Local Council Tax Support (LCTS) and whether accounts should be referred to bailiffs.

[Bailiff Advice]

Yesterday saw the publication of former MP Eric Ollerenshaw’s Independent Review of Local Council Tax Support (LCTS), which highlighted local authorities’ increasing use of bailiffs as a concern.

 

Background

 

The report was commissioned by the Department for Communities and Local Government (DCLG) and is an excellent in depth report about LCTS and it's effect since being implemented in 2013.

 

This review is the result of an amendment that had been put forward by Baroness Hollis of Heigham during the third reading of the Local Government Finance Bill in the House of Lords, which requested an independent review of the proposed local council tax support schemes.

 

The Government accepted the amendment unchanged. The review was launched on December 2nd 2015, and Eric Ollerenshaw was appointed by the Secretary of State for Communities and Local Government to chair it.

 

The review had to focus on whether LCTS was effective, transparent, fair and most importantly, whether LCTS should be absorbed into Universal Credit.

 

Although the report is very long it is nonetheless very easy to read.

 

The report recommends that LCTS should not be absorbed into Universal Credit at this time.

 

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/514767/Local_Council_Tax_support_schemes_-_review_report.pdf

[Bailiff Advice]

What is LCTS?

 

LCTS stands for 'Local Council Tax Support' (LCTS) and came into effect in April 2013 as a replacement for council tax benefit (CTB).

 

CTB had been set up in 1993 as a national benefit, funded by the Department for Work and Pensions, to help low-income residents who could not pay their council tax bill.

 

In 2013 almost 6 million people were in receipt of council tax benefit (CTB). Most importantly, (and this is where there is a current problem) is that prior to 2013, CTB provided up to 100% support (or discount) against council tax bills meaning that many people entitled to it, did not have to pay anything at all towards their council tax bills.

 

LCTS was introduced in 2013 and most importantly, it allows each council the freedom to set their own limit on the percentage of 'support' (or discount) that they offer to low income families and pensioners. Crucially, 100% discounts have disappeared.

 

Now, each council must set a minimum percentage that council tax payers must contribute towards their council tax bills.

 

To try to explain this more simply; Council X may have a scheme in place whereby a minimum payment level of 20% must be paid. In other words; assuming that the council tax bill for 2016/7 is £1,000, the LCTS recipient will pay at least £200 and the Council will pay the balance of 80%.

 

As an example; South Gloucester Council has the following LCTS scheme in place:

 

Weekly income of £120 would be awarded 80% support (reduction)

 

Weekly income up to £150 per week would get 50% support

 

As can be seen from above, a council tax payer in South Gloucester receiving a income of £600 per month (£150 per week) would be expected to pay 50% of their council tax bill.

[brassnecked]

It is counter productive to obtain a LO for families on LCTS

[brassnecked]

It is unconscionable for people in financial hardship having Liability Orders obtained and the account handed to bailiffs when the debtor is in receipt of LCTS, it is obvious that the cannot afford their portion of the bill, so how will doubling or tripling the debt with court costs and fees help recovery?

 

From the report:

 

"Joanna Elson, chief executive of the Money Advice Trust, said: “Bailiffs should only ever be used as a last resort – and we believe they shouldn’t be used at all in the case of recipients of Council Tax Support, who councils have already identified as requiring additional help to keep on top of their finances.”

 

Absolutely, bailiffs should NOT be used in that circumstance

[Bailiff Advice]

It is counter productive to obtain a LO for families on LCTS

 

The recommendation in the report is that where a person is in receipt of LCTS, it should be possible to allow 'voluntary' attachments of benefits (at the rate of £3.70) per week to be made but most importantly, without the requirement to obtain a Liability Order. Presently, deductions against benefits may only be made if a Liability Order has first been granted. The report states that obtaining a Liability Order will add at least £100 (or more) to the amount owed and this step only serves to make the financial position much worse.

[brassnecked]

The recommendation in the report is that where a person is in receipt of LCTS, it should be possible to allow 'voluntary' attachments of benefits (at the rate of £3.70) per week to be made but most importantly, without the requirement to obtain a Liability Order. Presently, deductions against benefits may only be made if a Liability Order has first been granted. The report states that obtaining a Liability Order will add at least £100 (or more) to the amount owed and this step only serves to make the financial position much worse.

That is all fine and dandy in theory, so could they attach to Tax Credit/Universal credit for a family struggling on a zero hour contract on minimum wage?

 

It is the low income working families, or disabled people unable to work who seem to suffer the most.

[Bailiff Advice]

 

From the report:

 

"Joanna Elson, chief executive of the Money Advice Trust, said: ;Bailiffs should only ever be used as a last resort and we believe they should not be used at all in the case of recipients of Council Tax Support, who councils have already identified as requiring additional help to keep on top of their finances.

 

Absolutely, bailiffs should NOT be used in that circumstance

 

On a practical point of view, I cannot see that her recommendation could work as this would exclude millions of cases. LCTS has replaced CTB and in 2013, the number of people receiving CTB was 6 million. The number receiving LCTS should be broadly similar.

[Bailiff Advice]

That is all fine and dandy in theory, so could they attach to Tax Credit/Universal credit for a family struggling on a zero hour contract on minimum wage

 

Attachments can be made to Universal Credits and also for anyone on zero hours contracts. There is a specific deduction formula for such cases.

[brassnecked]

Attachments can be made to Universal Credits and also for anyone on zero hours contracts. There is a specific deduction formula for such cases.

Thanks BA, I thought that as UC replaces a plethora of benefits it would have to be an "attachable" benefit.

[lookinforinfo]

CitizenB made the excellent point on another thread that in situations where the low paid are already being supported by the tax payer it is stupid to pass their cases on to bailiffs. i am bound to say that I agree totally.

[brassnecked]

CitizenB made the excellent point on another thread that in situations where the low paid are already being supported by the tax payer it is stupid to pass their cases on to bailiffs. i am bound to say that I agree totally.

Absolutely as the taxpayer pays the bailiff in the end, through the benefits, and the debtor is put through undue stress and hardship.

 

Incidentally in Wales some families will still get 100% LCTS, so no bailiffs for them thankfully.

[brassnecked]

From Scoop

 

http://www.theguardian.com/society/2016/apr/05/cuts-council-tax-support-benefits-no-joke?CMP=Share_AndroidApp_Scoop

 

One man mentioned in the article saw £51 Arrears rise to £700 once LO and bailiff fees added, so if£51 unpayable how will he afford £700?

[Schindler]

Agree Brassnecked

[josephbloggs]

Was talking about this with my mate who works for one of the big firms doing council tax

 

He said since the new law came in about people on benefits still have to pay a %age of the council tax its made his job unbearable

 

He said loads of people still claim they didnt know about that they are expected to pay even 4 years on.

Said even though the company has a policy of sending 4 letters out requesting an arrangement - nearly everyone sets the arrangement and doesnt bother paying it or just ignored it completly and that theres thousands of people with 4 years + arrears who havent paid a penny since it was introduced.

 

Said if he gets a job lot of cases say 500, even without looking easy 450 of the cases will be people on benefits.

 

Reckons as well the attitudes of the vast majority is "couldnt care less"

 

For what its worth i think the councils or government (whoever introduced this) should scrap it as a bad job.

[brassnecked]

Agree JB, the whole thing is ludicrous. It was one of Osborne's wheezes to get the Housing benefit off the Treasury books by devolving support to councils, and cutting the contribution leaving councils nowhere to go, but to reduce the amount of support.