Council Tax Reduction scheme - consultation on proposed changes from 1st April 2025
We want to know what you think about a proposed change to Newham Council’s Council Tax Reduction (CTR) scheme for working-age households, which we are considering as part of our 2025/26 budget setting process in the face of a significant budget gap forecast of £175 million facing the Council by 2027/28 because of rising costs of temporary accommodation and social care.
Newham still has the lowest council tax of any outer London borough with a band D property charged £1,724.34 in 2024/25, made up of £1254.94 for Newham's services including an additional amount for Adult Social Care and £471.40 for the Greater London Authority. Our current CTR scheme helps working aged residents who are in most financial need, by reducing their council tax by up to 90%. This has been part of our drive to create a fairer Newham and address systemic issues of financial insecurity experienced by so many residents and households as we work to support people to increase their household incomes and lead financially secure lives.
We are having to make changes because over the past 14 years grants we get from central government have drastically reduced despite growing demand and the growth of our population in Newham. Pressures on services for vulnerable children and adults, providing housing, keeping our streets clean and safe, running our libraries and children’s centres has been exacerbated by rising costs for these services, including the massively increased housing need in Newham. This means we must look for savings to balance our Council budget in the 2025/26 financial year.
Without making small changes to the CTR, we would instead have to look for savings of up to £4m from other areas of the council’s budget – potentially stopping a whole service or closing a facility people rely on elsewhere.
We are considering several options to alter the scheme to make it fair for all council tax payers so that we can continue to make sure those in greatest need can be helped the most. We need your views on proposals for a number of changes to the scheme, including reducing the maximum help available from 90% to 70%, which, if all proposals were agreed, would potentially increase council tax payments for those currently receiving a reduction by an average of £6.14 each week (£26.68 each month).
Our consultation offers you the opportunity to suggest alternatives that balance the council’s need to make savings with the impact on all council tax payers – whether you receive any sort of discount or not, and we also want to hear from people who work with vulnerable or disadvantaged residents and who advocate for them.
The consultation also wants to consider what additional steps we could take to make any changes fair for everyone, including making everyone aware of all the different benefits and entitlements that they could be claiming for, and that we know many people in Newham aren’t.
If you are having difficulty managing financially, it’s essential to check that you are claiming all the benefits available to you. For working age residents this will be Universal Credit through the Department for Work and Pensions (DWP) who can also support you into employment. For more details go to www.gov.uk/universal-credit. The DWP can also advise on entitlement to carers and disability benefits.
If you feel you need help with your council tax and are not currently receiving Council Tax Reduction, you can apply through our website: Make a claim for Council Tax Reduction – Council Tax Reduction – Newham Council
And please remember, these proposed changes would only affect working age households; pensioner households are not affected at all.
You have until 14th January 2025 to feed back your views, after which all your comments will be considered by Councillors who must look to set a balanced budget by the end of February.
Councillor Charlene McLean
Cabinet Member for Resident Engagement and Resident Experience
Councillor Canon Ann Easter
Commissioner for Interfaith and Interreligious Dialogue
Phases
Consultation
The Council is legally required to consult on any proposed changes to our Council Tax Reduction (CTR) scheme. The consultation aims to gather feedback from council tax payers receiving CTR; other council tax payers; and interested parties such as welfare and advice organisations on the proposed changes to the CTR scheme. Your input is crucial in helping us design a scheme that balances financial sustainability with the need to support vulnerable households.
What is the Council Tax Reduction Scheme?
Newham offers a reduction in Council Tax to households that might struggle to pay the full amount. The council does this by agreeing a local Council Tax Reduction Scheme for working-age residents. To work out a household's entitlement to CTR we compare their income and capital (savings etc.) with an assessed needs amount based on the Department for Work and Pensions' published figures that allows additional for having dependent children and disability. We also take into account the circumstances of other adults living in the household - we call these non-dependents - and make a deduction if the other adults can contribute to the payment of council tax. The current scheme allows households to have up to £16,000 in capital before not being eligible for CTR.
Pensioners can also receive Council Tax Reductions but the Government decides how much Council Tax Reduction pensioners will get. Pension age residents can be eligible for a discount of up to 100 per cent of their council tax bill. Pension age resident are not affected by the proposed changes.
What are the proposed changes?
Reducing the maximum support
Currently, working age residents can receive help through CTR of up to 90% of the amount of their Council Tax. We are proposing to decrease the maximum support working age households can receive to 70%.
Based on households currently receiving CTR and 2024/25 Council Tax amounts, this proposal would affect 17,850 households with an average increase in council tax payable of £4.83 each week. The actual change for affected households will depend on the council tax band for their property and any discounts they already get, for example for being the only adult in the household. Households in band A properties would have a potential average increase in Council Tax payments of £3.48. Households in larger or higher value properties in band G properties having a potential average increase of £8.95 each week. Only a very small number of households receiving CTR live in band G properties. Most properties in Newham are in bands A to C.
Increasing the income taper
The taper applies where a household's income is above their assessed level of need. The taper rate reduces entitlement to CTR as income increases. It is currently set at 20% meaning CTR reduces by 20p each week for every £1 of income above their assessed level of need. We are proposing to increase the rate to 30% meaning CTR would reduce by 30p for every £1.
Based on 2024/25 figures, this proposal would affect 4,211 households with an average increase in council tax payments of £3.82 each week.
Removing earnings disregards
Earnings disregards reduce the amount of income from employment and self-employment that we use when working out entitlement to CTR. Currently, income disregards are set at £5 per week for single claimants, £10 per week couples, £20 per week in some special cases, and £25 per week for single parents.
Based on 2024/25 figures, this proposal would affect 4,575 households with an average increase in council tax payments of £2.48 each week.
Reducing the capital limit
Capital includes all monies held in your bank accounts, savings accounts, bonds, stocks, shares, crypto-currency, investments and second properties. Some capital will not count toward the total. The capital limit is the amount above which the household will not qualify for CTR and is currently set at £16,000.
We are proposing to reduce the limit to £6,000 and based on 2024/25 figures this would affect 343 households who would see an average increase in their Council Tax payments of £18.49 each week. The actual increase for households will depend on the Council Tax band for their property.
Increasing non-dependent deductions
Non-dependent deductions apply where other adults are living with the council tax payer applying for or entitled to Council Tax Reduction. The amount of the deduction depends on the other adults' income. The circumstances where no non-dependent deduction applies will remain the same as the current scheme.
We are proposing to increase the amount of non-dependent deductions by 30% and based on 2024/25 figures this proposal would affect 2,078 households with an average increase in council tax payable of £2.98 each week.
Combining all proposals
Whilst the figures above show the impact of each individual proposal, if all the proposals were agreed then the changes would impact 17,850 households with an average increase in council tax payments of £6.14 each week (£26.68 each month). 12,918 households who are not working would see an average increase of £5.37 each week (£23.33 each month) and 4,932 households in work would see an average increase of £8.16 each week (£35.46 each month).
How to provide your views and feedback on the proposals?
Click the "Complete the consultation questionnaire" button and provide responses to the questions on each of the proposals.