Streamlining Welsh Benefits: review of legislation, eligibility criteria and policy

The benefits under consideration were:

• Council Tax Reduction Scheme (CTRS)
• Free School Meals (FSM)
• School Essentials Grant (SEG)

Council Tax Reduction Scheme

CTRS is the mechanism by which local authorities in Wales provide support to low-income households in meeting their Council Tax liability. 

Free School Meals

The introduction of an earned income threshold for families in receipt of Universal Credit (UC) from 1 April 2019 reserved entitlement to free school meals (eFSM) for families who are in receipt of UC but only where their annualised household earnings are less than £7,400 a year. 

The programme for government commits us to:

“Continue to meet the rise in demand for Free School Meals resulting from the pandemic and review the eligibility criteria, extending entitlement as far as resources allow and at least to all primary school children.”

School Essentials Grant

The School Essentials Grant is available to children and young people eligible for free school meals (eFSM) and Children Looked After (CLA), and LAs are requested to show their discretion in awarding the grant to learners whose families are classed as No Recourse to Public Funds (NRPF), in year groups Reception to Year 11. The scheme for the 2024 to 2025 academic year will begin on 1st July 2024 and end on 31st May 2025.

The ‘Get help with school costs’ joint campaign with FSM encourages parents to continue to register for eFSM and SEG and attract funding for their school or setting through the Pupil Development Grant.

Council Tax Reduction Scheme

The 2013 CTRS Reg were approved by the National Assembly for Wales on 26 November 2013. The value of award entitlements is met locally by each local authority. The Welsh Government provided £244m in the Local Government Settlement for CTRS in 2013 to 2014 and each year since.

This funding replaces the Council Tax income which authorities would otherwise be able to collect from households who are eligible for CTRS.

Free School Meals

FSMs are funded through the Revenue Support Grant which is unhypothecated and therefore cannot be isolated / identified, although the calculation and distribution of funding utilises the eFSM figures which are captured as part of Pupil Level Annual School Census (PLASC).  LAs are required to meet the FSM demand from RSG; if demand fluctuates funding does not. This is different to funding of roll out of Universal FSM at primary level.

School Essentials Grant

Demand led with an assigned budget and based on FSMs uptake from PLASC. In 2024 to 2025, funding of £13.1m has been made available for the School Essentials Grant. 

Council Tax Reduction Scheme

The powers to make the Council Tax Reduction Schemes and Prescribed Requirements (Wales) Regulations 2013 and the Council Tax Reduction Schemes (Default Scheme) (Wales) Regulations 2013 are contained in section 13A of, and Schedule 1B to, the Local Government Finance Act 1992. These powers enable the Welsh Ministers to require, by regulations, local authorities in Wales to implement Council Tax Reduction Schemes and to prescribe the content of such schemes.

Amending regulations are made annually to uprate the financial figures in the 2013 Regulations in line with Welsh Government policy to maintain entitlements, and to make any necessary consequential and technical amendments to ensure CTRS reflects changes to related social security benefits and other systems and remains fit-for-purpose.

Free School Meals

The 1996 Education Act (UK) gives Welsh Ministers the power to prescribe the circumstances under which pupils from families in receipt of Universal Credit can be eligible for free school meals. This is currently prescribed in the Free School Lunches and Milk (Universal Credit) (Wales) Order 2019.  

Under section 512ZB of the Education Act 1996, local authorities are required to provide a free school lunch for eligible pupils if:

• they attend state-maintained school (for nursery age pupils there is a prescribed requirement through The School Lunches (Prescribed Requirement) (Wales) Order 2005 that the pupil must attend both morning and afternoon sessions for the duty to arise)
• their families meet the eligibility criteria for the provision of free school meals
• a request has been made by, or on behalf of, the parent or pupil for free school meals (i.e. free school meals cannot be awarded automatically without a request being made by, or on behalf of the parent or pupil). 

School Essentials Grant

This funding is made on and subject to the conditions under the authority of the Cabinet Secretary for Education, one of the Welsh Ministers, acting pursuant to functions transferred under section 58A of the Government of Wales Act 2006 and sections 14 to 17 of the Education Act 2002. 

Council Tax Reduction Scheme

To provide households on low incomes with support with their Council Tax liability through the CTRS and reduce child poverty and provide financial relief for low-income households

Free School Meals

Ensure children from low-income households have access to healthy meals to improve health and learning outcomes.

School Essentials Grant

To provide support to help low-income households with meeting the cost of meeting school essentials i.e. uniform and equipment.

Council Tax Reduction Scheme

Capital of less than £16,000. If an applicant receives a ‘passported benefit’, they are automatically entitled to the maximum reduction in their Council Tax liability. This means a reduction to zero (less any deductions for non-dependants).  

Passported benefits include:

• Income-based Jobseeker’s Allowance: paid to those who are unemployed and are on a low income.
• Income-related Employment and Support Allowance: paid to those on a low income whose ability to work is limited by illness or disability.
• Income Support: paid to those on a low income and under state pension age.
• Pension Credit (Guarantee Credit): paid to those on a low income who are over the qualifying age.

If an applicant does not receive any of these passported benefits, they are categorised as ‘non-passported’. To decide whether they are eligible for a CTRS reduction, the household is subject to a means test.

Free School Meals

Children from low-income families in receipt of a relevant qualifying benefit i.e. Universal Credit or with net earnings below £7,400 and attend a LA maintained school. 

School Essentials Grant

Eligible to receive FSMs or living in a Non Recourse to Public Funds (subject to LA direction).

Council Tax Reduction Scheme

A reduction in their Council Tax liability of up to 100%.

Free School Meals

A free meal each day during term time. 

School Essentials Grant

Receive £125 grant per learner or £200 for learners entering year 7 (to help with increased costs associated with starting secondary school).

Council Tax Reduction Scheme

The household can contact their local authority's Council Tax department and apply over the phone or apply or online through the local authority's website. Some local authorities provide a hard copy form upon request.

An application can be completed as part of their Universal Credit claim. 

Free School Meals

The term request is not defined in the Education Act 1996, therefore each local authority has the autonomy to determine what counts as a request.  Given that specific data is required to determine eligibility, most local authorities request an application form be completed.

A parent or carer can collect a form from their child’s school or the local authority or there are options to apply through their local authority's website. Eligibility is generally assessed using the Eligibility Checking System provided by Department of Education, and if eligibility is confirmed a free school meal can be provided. Applicants can claim for FSM as part of a CTRS application through some LAs.

School Essentials Grant

LAs have a separate application form which is available when the scheme opens. Some LAs award a grant at the same time as they award FSM. Others use auto enrolment when the scheme opens.

Council Tax Reduction Scheme

Eligibility is assessed based on income and capital. An eligible person can have capital up to £16,000. If a person receives Pension Credit Guarantee they will still be eligible even if their capital exceeds £16,000.

Free School Meals

Families in receipt of Universal Credit with annualised net earnings below £7,400.

School Essentials Grant

Families in receipt of Universal Credit and earning below £7,400. 

Pupils who receive FSM through transitional protection arrangements or receive Universal Primary Free School Meals (UPFSM) do not qualify for this funding.

Council Tax Reduction Scheme

Our £244m Council Tax Reduction Scheme helps reduce the Council Tax paid by almost 260,000 households (around one in five households). Of these, over 216,000 households pay no Council Tax at all.

Free School Meals

This data is not available due to irregularities in PLASC collection.

School Essentials Grant

Take-up is at an average of 90% as of January 2025 for the second quarter returns from LAs, with end of grant year 2025.

Council Tax Reduction Scheme

Annually amendments are made to the Council Tax Reduction Schemes and Prescribed Requirements (Wales) Regulations 2013 and the Council Tax Reduction Schemes (Default Scheme) (Wales) Regulations 2013. Benefit entitlements used to calculate the amount of reduction are uprated in line with UK Benefits to reflect cost of living increases  

The Council Tax Reduction Scheme (Prescribed Requirements and Default Scheme) (Wales) (Amendment) Regulations 2025 introduced provisions to allow LAs treat an UC application as 'an intention to claim' CTRS. This change will enable a smoother integration between Universal Credit and CTRS, reducing administrative burdens for both applicants and LAs. This relies on the UC applicant agreeing to apply for CTRS (by ticking a box) and as a result the information on the applicant will be shared with the LA who can assess eligibility for CTRS.  Every time there is a change of circumstances the LA will be provided with updated information. 

Free School Meals

No recent changes. 

Any changes to the Universal Credit income threshold which determines FSM eligibility would need to be implemented through secondary legislation.

Introducing a new category of eligible learner (e.g. learners living who's parents/carers have no recourse to public funds or who receive CTRS), would require primary legislation.

School Essentials Grant

No recent changes and none currently planned. 

Council Tax Reduction Scheme

The Local Government Finance (Wales) Act 2024 places a duty on the Welsh Ministers to make a single national Council Tax Reduction Scheme through regulations with an ability to make in-year changes. Regulations are planned for April 2027.

Free School Meals

None planned.

School Essentials Grant

None planned.

Council Tax Reduction Scheme

Both support low-income families and children, aiming to reduce child poverty. They all aim for long-term improvement in outcomes whether financially, nutritionally, or educationally.

Free School Meals

All three aim to address child poverty and inequalities: CTRS through financial support, FSM through a free school meal, and SEG through additional educational support and resources.

School Essentials Grant

CTRS, FSM, and SEG all focus on reducing barriers for low-income families and those with children, working together to provide comprehensive support.

Council Tax Reduction Scheme

CTRS primarily addresses financial needs through tax relief, while FSM and SEG focus more directly on children’s access to food and educational support

Free School Meals

FSM eligibility is clearly defined i.e. someone is eligible or not, the means testing to take account of household circumstances, income and capital is undertaken by the DWP/Home Office in relation to the assessment of welfare benefits/support payments that passport FSM entitlement. As such FSM eligibility is somewhat beholden to any fundamental changes that are made to the eligibility/entitlement criteria for the welfare benefits and payments within the control of the UK government. 

A successful FSM outcome results in the ability to access a service i.e. a nutritional meal whilst at school. A learner who is eligible for FSM is also by definition eligible for SEG, however not all learners on FSM live in households that are eligible for CTRS and vice versa.

School Essentials Grant

SEG focuses educational support and to children and schools. while FSMs and CTRS focus on broader social support, financial relief, and providing a nutritional meal to children while in school.