IT firms fear council tax benefit collapse

IT firms fear council tax benefit collapse

The cabinet member for finance at a North London council says local authorities are finding it difficult to find an “affordable” IT supplier to devise a system for the Government’s new council tax benefit regime because they’re pricing “massive risk” into their costs.

The Government is abolishing the current scheme where councils receive rebates on the financial support they provide. Instead, it has told them to come up with their own schemes from next April, cutting expenditure by 10% and handing them the money to administer it.

It has also told them to protect pensioners from cuts, leading to fears that areas with a high proportion of elderly residents will force bigger cuts on working-age claimants.

The Government says the new local schemes will better target support, reduce fraud and should incentivise work. It also argues that by giving councils capacity to change their current discounts and exemptions for empty and second homes – and through the local retention of business rates – local authorities will be able to offset the reduction in expenditure.

However, Cllr Theo Blackwell, cabinet member for finance at the London borough of Camden, told 24dash councils across the country were having real difficulty in practically devising a “truly local” scheme with issues around how to prioritise who is shielded from cuts when the overall money is less and pensioners were being protected.

“For example, how do you justify prioritising carers over disabled people?” he said.

Camden is set to launch a consultation this month with residents which will see claimants get £3 less support a week, meaning that everyone would pay at least £156 a year towards their council tax bill.

In addition to making tough choices about who is prioritised for support Mr Blackwell said he had equal fears about the delivery of the scheme in time for next April.

He said: “Every authority I have spoken to has found it difficult to find an affordable IT company to devise a scheme for this because they’re pricing in massive risk and the regulations have been late. There is not much time to test and implement it. They don’t want to be responsible for the collapse of a scheme in an area. They’re either pricing risk in it or are waiting until it pans out.”

The same warning was made by Labour’s Clive Betts, chair of the Communities and Local Government committee in July during a debate in Parliament.

He referred to a letter written by back-office outsourcer Capita in January to all local authorities for which it provides services saying that it did not think that it could deliver the necessary systems in the time scale.

He said: “I just think back to Sheffield in 1999 when we had privatised the housing benefit service and transferred it to Capita in a rushed and botched way. I remember the constituents, often elderly, coming to my surgeries in tears not because they had done anything wrong but because the administration of their benefits was in chaos and, as a result, the arrears on their council tax and rent had risen. They were distraught because they had never been in arrears in their lives. I worry that we will go back to that situation.

“The responsibility will be not with local councils but with the Government who will push this through on an unacceptable and unattainable timetable.”