Confusion between checks and scam: reimbursement of Sunak’s housing tax proves difficult
Most billing authorities have yet to finalize details of how the Chancellor’s Council fee refund scheme will operate, with some likely to resort to sending checks to those who do not pay by direct debit, LGC has been told.
With just weeks to go before the £150 payments start, the revenue and benefits teams are still grappling with the question of making sure the money gets to those for whom the councils are not holding bank details.
There are also concerns that the level of activity required to ensure that payments reach those who do not pay by direct debit will not be met by the promised new funding.
A London borough’s attempt to get residents to sign up for direct debits by sending text messages has backfired after some recipients feared it was a scam. Meanwhile, officials from the Department of Leveling, Housing and Communities have suggested that the post office or PayPal could be used to make payments.
The plan to pay every household in the AD strip £150 to help them with the cost of spiraling energy bills was announced by Rishi Sunak in February, intending to use payment details from existing municipal taxes.
The challenges involved mean that while those who already pay by direct debit can expect to receive their payments from mid-April, those who don’t could wait much longer.
Speaking to the House of Commons Upgrading, Housing and Communities Committee earlier this week, DLUHC Local Government Finance Director Alex Skinner said the department, working with councils , had identified “three alternatives” to paying by direct debit: using the post office to make cash payments to individuals, using Pay Pal, or transferring the £150 as a credit to their council tax account.
He added: “We are absolutely aware of the challenge.”
Joanne Pitt, senior adviser on local government at the Chartered Institute for Public Finance & Accountancy, pointed out that there were 20 million households in England in Bands AD. Some councils have reported that up to a third of their households are not paying by direct debit.
Ms Pitt said that while none of the problems with delivering payment were “show stopper”, it was far from a “simple transaction”.
“Local authorities will do their best to make these payments as quickly as possible, but that doesn’t mean everyone will receive these payments immediately,” she said.
Geoff Winterbottom, senior research fellow at the Municipal Authorities Special Interest Group, told LGC that he expected most members to wait until the first council tax payment had been received before proceeding. pay to payers by direct debit, in order to verify that the bank details were up to date. .
However, he said a recent meeting of revenue and benefits officers hosted by Sigoma showed that there is no one-size-fits-all solution for making payments to those who are not on direct debit.
“There will definitely be some who will use checks, but there hasn’t been any enthusiasm for it,” he said.
“No one has a fantastic idea that’s going to hit this on the head, it’s going to be a combination of approaches to solving the problem.”
Society of District Treasurers president Alison Scott told LGC while five years ago checks would have been the obvious solution, most councils could no longer afford to issue large amounts of checks.
Ms Scott, finance director of Three Rivers DC and Watford BC, said that “even in leafy Hertfordshire” up to a quarter of municipal taxpayers do not pay by direct debit.
“We’re looking at 10-15,000 cheques, you can’t do that by hand…It has to be done by printing, but nobody has the facilities to do that anymore.”
She said her councils expected to get direct debit payments by mid-April but were likely to launch an application process for others that would not open until mid-April due to the year-end requirements.
“We are aware that the cost of living is hitting people now, so we want to try and get the money out as quickly as possible. We have made an effort, like other councils, to get people to sign up for direct debit.
However, this does not always turn out to be simple. Waltham Forest LBC recently sent a text message to council taxpayers who had not set up direct debits encouraging them to do so. However, a number of residents took it for a scam and contacted the council to ask if it was genuine.
A spokesperson said they posted a message that residents could call them or visit the website and did not need to click on any links in the message.
Tracy Bingham, chief financial officer of Oadby & Wigston BC, told LGC that the delay in finalizing the program within her board was due to the expectation that software providers would develop their solutions to make payments to those already by direct debit.
She said the council also needed to know what the government’s “new funding envelope” would be to administer the program before entering into contracts with software vendors or planning to contact those not currently in place. debit.
“In a small district like Oadby & Wigston, we want to make sure that this scheme doesn’t cost us more to administer than what we will receive from central government to do it,” she said.
LGC understands that Capita, a leading provider of revenue and benefits software, expects to have the required “patch” ready by the end of the month. It is not yet known how much it will cost. Other providers would be in a similar position.
Ms Bingham and Ms Scott also raised concerns about revenue and benefits staffing shortages which they said added to the challenge of implementing the programme.
Ms Scott said: “I am concerned about the burden placed on the teams who have spent the past two years working hard to deliver business grants for Covid. They’re stretched enough already.
Treasurers also raised concerns with LGC that the high-profile nature of the payments could lead to similar pressure to make payments as seen with the business grants scheme, where board performance was monitored. with a public leaderboard. However, LGC understands that DLUHC does not intend to follow a similar approach here.
A DLUHC spokesperson said: “We will fund the costs incurred by councils in administering the rebate scheme and encourage households to pay council tax by direct debit where possible, to facilitate this process. “