Agenda item

Information on the abolition of Council Tax Benefit and the introduction of a Council Tax Reduction Scheme (CTRS).

Councillor Neil Coyle, deputy cabinet member for welfare introduced the item by explaining that the Rightfully Yours Team helped navigate people through a complex benefits system to help them claim the benefits they were entitled to. Cllr Coyle explained that the government were making changes to tax credit which were about to come into force – these changes would have a significant effect on people in the borough.

From April 2013 changes to council tax benefit and the ‘bedroom tax’ would be introduced. People over 65 would not be affected by the changes. Cllr Coyle outlined that the council would help people affected by the changes where possible for example by: helping people to move into smaller properties. A hardship fund of £800,000 had been introduced by the council to assist residents.

Paul Edwards, from the Rightfully Yours team added that from April each council would be introducing their own council tax benefit scheme. Southwark would receive less support from government but had to provide the same level of support to the elderly, this meant that people of working age would have to pay for most of their council tax. Paul outlined that if people received certain benefits then they would receive discounts on their council tax – it was important that people were aware of the benefits they were entitled to claim. Paul also pointed out that it was worth requesting to pay council tax over a 12 month, rather than the usual 10 month period, this would help people to budget better.

Paul explained that the ‘bedroom tax’ would cut the amount of benefit people could claim if they were considered to have a spare room in their council or housing association home. Paul pointed out that a family with two boys under 12 were only deemed to require two bedrooms so if they were living in a three bedroom home they would be hit by the bedroom tax.

A benefit cap of £26,000 would also be introduced which would restrict the total amount of benefit an individual could receive. One key exception from the cap was for people receiving working tax credit, therefore the council was aiming to help people get into work. From April 2013 the social fund would be abolished which would effect people on very low incomes the council were given some money by government to provide some of the support previously provided by the social fund, through the Southwark Emergency Support Service, but the funding available was now less.

Paul highlighted that many residents in the borough would be effected by more than one element of the reforms introduced by government which would have a significant impact on their personal finances.

Kylie, from Rightfully Yours, explained the role of the team in helping people claim the benefits they were entitled to. Disability living allowance (DLA) was a key benefit as it was a passport to other benefits. DLA was under claimed in Southwark, Kylie encouraged people to get in touch with the team.

In response to questions Paul and Jay Daisi from the revenue and benefits service, explained that those claiming pension credit were exempt from the bedroom tax. Children under 16 of the same gender were expected to share a bedroom and children under 10, regardless of gender were expected to share a bedroom. The size of rooms were not considered rooms classed as a bedroom in a tenancy agreement were included. If a person in the household went to university then they could state their address was their long-term home. This meant they would still be exempt from council tax but would not be affected by the bedroom tax whilst they were away from home at university. It was estimated that around 30,000 people in Southwark were effected by some part of the welfare reforms.

A resident made the point that although the reforms were introduced by government the council had discretion on how local schemes were implemented and some councils had chosen to meet the deficit created for council tax benefit.

In a response to questions on assistance for carers and requirements to have a bank account for universal tax credit Jay explained that most carers tended to live for those they cared for and therefore weren’t the council tax account holder. The council were working with the voluntary sector to help people set up bank accounts. He added that the voluntary sector was also working to educate people on budgeting and the pitfalls of taking out payday loans.

Councillors commented that council assembly had decided to make changes to the council tax scheme which meant that people with empty homes in the borough would now pay more council tax in an attempt to encourage use of those homes. They thanked the rightfully yours team for their work which it was estimated had borough £20 million into the borough in their first three years.