When the Government handed responsibility for administering council tax benefit to local councils, it did so with a massive reduction in funding. To put this into context, our Council Tax Reduction Scheme helps over 27,000 Hackney working age residents to pay their council tax. The Council currently invests over £25m, but we receive a miserly £8.6m from the Government towards what until 2010 was a fully funded national benefit.

To place this in context this local investment of over £25m is an equivalent amount to half of our entire Children and Families budget, which delivers a huge range of services, including support for some of the borough’s most vulnerable children and young people, youth justice, safeguarding and activities for young people. We have recently written to national Government calling on them to return to fully funding the scheme, and stop passing on the costs to some of the poorest boroughs in the country.

Over the last few years we’ve absorbed these costs by making savings in other areas, but as the Government’s brutal cuts continue, stripping Hackney alone of over £140m in funding and affecting public services across the board, this simply is not an option going forward especially as over the next three years we will have £34m in further savings and cuts to find, so we need to update the scheme.

We recently consulted residents on increasing the minimum contribution a working age household would have to pay from 15 to 20%. Before and during the consultation period, we met with charities and organisations to gain their views, and we received around 150 responses to the consultation. These understandably raised concerns about the impact the increase would have on those in receipt of CTRS, while these are concerns we of course share, none of the decisions we have to take around the Council’s budget are easy.

Throughout this process we have of course considered other options which would not require us to increase the minimum contribution, but we want to ensure that we can have a scheme that supports the most vulnerable, is sustainable and doesn’t lead to cuts to other services - so doing nothing is a not an option. The scheme needs updating so that it fully interacts with other welfare systems such as Universal Credit, and we simply do not have the money to pay for the predicted £500,000 a year increase in the cost of the scheme. Other councils have sought to absorb all these costs themselves and return to a fully funded scheme, to do this in Hackney would cost an additional £2.8 million, funding we don’t have, given the numbers of residents we have to support. In addition we have sought to maintain additional safeguards such as backdating payments for those who apply for support already in debt, something other boroughs have been increasingly restricting. We have improved the support for some of the most vulnerable.

However, the Council and I have listened and that is why I have asked Cabinet to change our proposal and agree to a two per cent increase in the minimum contribution working age people will be required pay, meaning we will continue to support those on benefits or a low incomes by reducing their council tax bill by up to 83 per cent.

This two per cent increase would cover the predicted £500,000 increase in providing the scheme. While other boroughs continue to review their schemes, we can also commit to maintaining the scheme at this level for at least two years. In the meantime we will increase the awareness of CTRS hardship fund, actively promoting it to those that still face difficulties and monitor the impact of these changes to help shape the scheme’s development in the future. We will also be continuing a thorough review, with key stakeholders, of how the Council approaches those in financial difficulty including our approach to debt, advice and support.