Revenues and benefits teams in district councils and other billing authorities have had a torrid time over the last two years. They have successfully administered billions of pounds in grants, reliefs and other support measures for businesses and households as a result of COVID, as well as the almost annual changes to business rates reliefs announced in each budget.
Now the Government has asked them to step up to help again, just at the time when they are at their busiest. Bills for 2022-23 will be issued over the next few weeks. They inevitably prompt notification of changes and additional support requests from households facing difficulty in paying council tax. Teams then move to the usual initiation of reminders and recovery action if people don’t pay their first instalment.
The Government is right to help households facing sharp increases in energy costs. It could have chosen to deliver that assistance in other ways, such as increasing universal credit and other mean-tested benefits and removing VAT on fuel. I suspect it didn’t do so because it didn’t want to have to reverse such measures in 12 months’ time and be accused of ‘cutting benefits’ or ‘increasing household bills’.
So the concept of the ‘council tax energy rebate’ has been invented. It is rather a misnomer as it is not actually a rebate from the council tax bill but a cash payment that districts and other billing authorities will make to certain households during April.
It is not a rebate from council tax as households will still receive and be expected to pay their full bills. If support was going to be delivered via councils, it might have been better for the Government to pay for council tax bills to be reduced. The benefit for households would then be spread across the year as most people pay by instalments. It might also have avoided the situation where households spend their £150 soon after receiving it and are in no better position to pay their highest energy bills, which are likely to be in the winter of 2022/23.
Twelve days after unveiling the desire that councils should pay £150 to every household in Bands A to D in England and that £144m would be provided to billing authorities to provide discretionary support for other struggling households, we are still in the dark. Districts don’t know their share of the £144m so can’t safely devise plans for allocating it. No guidance has been issued and it is expected to emerge in the middle part of the week of 14 February. Councils need as much flexibility as possible so that, in the immediate aftermath of issuing bills, they can find ways to avoid hundreds or even thousands of applications being required.
On 14 February, regulations were made to require the addition of a reference to the scheme on the face of the demand notice and to require that ‘council tax energy rebate payments’ must be disregarded as income for the purposes of calculating eligibility for both working age and pensioner local council tax support schemes in 2022-23. But we are still awaiting the leaflet that the Government wants councils to send to taxpayers prior to the start of the new financial year. Let us hope that the wording is not misleading and does not create undeliverable expectations, and that councils can cope with the logistical difficulties of including an additional, unplanned document with demand notices at this very late stage.
The Government has confirmed that, in accordance with the new burdens doctrine, billing authorities will be compensated this month for the administrative costs of providing the ‘rebate’. Quite right too. The costs could be significant. Software systems might need amendment. Only a proportion of households pay by direct debit (about 69% in my council’s case but only 45% of those in Band A), so we don’t have bank account details for the remainder. We will face the administrative hurdle of either obtaining those households’ bank account details or paying for other methods to get money to them such as the Post Office’s ‘Payout’ service.
This process could have been made smoother if the Government had spent a couple of weeks properly discussing its plans with local government bodies before rushing out an announcement. Instead it has put both councils and probably civil servants on the back foot. The problems that will arise will turn out in large part to have been avoidable. The Government also needs to make sure that further messages from Ministers manage public expectations about what councils will deliver and when. Districts nevertheless stand ready to discharge this additional responsibility effectively and as reasonably quickly as they can.
Ian Miller is chief executive of Wyre Forest District Council and the lead chief executive for the finance & investment workstream at the District Councils’ Network