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Factsheet for case GB-2020-11/699 Updated – measures in United Kingdom

Governmental GBP 500 million fund for council tax relief for people in need

£500 million Hardship Fund

Country United Kingdom , applies nationwide
Time period Open ended, started on 11 March 2020
Type Legislations or other statutory regulations
Category Measures to prevent social hardship
– Preventing over-indebtedness
Author Claire Evans (Warwick University) and Eurofound
Case created 16 April 2020 (updated 22 July 2020)

Background information

On the 11 March in the Budget 2020 speech, the Chancellor announced the launch of this GBP 500 million Hardship Fund (which applies to England). The Hardship Fund will provide council tax relief to help those affected most by coronavirus. The funding will go to local authorities in England to enable them to reduce the 2020 to 2021 council tax bills of working age people receiving Local Council Tax Support. Councils will also be able to use the funding to provide further discretionary support to vulnerable people through other support arrangements such as Local Welfare Schemes.

Guidance for the GBP 500 million Hardship Fund was released on the 24th of March, aimed at providing clarity to local authorities on how to allocate the funding following its announcement at Budget.

This amends s13A(1)(c) of the Local Government Finance Act 1992.

Content of measure

In the Guidance issued, the Government states that it recognises that COVID-19 is likely to cause fluctuations in household incomes and that, as a result, some individuals may struggle to meet council tax payments. It says that councils will already have established their local council tax support schemes for 2020-21 and that the Government therefore expects that billing authorities will primarily use their grant allocation to reduce the council tax liability of individuals in their area, using their discretionary powers under s13A(1)(c) of the Local Government Finance Act 1992.

Further, it states that councils may also want to use some funding to deliver increased financial assistance through other local support mechanisms, having considered local circumstances. The Government states that councils should expedite provision of support to individuals in their area, using existing policies and schemes to deliver assistance where practical. Where council clearance processes are considered necessary, to avoid delays, they should be kept as light touch as possible within the governance arrangements of each authority.

It also states that council tax reductions should be applied as soon as possible from the beginning of the 2020-21 financial year and billing authorities should rebill council taxpayers as quickly as practical. Authorities will want to make the local population aware of how the grant support package will be delivered, e.g. through providing information on their websites.

The Government confirms that it will fund billing authorities in full for the new burdens cost for delivering the support.  Local authorities will wish to maintain a record of grant expenditure under this scheme, both through the council tax system and their own local support mechanisms.

Updates

The following updates to this measure have been made after it came into effect.

16 April 2020

On the 16 April, the Government issued some technical guidance to councils on implementation of the £500 million hardship fund (Ministry of Housing, Communities and Local Government, 2020). In its letter, it states that all working-age Local Council Tax Support (LCTS) claimants in 2020-21 (who are entitled to working-age LCTS in respect of any part of the 2020-21 council tax liability) will receive a further discount of £150. The reduction is to be made through the use of the powers under Section 13A (1)(c) of the Local Government Finance Act 1992. The hardship fund discount should be applied at the point a claimant first becomes entitled to working-age LCTS in 2020-21.

Councils may use their discretionary powers under Section 13A(1)(c) to reduce council tax liability to any level. When determining the level of discount to provide, councils should reflect on their allocated amount from the hardship fund.

Use of measure

On the 16th of April, the UK Government issued more guidance, in which it stated that all working-age Local Council Tax Support (LCTS) claimants in 2020-21 (who are entitled to working-age LCTS in respect of any part of the 2020-21 council tax liability) will receive a further discount of GBP 150 under the Hardship Fund. The reduction is to be made through the use of the powers under Section 13A (1)(c) of the Local Government Finance Act 1992.

Cost of measure: GBP 500 million to be disbursed to local councils.

Target groups

Workers Businesses Citizens
Unemployed
Other groups of workers
Does not apply to businesses Older citizens
The COVID-19 risk group
Disabled

Actors and funding

Actors Funding
National government
Local / regional government
National funds

Social partners

Social partners' role in designing the measure and form of involvement:

Trade unions Employers' organisations
Role Informed Informed
Form Not applicable Not applicable

Social partners' role in the implementation, monitoring and assessment phase:

  • No involvement
  • Main level of involvement: Peak or cross-sectoral level

Involvement

The social partners would have been informed by the Government as to the raft of measures to be implemented but they were not involved in the design, implementation or formal monitoring of this measure.

Views and reactions

As stated previously, the involvement of social partners in devising measures (aside from the furloughing and self-employment schemes) is unknown. There has been informal consultation with business groups (CBI and the FSB) as well as the TUC, but the exact nature of communications is not in the public domain.

Sources

Citation

Eurofound (2020), Governmental GBP 500 million fund for council tax relief for people in need, case GB-2020-11/699 (measures in United Kingdom), COVID-19 EU PolicyWatch, Dublin, http://eurofound.link/covid19eupolicywatch

Disclaimer: This information has not been subject to the full Eurofound evaluation, editorial and publication process. All information is preliminary and subject to change.