The Council has considered a wide range of options to make up for the shortfall in funding and believes the fairest proposal (for both benefit claimants and taxpayers) is to reduce spending by:

• Introducing a new Council Tax Support scheme; and
• Changing the Council Tax exemptions and discounts for second homes and empty properties.

We have produced a draft Council Tax Support scheme, based largely upon the existing Council Tax Benefit rules. However, we have created two draft proposals (below) to reduce spending.

We want the new scheme to encourage and support people back into employment whilst reducing the impact on the most vulnerable. We have therefore set out our proposals below on how we aim to achieve this. 

Council Tax Support Scheme - Proposal 1: (Combined options)

The following options could be combined together to help the council to reduce benefit expenditure. The options are flexible and can be changed, depending on the outcome of this consultation.

The options include:

1. Abolish Second Adult Rebate
2. Restrict support to a Band D property charge
3. Increase the income taper from 20% to 30%
4. Include Child Benefit as income when working out entitlement
5. Abolish backdating so all awards are paid from the date of application
6. Increase the deduction made for other adults living in a property where the customer receives Council Tax benefit / support
7. Restrict benefit, so no awards are made under £5 per week

We estimate this proposal would reduce benefit expenditure between £500,000 and £800,000 depending on the protections applied. The rest of the funding would come from changes to the empty property exemption and second home discount.

The new scheme should include a number of new incentives to make work pay and help protect vulnerable residents.

Council Tax Support Scheme - Proposal 2: Reduce all working age claims by 20%

Under this proposal everyone (unless they were in a protected group) would receive 80% of the Council Tax Benefit they currently receive and would have to pay the remaining 20%. This proposal would affect approximately 12,000 working age residents.

We estimate this proposal would reduce benefit expenditure by approximately £1m depending on the protections applied. The rest of the funding would be obtained by changing the empty property exemption and second homes discount.

The new scheme should include a number of new incentives to make work pay and help protect vulnerable residents.

Scheme 2 scenario example:

Current Scheme (Council Tax Benefit)

A resident who qualifies for full Council Tax Benefit and lives in a Band D property would currently receive help of £1,302.21 per year towards their Council Tax bill. Their benefit meets the full cost of their Council Tax bill.

Proposed scheme*

Under this scheme the same resident would receive help of £1031.77 (80% of what they would currently receive) per year towards their Council Tax bill and would need to contribute £260.44 themselves.

*based on Council Tax amount remaining at 2012 /2013 rate.

Helping to support people back into work whilst protecting the
  most vulnerable

The Council believes that the new scheme should:

• Encourage and support people back into work;
• Protect the most vulnerable;
• Be clear and easy to understand; and
• Be fair to those claiming benefit and to the taxpayer.

These proposals are explained below.

Encouraging and supporting people back into work

The Council is keen to design a new Council Tax Support scheme which encourages people back into employment and underpins the Government’s welfare reform principles below:

• People should get more overall income in work than out of work.
• People should get more overall income from working more and earning more.
• People should be confident that support will be provided whether they are in or out of work that it will be timely and correct, and that claiming will not be a complicated and frustrating experience.

We propose that the new Council Tax Support scheme should build upon the existing work incentives already available (under the Council Tax Benefit scheme), and include the following additional support:

1.  Give people (receiving Council Tax Benefit) extra benefit for a limited period of 8 weeks to help pay their Council Tax when they start work and stop receiving certain benefits. The current period is 4 weeks.
2.  Increase the child care disregards by 10%, so that people who pay child care costs can continue to receive Council Tax Support if they are on a low income. The child care disregard is the amount of money that is not counted as income when working out entitlement to benefit. Under this proposal we would disregard child care costs of £192.50 for 1 child and £330 for 2 or more children.

Protecting the most vulnerable

The Council is committed to protecting the most vulnerable residents where possible and is keen to seek your views on which groups are more likely to be affected by the new Council Tax Support scheme.

Under our draft proposals we are considering providing some form of protection for people with a disability and families with children under 5 years old. Residents over pension age are automatically protected, this has been decided by Central Government. To protect vulnerable residents we could introduce a discretionary fund where residents receiving Council Tax Support could apply for short term help on a case by case basis.

The proposed Council Tax Support scheme alone does not make up the full shortage in funding. Therefore, we want to hear your views on further proposals to change the Council Tax Exemptions and Discounts for empty properties and second homes.

Option A: Remove the Empty Property Exemption for unfurnished properties in Trafford and apply a 25% discount

Residents can currently receive up to 6 months exemption (with no charge) from Council Tax payments where a property is empty and does not contain furniture. It is proposed to remove this exemption from 1 April 2013 and award a 25% Council Tax discount for up to 6 months. Full Council Tax payments would be due after 6 months.

Current scheme	Proposed scheme
A resident moves out of a property but the property has not yet been sold. There is no Council Tax charge for the first 6 months. After 6 months Council Tax is charged in full.	Under the new scheme the resident would need to pay 75% of their Council Tax bill for the first 6 months. After 6 months Council Tax is charged in full.

Option B: Remove the Empty Property Exemption for unfurnished properties in Trafford and apply a one month 100% discount

Residents can currently receive up to 6 months exemption (with no charge) for Council Tax payment where a property is empty and does not contain furniture. It is proposed to apply a discount of 100% for one month from when the property becomes empty. Full Council Tax payments would be due after 1 month.

Remove the current 10% discount for second homes in Trafford

Residents who own a second home (which is empty and furnished) in the borough currently receive a 10% discount off their Council Tax bill. It is proposed to remove this discount from 1 April 2013.

An example of how this proposal would affect taxpayers:

Current second home discount	Proposed second home discount
A Trafford resident owns a second home in the borough and receives a 10% discount off their Council Tax bill for the second property.	The discount would be removed from 1st April 2013 and the resident would need to pay the full Council Tax charge for the second home.

Option 1: Abolish Second Adult Rebate

Second Adult Rebate was designed to compensate people who would normally qualify for a sole occupier discount (25% off their bill) if a second adult did not live with them.

Second Adult Rebate cannot be claimed if the claimant lives with a partner, a boarder or joint tenant and is often awarded when a grown up son or daughter lives with one of their parents. The amount of rebate given depends upon the second adult’s income, regardless of the claimant’s income.

Under this proposal the Second Adult Rebate Scheme would be abolished and the second adult would be expected to pay towards the Council Tax Bill.

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Option 2: Restrict support to a band D property charge

Under the current Council Tax Benefit Scheme it is possible to receive enough benefit to pay your Council Tax bill in full, no matter which Council Tax Band your property is in.

Under this proposal, support would be restricted to a Band D property charge. This would affect people living in Band E properties and above.

An example of how this proposal would affect claimants:

Current scheme example	Proposed scheme
A couple living in a Band E property may receive full Council Tax Benefit of £1,591.59 per year.	Under the new scheme Council Tax Support is capped at the charge for a Band D property. Therefore, the couple would receive Council Tax Support of £1,302.21 per year and would need to contribute £289.38 towards their Council Tax bill.

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Option 3: Increase the Council Tax Benefit taper from 20% to 30%

If a claimant earns more than the minimum amount the Government says he/she needs to live on, they must pay some of the remainder towards their Council Tax bill. The percentage of the remaining income that they need to pay towards their bill is called the taper. At present the taper is set at 20%. This means that for every £1 extra a person has above the minimum amount, they are expected to pay 20p towards their Council Tax bill.

Under this proposal the taper would increase to 30%, so that a person would be expected to pay 30p for every £1 they had above the minimum level.

An example of how this proposal would affect claimants:

Current scheme example	Proposed scheme
A couple earn £60 above the minimum income level. If their Council Tax bill was £25 per week they would receive £13 per week in Council Tax Benefit and pay £12 per week towards their Council Tax bill.	The couple would receive £7 Council Tax Support and would need to pay £18 towards their Council Tax bill.

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Option 4: Include Child Benefit as income when working out entitlement

Under the current scheme Child Benefit is not included as income when working out an award of Council Tax Benefit.

Under this proposal Child Benefit would be taken into account as income.

An example of how this proposal would affect claimants:

Current scheme example	Proposed scheme
A couple with 2 children (over 5 years old) receive council tax benefit of £15 per week. They receive £33.70 per week in child benefit and this income is not taken into account when working out their award.	The same couple would now receive £10.11 per week in Council Tax Support because their child benefit is now taken into account as income.

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Option 5: Abolish backdating so all awards are paid from the date of application

Currently Council Tax Benefit awards can be backdated for up to 6 months if the claimant can show a good reason why they did not claim from an earlier date.

Under this proposal all claims would be awarded from the date of the application only.

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Option 6: Increase the deductions made for other adults living in a property where the customer receives Council Tax benefit / support.

Council Tax Benefit is worked out on the needs of the claimant, partner and dependant children. Other adults (aged 18 or over) living within the household (usually a grown up son or daughter) are expected to contribute towards the Council Tax bill depending on their income. The contribution these other adults are expected to make is deducted from the amount of benefit the claimant receives.

Under this proposal, the deductions will increase by 20% and a new charge of £4 per week would be made for other adults not in work.

An example of how this proposal would affect claimants:

Current scheme example	Proposed scheme
A couple live with their 26 year old daughter who earns £400 per week, and their 20 year old son who receives income support. A deduction of £9.90 per week is taken from the claimant’s Council Tax Benefit for their daughter and no deduction is taken for their son.	Under the new scheme the deduction will increase to £11.88 per week for their daughter and £4 per week for their son. The total deduction is now £15.88 per week.

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Option 7: Restrict benefit, so no awards are made under £5 per week

Under the current Council Tax Benefit Scheme there is no minimum weekly Council Tax Benefit payment.

Under this proposal a minimum award of £5 per week would be introduced. This means that any awards of £4.99 per week or less would not be payable from 1st April 2013.

An example of how this proposal will affect claimants:

Current scheme example	Proposed scheme
A claimant receives Council Tax Benefit of £2.50 per week.	The claimant will no longer receive a reduction from their Council Tax bill.

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