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Software providers charge “exorbitant amounts” for councils wanting to make minor changes to local council tax support, according to a report.
The independent review of local council tax support schemes by former MP Eric Ollerenshaw, found there is little competition between software providers, which has led to councils being charged high fees if they want to make any changes to the system.
“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,” Ollerenshaw said in the report. “I heard how some councils were quoted £30,000 for just one small change.”
The report adds that this means it’s simpler for providers, and cheaper for councils, to keep the local council tax support systems as “close as possible to other benefits systems”, which “undermines efficiency and savings and can also impede the development of radical and innovative schemes”.
The report comes after the abolition of council tax benefits in 2013, which was replaced by local council tax support schemes.
While the roll-out of Universal Credit (UC), which intends to replace six existing benefits, is due to begin in May 2016, the report states that local council tax support schemes “should not be moved into Universal Credit at this time”.
“No one has prepared for such a move, which would be complex and disruptive to both central and local government at this critical phase in the Universal Credit timetable,” the report said.
However, Universal Credit has also led to data sharing problems. Previously, councils would automatically get data from the Department for Work and Pensions (DWP) on recipients of housing benefits so it could assess and administer claims.
This same data has been used for assessing local council tax support claims, but because housing benefit will no longer be done by the councils’ benefits teams “this essential source of data is being lost”.
“Universal Credit systems that have been set up to plug the gap are reported by councils as not currently fit for purpose, providing insufficient data, and doing so inconsistently,” the report said.
“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 data for housing benefit used to.
“This means that, when the circumstances of an LCTS [local council tax support] recipient who is on UC change, the council is not always notified by DWP. This can lead to errors in calculating LCTS entitlements.”
This will increase to 50 job centres a month once the DWP is confident “the system can cope with the higher volume”. The DWP aims to complete the roll-out by March 2021.