council tax confusion


By Steve Freer, CIPFA Chief Executive

Last week’s announcement of a new transitional grant for local authorities taking on responsibility for the award of council tax benefit (CTB) has caused a level of confusion and frustration in many councils.

CTB is currently operated and funded through a national scheme set by the Government. With effect from 1 April 2013 it will become the responsibility of local councils. Each authority will agree and implement its own individual scheme reflecting its distinctive local needs and priorities.

This is a tough new role for councils to take on when the economy is in or close to recession. It is all the more challenging when, mindful of the need to reduce public spending, Government has decided to transfer funding equivalent to only 90% of current costs to enable councils to fund their new responsibilities.

With April not so far away, most councils have already drawn up their proposed local schemes and exposed them to public consultation. The aim in the vast majority of cases is to contain costs within the 90% funding available. That means difficult decisions between particular categories of claimants. Some will inevitably receive reduced levels of support under the new arrangements.

Last week Brandon Lewis, Under Secretary of State for Communities and Local Government, announced a new transitional grant to help councils. Local schemes that conform with the Government’s view of an appropriate scheme will qualify for special grant support in the first year. A budget of £100m has been earmarked for the purpose.

From a distance this might look like good news for councils. But there are two problems which have caused the reaction from authorities to be less than enthusiastic.

First, the whole initiative has been championed by Government as a localism measure. However, it now seems that councils can attract extra funding if they suppress their localist inclinations and conform to a Government template.

Second, the timing of the announcement – with no prior warning – comes after many councils have developed and consulted on their own schemes. So qualification for the new transitional grant is likely to be more a matter of luck than skilful design. If schemes happen to coincide with the Government’s view of ‘good’, the councils concerned will qualify for a windfall grant. If they do not, councils may find it very difficult to switch to a qualifying scheme at such a late stage.