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Local Government Finance Act 2012

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Schedule 4: Amendments relating to council tax reduction schemes

96.Part 1 of Schedule 4 to the Act inserts new Schedules 1A and 1B into the LGFA 1992. The new Schedule 1A concerns council tax reductions schemes in England; the new Schedule 1B concerns council tax reduction schemes in Wales. Part 2 of Schedule 4 to the Act makes amendments which are consequential on the introduction of council tax reduction schemes.

97.Paragraph 2 of the new Schedule 1A provides, in particular, that a scheme must-

  • state the classes of person entitled to a reduction (paragraph 2(1) and (2));

  • state the reductions which are to apply to those classes (paragraph 2(3) and (4)); and,

  • state the procedure by which a person may apply for a reduction under the scheme (paragraph 2(5)).

98.Paragraph 2(8) of new Schedule 1A provides that the Secretary of State may prescribe other requirements for schemes. The Secretary of State may make regulations prescribing classes of persons which must be included in a scheme and the reductions which must apply to those classes (paragraph 2(9) of new Schedule 1A). The Secretary of State intends to use this power to ensure that reductions are provided for pensioners.

99.Paragraph 2(10) of new Schedule 1A provides that regulations made under paragraph 2(8) may in particular set out provision to be included in a scheme that is equivalent to a provision made by (or capable of being made under) specified sections of the Social Security Contributions and Benefits Act 1992, the Social Security Administration Act 1992 and the Welfare Reform Act 2007, with modifications. Paragraph 2(11) makes the same provision in relation to provisions that a billing authority may include in its scheme. This power ensures that regulations of the Secretary of State, and local schemes, can incorporate certain provisions that currently apply to the entitlement to, and calculation and administration of, council tax benefit, for example, in the treatment of income and capital.

100.Before it makes a scheme a billing authority must consult its major precepting authorities and other persons it considers are likely to have an interest in the scheme (paragraph 3(1) of new Schedule 1A). Provision is made recognising any step undertaken in accordance with paragraph 3 which takes place prior to commencement (paragraph 3(2)). Once a scheme is made the billing authority must publish it (paragraph 3(3)). The Secretary of State may make regulations about the procedure for preparing a scheme, including requiring the authority to produce documents in connection with the preparation of a scheme and setting out requirements for publication (paragraph 3(4) and (5)).

101.The Secretary of State is required to make regulations prescribing a default scheme (paragraph 4(1)). The default scheme must relate to the financial year 2013-14 and it must comply with the requirements in paragraph 2(1) to (7) and regulations under paragraph 2(8) (paragraph 4(3)). Paragraph 4(4) provides a comparable power in relation to default schemes to that provided by paragraph 2(10) in relation to requirements for schemes prescribed under paragraph 2(8) – that is that regulations setting out a default scheme may include provision that is equivalent to a provision made by (or capable of being made under) specified sections of the Social Security Contributions and Benefits Act 1992, the Social Security Administration Act 1992, and the Welfare Reform Act 2007, with modifications.

102.The default scheme will apply to a billing authority’s area if it fails to make a scheme on or before 31 January 2013 (paragraph 4(6)) or such other date as is specified in section 10(4) of the Act. Where a default scheme applies, new Schedule 1A applies as if the scheme had been made by the authority (paragraph 4(7)). In particular, this means that a billing authority must publish the default scheme in accordance with paragraph 3(3).

103.Each financial year a billing authority must consider whether to revise or replace its scheme (paragraph 5(1) of new Schedule 1A). The procedure for making a scheme also applies if a scheme is revised or replaced (paragraph 5(5) and (6)). If a reduction is reduced or removed the billing authority must make such transitional provision as it thinks fit (paragraph 5(4)).

104.A billing authority and major precepting authorities with a power to issue precepts to that billing authority may enter into arrangements which have effect if there is, or if the billing authority estimates that there will be, a deficit on the collection fund for that year (paragraph 6(1) and (2)). These arrangements can include the making of payments by one authority to another, or the variation of payments required to be made in regulations made under section 99 of the LGFA 1988 in relation to council tax (paragraph 6(3)).

105.The Secretary of State may by notice require a billing authority to supply information for the purpose of deciding whether to exercise any functions relating to schemes (paragraph 7(1) of new Schedule 1A). If an authority fails to comply the Secretary of State may exercise those functions on the basis of such assumptions and estimates as he thinks fit (paragraph 7(3)).

106.The Secretary of State may issue guidance to which billing authorities must have regard and may also make regulations setting out transitional provision relating to the commencement of schemes (paragraphs 8 and 9 of new Schedule 1A).

107.New schedule 1B provides for matters to be included in regulations to be made by Welsh Ministers under new section 13A(4). These powers largely mirror those provided by new schedule 1A in relation to England. New schedule 1B provides that regulations may:

  • Prescribe the dwellings to which each scheme is to apply or require each scheme to state the dwellings to which it is to apply (paragraph 2(1));

  • Prescribe by when a scheme is to be made, and the first year to which it is to relate (paragraph 2(2));

  • Prescribe classes of persons who must, or must not, receive a reduction under a scheme (paragraph 3(1));

  • Allow authorities to determine classes of person who are to be entitled to reductions under schemes or provide that authorities may not determine such classes (paragraph 3(2));

  • Prescribe reductions to which persons in each class are to be entitled (paragraph 4(1));

  • Allow authorities to determine reductions to which persons in each class are to be entitled or provide that authorities may not determine such reductions (paragraph 4(2));

  • Provide for a default scheme (paragraph 6(1)).

108.Part 2 of Schedule 4 makes further amendments relating to council tax reduction schemes. Paragraph 2 amends Schedule 11 to the LGFA 1988 so as to enable First-tier Tribunal members to sit as members of the Valuation Tribunal for England. This is so that their expertise can be used when deciding appeals against decisions made in relation to council tax reduction schemes.

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