Written Statement - Update on the Arrangements for the Council Tax Reduction Schemes in 2014-15

I wish to update Members on arrangements being made for Council Tax Reduction Schemes (CTRS) in 2014-15.

Today, I have laid two sets of bilingual Regulations relating to Council Tax Reduction Schemes which will apply for the financial year 2014-15 and onwards.  These are:

• The Council Tax Reduction Schemes and Prescribed Requirements (Wales) Regulations 2013; and
• The Council Tax Reduction Schemes (Default Scheme) (Wales) Regulations 2013.

These Regulations will govern the operation of Council Tax Reduction Schemes in 2014-15 and onwards, subject to the approval of the National Assembly for Wales.

• One set of Regulations will place a duty upon Local Authorities to introduce Council Tax Reduction Schemes in their area which are to apply from 1 April 2014, will prescribe the requirements which must be included in local Schemes introduced by individual Local Authorities in Wales and will specify a number of areas of limited local discretion (‘the Prescribed Requirements Regulations’); and
• The other set of Regulations will prescribe the ‘default’ Council Tax Reduction Scheme, which will take effect if Local Authorities do not adopt their own Schemes by 31 January 2014.

These new Regulations are closely based on the Regulations which introduced Council Tax Reduction Schemes in Wales following the UK Government’s abolition of Council Tax Benefit which are limited to 2013-14 by virtue of a sunset clause. They retain the National Framework scheme and maintain entitlements for eligible claimants, at their current levels, for a further year. Over the summer, I made an offer to Local Government to share the costs of funding the shortfall so we can work together to protect our vulnerable communities from any reduction in support under the Schemes.  This offer reflected the shared ownership of CTRS, which was developed in collaboration with Local Government and which provides support to applicants in meeting their locally determined council tax liability.

The Local Government Settlement, announced on 16 October, includes our plans for funding Council Tax Reduction Schemes for 2014-15.  £244m of funding is included within the settlement for Council Tax Reduction Schemes.  This matches the level of support provided for 2013-14.  Local Government will be expected to meet any remaining costs of the funding shortfall as increases in the cost of CTRS are linked to local decisions about council tax rises.

In making these new Regulations, we have also taken the opportunity to:

• Incorporate amendments required for certain Welfare Reform changes, such as the Armed Forces Independence Payment;
• Make further simplifications to improve the process for applicants and, where possible, to reduce the costs of administration; and
• Consider any practical adjustments needed based on our experience of the first few months of the Schemes’ operation.

As such they have been drafted working closely with Local Government practitioners and the Citizens Advice Bureau.  This has included a detailed technical consultation. Technical briefings have also been offered to opposition party spokespeople, to the Constitutional and Legislative Affairs Committee and to the Communities, Equality and Local Government Committee.

As I outlined in my Statement of 16 August, I can now confirm it will also be necessary to make a separate set of technical uprating Regulations after the main sets of Regulations have been made.  This is a result of the Chancellor’s announcement the Autumn Statement will be published on 4 December 2013.  The Autumn Statement will contain information required to calculate the uprating which is necessary to keep applicants’ entitlement to support in line with cost-of-living increases and, without this, applicants would be worse off.  This is a routine process done on an annual basis for a number of other sets of Regulations.

Minor amendments are also required to update specific references to the Regulations introduced for 2013-14 in some of the technical Regulations , which are necessary for the effective operation of CTRS, for example, those relating to fraud.  My previous Statement also set out the timetable for these other sets of regulations.  Further details are provided in the Annex to this Statement.

Following the commencement of the Universal Credit Pathfinder on 29 April, the Department for Work and Pensions (DWP) is now planning six progressive Universal Credit roll-out areas.  One of these sites will be Shotton Jobcentre in Flintshire, which is expected to start taking Universal Credit claims from 24 March 2014.  The Regulations contain provisions for Universal Credit which have been drafted following detailed engagement with DWP and the Department for Communities and Local Government (DCLG).  Like the Pathfinder, it is expected the progressive Universal Credit roll-out areas will start accepting  claims from single applicants with no dependants.  However, if DWP alter these planning assumptions, then further amendments to the Regulations may be required.  We are keeping these arrangements and any implications under review pending the DWP confirmation of its UC roll-out schedule in 2013 and beyond and will keep Members informed.

Alongside the work to put arrangements in place for 2014-15, it is also crucial we develop a longer-term solution to provide Council Tax support in Wales.  Therefore, I have commissioned a review to examine the options. I want a solution which will provide sustainable and fair long-term support within the funding available. This new model of support will be implemented from 2015-16.

The review will assess potential options and their impact on public finances and local services, as well as examining implications for those who currently receive Council Tax support  and other Council Tax payers.  It will include an analysis of the Schemes currently operating in England and the effects of welfare reform, to identify viable options and model their likely impact.  A Task and Finish Group of officials, Local Government representatives and  Citizens Advice Bureau  staff is overseeing this work.

Our ultimate aim is to establish arrangements, in partnership and collaboration with Local Government, which are sustainable and equitable for recipients. However, within the context of narrow timeframes, reduced funding and significant financial and legislative constraints, we should be under no illusions about the challenges we face in this task and the difficult choices we will have to make. I will keep Members updated on this longer term work as it progresses.