Sunday, 30 September 2012

Council Tax benefit and Cornwall Council's profitable proposal

Council tax benefit is changing across the UK. Responsibility for the scheme has been passed to local authorities along with a cut in the overall amount to fund it. With the Government making it clear that pensioners must be exempt, working age recipients are set to see a big drop in benefit. Crucially though, it looks like Cornwall wants to go further and their proposed scheme will actually be making a profit for the council.

The scale of the cut in the amount Cornwall has received is £6 million. The proposal from the administration is to impose an across the board cut of 30% on the amount that non-pensioner recipients get. And, they have proposed to cut other entitlements which will also save more money. The total amount they will raise? Nearly £8 million - in effect, making a profit out of cutting benefits for some of Cornwall's poorest residents.

Steve Double - the cabinet member in charge of this proposal - told me that he expected the collection rate to fall and to need to raise more than £6 million in cuts as a result. He couldn't put a figure on this collection shortfall - but almost £2 million seems hugely excessive.

Cornwall Council is consulting on a scheme made up like this:

- Across the board 30% cut affecting 26,358 non pensioner households and generating a £7,213,488 saving

- Remove the second adult reduction - 259 households - £55,661 saving
- Cap at Band D - 498 households - £168,424 saving
- No backdating - 782 households - £73,981 saving
- Reduction in capital levels to £6k - 291 households - £220,005 saving
- No underlying entitlement - 303 households - £36,340 saving

It is clear that the government's grant reduction has forced councils to make unpalatable cuts. But why is Cornwall Council going so much further than they need to with their proposed scheme?

Following the consultation period, the Cabinet will make a recommendation in November before a final decision is taken by the full council in December.


socialmedia said...

This is a very important issue which will affect thousands of people in Cornwall and I am extremely disappointed that Mr Folkes has chosen to deliberately misrepresent the details of our conversation to score political points.

The facts are that the Government is transferring responsibility for administering the council tax benefit scheme to local councils and, at the same time, is cutting the amount of money available to fund the scheme. This means that we will have at least £6 million less to distribute to people who are entitled to council tax benefit in Cornwall when we take over the responsibility for the scheme next year.

The Government has stated that pensioners must be protected from any reduction in council tax benefit and so we need to find the fairest scheme possible for people of working age who claim council tax benefit.

As Mr Folkes knows we are asking people for their views on how to achieve this. One proposal is for everyone of working age who receives Council tax benefit to pay at least 30% towards their council tax bill i.e. receive less council tax benefit, in order to make up for the reduction in Government grant.

This proposal is not aimed at making a profit for the Council – it is trying to come up with a scheme which is fair to everyone. The stark reality is that if we don’t find a way of making up the shortfall we will be faced with increasing council tax for everyone in Cornwall by 2.5% or cutting services. The figure quoted by Mr Folkes includes an amount calculated to meet the anticipated non-collection of the new charges from some claimants, together with some additional costs associated with attempting to recover this increased council tax.

I made it very clear to Mr Folkes last week that I would not support any proposal which is designed to make a profit from the changes to the benefit system. His claim that the Council is deliberately choosing to go further than we need to is both untrue and offensive to the Members who are trying to do their best in a very difficult situation which is not of our making.

Steve Double, the Council’s portfolio holder for environment, waste management and shared services

Alex Folkes said...

Hi Steve
I'm sorry if you feel I've misrepresented you and am happy to leave your comment here to rebut anything you feel is unfair. But I would point out that you haven't contradicted any of the facts I presented.
But it remains the case that you are proposing a new regime which would make a profit. I'd be delighted if you could confirm how you plan to change your current proposal in order to avoid doing so - something I'm sure we would all be grateful for.