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'Council tax changes led to software price hike'

18/04/16

Eric Ollerenshaw report to DCLG highlights 'exorbitant' charges and data problems with Universal Credit

Software companies have ripped off local authorities struggling with council tax changes by charging “exorbitant” fees, the Government has been told in a report on support schemes for the tax.

Eric_OllerenshawFormer Conservative MP Eric Ollerenshaw (pictured) has made the criticisms in Three Years On: An Independent Review of Local Council Tax Support Schemes, submitted to the Department for Communities and Local Government (DCLG).

Among his claims is that excessive charges – up to £30,000 for “just one small change” – have frustrated attempts to introduce innovative new benefit schemes.

The study also repeats concerns that the introduction of Universal Credit is causing blunders and delays, because an “essential source of data is being lost”.

It follows the controversial introduction of local council tax support schemes (LCTS) with the abolition of council tax benefit in 2013.

Last year, more than half of councils imposed a 10-20% charge on their poorest residents – and one in six charged more than 20% – after their grants from central government were slashed. But they were barred from either increasing charges for pensioners, or from scrapping the Single Person Discount, which guarantees 25% off a council tax bill for people living alone.

The report says those restrictions made it very difficult for councils to draw up “new and radical schemes” as hoped.

Making a killing

They have also been held back by a lack of competition between software companies, which were therefore able to make a killing out of the localisation of council tax help.

Ollerenshaw says in the report: “For the most part, councils mentioned just one or two software companies. There was a sense from some councils that these companies have benefited greatly from the localisation of council tax support, charging exorbitant amounts for minor changes.

“I heard how some councils were quoted £30,000 for just one small change in the system. In a time of pressured council finances, high upfront and maintenance costs for IT can undermine a council’s ability and willingness to make a simpler or more innovative scheme.

“To quote the submission from Leeds City Council: On a very practical level, ICT systems presented a significant barrier to introducing new and radical schemes.”

In addition, councils have had to run different software systems for different LCTS schemes – for pensioners and working age recipients – and housing benefit, which has added to costs.

Among its recommendations is that councils should consider joint procurement from software suppliers and joint schemes with neighbours when possible.

UC switch disruption

Meanwhile, the report also highlights how the switch to administering housing benefit from Whitehall – with the introduction of Universal Credit (UC) – is not “currently fit for purpose”.

It warns: “Often, councils told me, the council has to request further pieces of information from the recipient, resulting in delays and confusion. The UC systems also do not provide automatic updates on a person’s circumstances, as DWP (Department for Work and Pensions) data for housing benefit used to.

“This means that, when the circumstances of an LCTS recipient who is on UC change, the council is not always notified by DWP. This can lead to errors in calculating LCTS entitlements.”

 

Picture by Milezhb, public domain via Wikimedia Commons

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