 20% or more in Council Tax.  The 15% figure was considered to be fairer.   

The option outlined in Appendix C to the report was considered the fairest proposal to CTS claimants and council tax payers if the CTS scheme was to be included as part of the savings package.

While the Council had reserves it could use to fund the CTS scheme, it could only be used for one-off savings and schemes in future years would still need funding.  The Council’s overall budget strategy was consulted and did not include use of balances or reserves.  No significant responses had been received suggesting the Council should not reduce spending but instead should use reserves.

The option of increasing the Council Tax was already being considered as part of the main budget strategy.  Consultation with the public had shown a majority were not in favour of a higher Council Tax rise than proposed in the Strategy.

Cabinet:

1.         Noted and considered the responses to the CTS and Empty Homes Premium consultation appended to the Council’s Financial Strategy Cabinet report considered in the Financial Strategy report.

2.         Noted the financial pressure of the reduction in settlement funding considered in the Financial Strategy report and the potential impact on the Council Tax Support allocation.

3.         Approved and recommended to Council the adoption of the proposed revised local council tax support scheme as summarised in Appendix A to the report with effect from April 2015.

4.         Approvedan increase of 50% to the standard rate of council tax for properties that had been empty for more than two years with effect from April 2015, subject to the current discounts and exemptions.