Liberal Democrat President, Mark Pack, highlights a major weakness in the Chancellor's proposal to give £150 to every council tax payer living in a band A to D household.
Mark tells us that around 1.3 million eligible families are set to miss out on the government’s £150 council tax rebate to help with soaring energy bills. These damning figures are buried in the small print of a report by the government’s financial watchdog, the Office for Budget Responsibility (OBR), accompanying this week’s Spring Statement:
It predicts that the Treasury is set to rake in £195 million from lack of take-up of the government’s flagship scheme. The OBR estimates that two-thirds of council tax payers use direct debit and therefore will automatically benefit.
It then estimates a take-up rate of 80% among those who don’t use direct debit. This leaves 20% of households who won’t benefit from the scheme.
The watchdog says this implies that around seven per cent of the total £2.9 billion of funding for the scheme will not be paid out to eligible households, amounting to savings of £195 million. That is equivalent to 1.3 million families missing out on the £150 per council tax rebate.
Those who pay council tax without using direct debit tend to be older and more deprived households, who will also be hardest hit by soaring energy bills. The Liberal Democrats are demanding that the government post a £150 cheque to each household that doesn’t pay council tax by direct debit, to ensure no-one missed out.
The OBR also looks at the impact of the £200 discount on energy bills being provided to households, which has to then be paid back via a £40 charge on energy bills over the next five years. It says this loan means over half of the support being provided to help families with soaring heating costs is being clawed back by the Treasury.
As Ed Davey points out, maybe councils should be told to plug this gap by sending a good old fashioned cheque in the post.
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