Agenda item

To receive the report of the Council Tax Reduction Scheme Task and Finish Group.

The Panel considered the recommendations of the Council Tax Reduction Task and Finish Group on the Council Tax Reduction scheme 2025/26, the Council Tax Reduction Scheme Sanctions and Penalties Policy, and local exceptions to the empty home premium and second home premium, which were being introduced from 1 April 2025.

It was noted that the Scheme supported approximately 8000 claimants in paying their council tax, with the level of support being circa £10m per annum. Councils had responsibility for determining its local scheme to support those of working age, with support for pension age claimants set by Government.

The Task and Finish Group had reviewed aspects of the Scheme, taking into account a number of factors including feedback following the public consultation. Hampshire County Council had expressed concerns about making the scheme more generous, due to its severe financial pressures. 225 responses had been received to the consultation.

The Group had also taken into account the expected additional income to be gained from the Second Homes Premium.

Having taken everything into account, the Group had recommended the removal of the 10% minimum contribution, the removal of the Band D cap, an increase to the de minimis rule from £1 to £2, and to align the treatment of childcare costs with Universal Credit levels for all claims.

The Group had also undertaken the 3 yearly review of the Council Tax Reduction Scheme Sanctions and Penalties Policy.  As there had been no changes to legislation, only minor updating amendments were being proposed.

The Group had also considered the exceptions that the Government had recently announced regarding the Second Homes Premium and the Empty Homes Premium and recommended using local discretions to extend these in exceptional circumstances.

Cllr Alvey, the Chairman of the Group, thanked members of the Group and officers for their support during the review process.  He spoke in support of the recommendation to remove the 10% minimum contribution, and for the removal of the Band D cap, both of which related to the Council’s Corporate Plan objective to assist our most vulnerable residents.  He felt the report should have had more emphasis on the increased income expected form changes to the second home premiums. The Group had been informed that this extra income amounted to £2m, which would greatly exceed the additional cost to NFDC and other authorities (HCC and Fire etc), of the removal of the 10% minimum contribution and the Band D Cap.  He also queried whether a Task and Finish Group was the best way of considering such matters, and suggested that future consideration could be done directly by the Cabinet.

Cllr Heron, Portfolio Holder for Finance and Corporate, explained that the Council was contending with ever increasing prices, including annual wage increases, against fairly fixed income and a cap on council tax increases.  Consequently, there was still much hard work to do to achieve a balanced budget for 2025/26.  The Council was facing a long term deficit in 2028/29 of nearly £2.544m, which already took account of cumulative council tax growth of £1.4m.  The Council needed to maximise income and minimise expenditure. Accordingly, he asked the Panel to be mindful of these constraints when considering the Group’s recommendations.

The Chairman echoed Cllr Heron’s comments and added that the budget deficit was quite dramatic, not only for this Council but for HCC, and there was some uncertainty about how this would be rectified. He also referred to the Government imposed caps on Council Tax increases. He felt it inadvisable to suggest removing the 10% minimum contribution at this time.

Cllr Heron added that the costs of removing the 10% minimum contribution was a total of approximately £30K to the current NFDC administration. In answer to a query, officers confirmed that the overall cost of removal of the 10% minimum contribution was approximately £300K, whilst the overall expected additional income from the second homes premium was forecasted to be about £2m per year.

A member asked about the exceptional hardship threshold in respect of the proposal to align the treatment of childcare costs with Universal Credit levels for all claims. In response it was explained that the overall reduction in support for the 42 claimants was £3K per year, which affected most individuals by a few pounds. The Council had an exceptional hardship policy and process via an online form or via support by phone, and each case was looked at on its own merits and those affected would be informed of the process.

In response to a query, officers confirmed that the in-year collection rate for those subject to the 10% minimum council tax contribution had historically remained fairly stable at around 75-77%, though not all of this was collected in the financial year it was due.

It was clarified in discussion that rather than being a unanimous agreement, the majority of Group members had agreed to recommend removing the 10% contribution.

The Chairman referred to the Council’s Medium Term Financial Plan position, which as of October still required over £600,000 to be identified to help achieve a balanced budget for 2025/26.  This gap extended to more like £2.5m over a 4 year term.  The items as identified through the Financial Task and Finish group, including the requirement to support a higher homelessness budget, were also more likely make the Council’s position more challenging.

The Chairman added that in terms of Council Tax Reduction, those most vulnerable already received up to 100% relief.  The Government had also extended the household support fund into 2025/26, so that some households within the New Forest could be eligible to receive some support with their housing costs from that fund.

Whilst he acknowledged that the forecasted additional income from the second home premium was helpful, this was in keeping with the Council’s financial strategy to maximise council tax in line with Government reform and parameters.  Given this, he disagreed with the Task and Finish Group’s decision to recommend giving some of this additional income away.

The Chairman felt that on the basis the Council needed to maintain additional budget resource for homelessness, had significant budget pressures to address, and other priorities to fund, now was not the right moment to make the Council’s scheme more generous at a cost of over £30k to the Council.  He also felt members should be mindful of the significant financial pressures faced by the County Council at this time, with a lot of that pressure emanating from their services supporting the most vulnerable adults and children, including residents within the New Forest.

Accordingly, the Chairman proposed that the Panel should agree the proposals set out in Recommendation 1 as made by the Group, with the exception of Part a), which he proposed be removed from the recommendation up to the Cabinet.

On Recommendation 3, the Chairman felt that in respect of second and empty homes, there was merit in keeping the Council’s policy and scheme in alignment with the Government’s position, on exceptions as opposed to employing local discretions.  He explained that alignment with the Government’s position on this made things more simple and clear for residents who may move from one area to another, and could incentivise quicker action by homeowners, as opposed to further extending the exceptions, and again being more generous, on a localised basis.

The Chairman therefore proposed to recommend removing the proposed local discretion at Recommendation 3 as per paragraph 42 of the report and apply the prescribed terms as outlined in paragraph 41 of the report.

Some members felt there were advantages to retaining local discretions rather than using national rules, which did not always fit local demographics and circumstances. The Chairman pointed out that the proposed local discretion to extend the period by up to six months where a premium cannot apply, would mean an undesirable loss of income.

Both proposals were put to the vote and agreed.

Cllr J Davies proposed that Recommendation 1d) (the alignment of childcare costs with Universal Credit for all claims at a saving of £3k to precepting authorities) be removed. This proposal was voted on and was lost.

RESOLVED:

That it be a recommendation to Cabinet:

1.           That the following changes be agreed in respect of the Council Tax Reduction Scheme from 1 April 2025:

a)     The removal of the Band D cap at an overall cost to precepting authorities of £33k.

b)     The increase of the de-minimis rule to £2 at no net cost.

c)     The alignment of childcare costs with Universal Credit for all claims at a saving of £3k to precepting authorities.

2.           That the Council Tax Reduction Scheme Sanctions and Prosecution Policy be approved.