To consider a report which gives an explanation of how the North Tyneside Council Tax Base for 2022/23 has been calculated and requests approval for the calculation of the Authority’s Council Tax Base for 2022/23.
Cabinet considered a report which provided an explanation of how the proposed North Tyneside Council Tax Base for 2022/23 had been calculated and requested approval of the calculation for 2022/23.
The detailed Council Tax Base calculation for North Tyneside for 2022/23 was attached as Appendix A to the report, together with an explanation of the specific elements that formed part of this calculation. Within this calculation, adjustments had been made to reflect the effect of exempt properties, disabled relief, discounts and premiums.
Applying the adjustments had the effect of adjusting the total number of properties to a common base for each band, in terms of full year equivalents.
The Council Tax Base Regulations ensured that the Council Tax Base for an area took into account the effect of disability reductions in respect of dwellings which fell within Band A. They introduced an additional ‘alternative valuation band’ to allow Band A properties to qualify for a disabled reduction. Previously, properties adapted to meet the needs of a disabled person were charged at a rate equal to the next lowest valuation band, so for example a qualifying Band D property would be charged at a Band C rate, but this had not applied to Band A properties. Instead of paying the normal Band A charge (six-ninths of the Band D) a qualifying Band A property was now charged five-ninths of the Band D charge. For the purpose of the Council Tax Base calculation, it was now necessary to show Band A properties which qualified for a disabled reduction as if it were an additional valuation band. Deductions were then made for exempt dwellings and the estimated impact of the Council Tax Support scheme for 2022/23.
In order to arrive at the Council Tax Base calculation for 2022/23, the number of dwellings within each of the Council Tax Bands, A – H, had been converted to their Band D equivalents, using the appropriate proportions. The result of this calculation for 2022/23 was to produce a total number of properties prior to an allowance for non-collection and contributions in lieu of 63,126.
The next stage of the Council Tax Base calculation involved making a deduction for the non-collection of Council Tax. This non-collection element of the calculation was made in respect of the amounts that were legally due, but which, for varying reasons, may not be collected. The assumed Council Tax collection rates for North Tyneside had improved significantly since 1993/94, when the assumed collection rate was 95%. The assumed North Tyneside Council Tax collection rates for each year from when Council Tax had been introduced in 1993/94 were detailed in the report.
A fundamental issue for the Council Tax Base calculation was the assumed percentage Council Tax collection rate to apply. The Authority’s performance on Council Tax collection had been improving for many years, reaching a peak of 99.20% in setting the Council Tax Base for 2012/13. However, since 2013/14, a lower collection rate of 98.50% had been proposed and agreed. This lower rate of 98.50% had been set to reflect the estimated impact of the
Council Tax Support Scheme, the estimated impact of other Welfare Reform changes and changes to Exemptions and Discounts applied from 2013/14.
Council Tax in year collection had reduced in 2020/21 and 2021/22 due to the impacts of Covid-19 which had seen a reduction in income for some residents. There had been an increase in residents of working age claiming Local Council Tax Support in the last two financial years but there are now signs that the number of claimants were reducing. As at the end of November 2021 the in-year collection for 2021/22 was 0.50% lower than at the same point in 2019/20. However, it was 0.10% ahead of what it was in 2020/21 at the same point. This was because the Authority paused recovery of Council Tax debt in 2020/21 until late in that financial year to support residents who were having difficulty in paying. The collection rate at this point was only however an approximate indicator of the assumed Council Tax collection performance, given the significant time lag effect between in year and ultimate Council Tax collection performance.
Having considered various issues in relation to the collection rate for 2022/23, which were detailed in the report, it was proposed that an assumed Council Tax collection rate of 98.50% was set as part of the 2022/23 Council Tax Base calculation. This was an increase against the assumed collection rate for 2021/22 which had been reduced to take account of the difficulty in collection due to job losses, furlough and the general economic climate caused by Covid-19.
This year collection had improved against 2021/22 at this point, recovery of Council Tax debt was in place and the Council Tax Support claims were reducing. It was also the case that since 2020/21, working age Council Tax Support claimants had been further assisted with up to £150.00 additional support against their Council Tax through government grants. When this was removed from 2022/23 it may have some impact on in year collection. Despite this it was felt that a return to the assumed collection rate of prior to 2021/22 of 98.50% was achievable long term.
The final stage of the Council Tax Base calculation involved adding an estimated amount in respect of contributions in lieu of Council Tax to be made to the Authority, which was expressed in terms of the number of Band D equivalent properties. For 2022/23 this figure for North Tyneside Council which related to Ministry of Defence properties was 50 Band D equivalent properties.
The 2022/23 Council Tax Base for the whole of North Tyneside after the allowance fornon-collection and payments in lieu was 62,229 Band D equivalent properties. This equated to an increase of 1,288 Band D equivalent properties compared to the 2021/22 figure, this was down to a reduction in Council Tax Support claims, and the increase in the assumed long-term collection rate.
Cabinet considered the following decision options:
Option 1 – to set the 2022/23 Council Tax Base for North Tyneside Council using an assumed Council Tax collection rate of 98.50% and agrees the change to the Council Tax Support Scheme.
Option 2 – to not agree the proposed Council Tax Base calculation and asks officers to undertake further work on the proposal.
Resolved that the report on the calculation of North Tyneside’s Council Tax Base for 2022/23 be noted, and the assumed Council Tax collection rate for 2022/23 be set at 98.50% and therefore the amount calculated by North Tyneside Council as its Council Tax Base for 2022/23 shall be 62,229 Band D equivalent properties.
(Reasons for decision: The proposed 98.50% Council Tax collection rate, representing an increase of 0.5% on the 2021/22 assumed collection rate is felt to be achievable for the reasons set out in paragraph 1.5.13 of the report.
The risk of setting a Council Tax collection rate too high is that this can result in a deficit position for the Council Tax element of the Collection Fund, which in turn will have to be funded by the Authority’s General Fund. This collection rate is reviewed as part of the annual Council Tax Base calculation, and the 98.50% collection rate will be reviewed in determining the Council Tax Base for 2023/24.)