Written Statement - Future arrangements for council tax reduction schemes in wales

Today, I am pleased to confirm the Welsh Government has agreed to continue to protect vulnerable and low income households by maintaining full entitlements for Council Tax Reduction Scheme (CTRS) until the end of 2017-18.  The longer term arrangements for 2018-19 onwards will be determined as part of wider considerations about how to make council tax fairer.

In the 2010 Spending Review, the UK Government announced it would abolish Council Tax Benefit and give responsibility for developing replacement arrangements to local authorities in England.  At the same time, it announced that funding would be passed to the Devolved Administrations in Scotland and Wales, cut by 10% and transferred into fixed, rather than demand-led, budgets.  

Despite the shortfall in funding, Welsh Government and local government in Wales have worked together to maintain full entitlements for CTRS through a single national framework supported with the annual provision of £244m to local authorities  in the local government settlement.  These arrangements will continue for a further year until the end of 2017-18.  

This decision will ensure that approximately 300,000 vulnerable and low-income households in Wales will continue to be protected from any increase in their council tax liability.  Of these, 220,000 will continue to pay no council tax at all.  We know many of these households are already struggling to cope with the impacts of the UK Government’s welfare reforms and maintaining our CTRS arrangements will help to mitigate some of the worst impacts on those affected.

Our policy approach is in stark contrast to the situation in England, where local authorities have been left to design their own schemes and manage the associated funding shortfall.  As a result, council tax liability varies by local authority, a multitude of different schemes operate and over two million low-income households are faced with having to pay more of their council tax bill.  Low-income families in England are now paying on average £169 a year more in council tax than they would have if Council Tax Benefit were still in place.  

Local authorities in Wales will continue to be shielded from the risks and costs faced by councils in England who are having to try to collect council tax from some households for the first time.  The recent Independent Review of Council Tax Support Schemes in England and Wales carried out by Eric Ollerenshaw, was very supportive of this approach, recognising it has protected vulnerable households and saved local authorities from any increased level of administration burden.

I am grateful for the continued assistance of local authorities in delivering CTRS and the important financial support it provides to eligible households.