The county's town and parish councils are being offered a six figure show of faith ahead of taking on more services.

Herefordshire Council is proposing to pass its £289,000 council tax reduction support scheme grant onto parishes over 2015-16.

A decision rests with cabinet and could come when members meet next week.

The grant funding is intended to replace receipts lost to the introduction of the reduction scheme, in turn, reducing the community impact of an increased precept if the grant funding is not allocated as recommended.

Herefordshire Council currently budgets to pass on the proportion of grant that relates to the council tax reduction scheme but could keep the £289,000 as a contribution to its savings targets.

Keeping the £289,000, however, means parishes either having to reduce their budgets or increase their precept by an average of 10%.

Councils that have taken this course are being challenged by parishes and could be overturned in the courts.

Cabinet will be told that retention by Herefordshire Council would “cause problems” for parishes when the council wanted them to take on more services.

Funding could be reduced by a level equivalent  to central grant reductions. Currently the  revenue support grant that the council tax reduction scheme forms part of is being cut by between 5 per cent and 7 per cent a year.

However, reducing the grant by an amount to reflect this cut – taking 10 per cent as an example - is seen by the council as making very little difference at £29,000.

Last year, the government’s council tax benefit scheme was abolished and  replaced by the council tax reduction scheme now operated by Herefordshire Council.

As a result, the  council tax base on which Band D council tax is  calculated and collected reduced causing a fall in related receipts.

This is largely, but not entirely, funded through the Rates Retention Scheme through which councils receive central government support.

The funding received is about 10 per cent less than would have been received under the old council tax benefit system.

For 2013/14 the government estimated £289,000 of the additional funding included in the  Rates Retention Scheme for 2013/14 related to town and parish councils.

Though there is no legislative duty to pass on this funding, the council passed the grant to parishes.

The basis of calculation to individual parishes was the number of homes in the that were previously in receipt of council tax benefit.

For 2014/15, the council will not be told how much council tax reduction grant is  included in its financial settlement.

Impact the grant has on each parish - as a percentage of its total precept - ranges from one per cent in Hampton Bishop and Mathon to 19% in Kington.

The effect of the loss of grant on each parish - if it had to increase its precept to compensate for the loss – is averaged at  10 per cent of the near £3 million overall precept collected by parish and town councils.

In monetary terms the biggest loser if the grant was not passed on would be Hereford Town Council with the equivalent of 15,273 B and D properties, 23% of the number in the county that that receives £93,000 a year, 13 per cent of its precept.

All parishes - and each of Herefordshire Council’s political group leaders - have been consulted over the pass on proposal which is supported by council leader councillor Tony Johnson.

THE PARISH PASS ON – LEGAL IMPLICATIONS

Since April 1 last year, local authorities in England have been responsible for  administering their own Council Tax Reduction Schemes, subject to the Council Tax Reduction Schemes (Prescribed Requirements) (England) Regulations 2012.

The funding for council tax support schemes provided to billing authorities for 2013-14 included a sum in respect of the funding that would be lost to parish councils as a  result of this decision.

However, the Government did not oblige billing authorities to pass this sum on to parish and town councils.

From 2014-15, funding for council tax support schemes  - and the sums intended for parish and town councils - will be rolled into the general local authority grant.

As a consequence, it is not now possible to identify a specific amount intended for council tax support schemes.