Issue - meetings

ORDERED that Executive:

1.     APPROVES a time-limited change (2026/27 financial year only) to the Exceptional Hardship Fund - Section 13A (1) (a) policy which was approved at Executive on 4 February 2026.

Members were advised that this change would extend eligibility to Council Tax Reduction (CTR) claimants on the basis of their increased income from Universal Credit due to the removal of the two-child restriction, to enable individual council tax bills to remain unaffected, with automatic awards to be made.

The Executive Member for Finance submitted a report for Executive consideration. The purpose of the report sought Executive approval to change the, recently confirmed, Exceptional Hardship Fund policy. This would enable the Council to ensure recipients of Council Tax Reduction were not adversely affected by an increase in income following the removal of the two-child restriction which had previously applied within Universal Credit. 

Members were advised that under Schedule 1A of the Local Government Finance Act 1992, Council Tax Reduction (CTR) schemes had to be approved by 11 March each year. The requirement to publish a draft scheme and provide for consultation on changes to an existing scheme had to be in advance of that date.

The Chancellor of the Exchequer announced in her Budget on 26 November 2025 that the government would be removing the two-child limit in the child element of Universal Credit from April 2026 and estimated that the measure would lift 450,000 children out of poverty.

It was noted that the announcement was too late for councils to undertake the necessary preparatory work to design and consult on a scheme taking the change into account and then to obtain scheme approval by the 11 March 2026 deadline.

The Department for Work and Pensions (DWP) had been approached for data on those claimants who were likely to be affected by the change. However, it had responded to the effect that nothing was to be provided.

As such, it was difficult to predict with any accuracy the numbers and potential cost involved, as the Council was reliant on receiving DWP electronic notifications. Those notifications were expected during May and June 2026 as individual claimant Universal Credit entitlements were recalculated.

Existing data suggested that more than 1,000 claimants would be affected, and the impact in each instance would vary according to other factors in individual assessments. The effect this would have, in terms of the reduction in the rate of support to be provided by the CTR scheme, could be substantial particularly for larger families.

For each additional child, for which the child element will be awarded in Universal Credit, the income provided for would increase by £303.94 per month, or £70.14 per week.

Most claimants would be receiving CTR at a rate of 90% before the increase took effect, with 72%, 36%, 24% and none, all being possible entitlement rates afterwards. The current scheme bands prescribed income ranges as shown in the table detailed in the report. 

Members were advised that the proposal in the report was to negate the effect of a lower rate of CTR by reducing a claimant’s council tax liability to the value of CTR lost by crediting an equivalent amount under the Exceptional Hardship Fund - Section 13A (1) (a) Policy. The Exceptional Hardship Fund - Section 13A (1) (a) Policy provided for application-based reductions to council tax bills in exceptional circumstances, usually where a CTR award has been made.

A Member queried if the changes detailed in the report would have  ...  view the full minutes text for item 149