Andrea Dunlop, Managing Director at Access PaySuite, offers her advice on how the government can improve public sector payments systems

Outdated systems could limit how the UK Government distributes the essential cost-of-living payments to those who need them most.

‘It’s bittersweet that the government has to create support packages’

It’s bittersweet that over the last few years, the government has created a number of support packages to help people navigate through numerous economic crises – all happening in alarmingly quick succession.

Where the Coronavirus Job Retention Scheme cushioned workers during the pandemic, the Bounce Back Loan (BBL) helped small businesses to bridge the gap over any losses accumulated during that time. Rather than having plenty of time to stabilise after the economy opened up again, inflation has risen to new heights while wages struggle to keep up.

Last year, the Vulnerable Customer Exclusion Report from the Vulnerability Registration Service (VRS) revealed that 16% of the general population now say that they’re in ‘financial distress’. This means they’re struggling to keep up with living expenses, including government services, such as council tax payments or waste collection fees, as well as essential energy and grocery costs.

What happens if you fall outside of the income threshold for Universal Credit?

Now, support schemes such as the Cost of Living Payment have been devised to help mitigate the impact for people on means-tested benefits. This spring, around 5.4 million households across the UK are expected to qualify for a further £900 paid to them in instalments roughly every sixth month over the next year.

In a world where the price of milk, eggs and sugar have risen by more than 30%, many will be relieved. But what about those who fall just outside of the income threshold for Universal Credit when the first funding is allocated – but still desperately need the support?

‘Mop-up’ payments are planned to try and address people who fall just outside of the threshold

Luckily, further ‘mop-up’ payments are planned to try and address this. Yet when the Treasury Committee called for it to be paid every month as a solution, Harriett Baldwin, its chair, was “Disappointed to hear that clunky systems” would prevent that from happening.

In the wake of proposed council tax hikes, at the start of this year, I recommended that flexible payments could help the public sector to support those most financially vulnerable. That message is just as important today.

We only see the tip of the iceberg

The Cost of Living Payment case is just one example highlighting where councils could benefit from upgrading their systems to match many of those in the private sector. Consumers are used to being able to pay – and receive – funds with far fewer restrictions than five or ten years ago.

As well as being responsible for handing out payments such as the additional cost of living support this spring, we must not forget that flexible platforms can also help councils take payments. A household on a reduced income one month would likely benefit from a way to request smaller instalments for their rent or council tax that suit them – rather than struggling to find one large lump sum payment when requested.

For a council or housing association, it can bring cash flow benefits too – not only for the regular injection of funds but for the additional level of visibility it can allow. Whereas the government’s current payment system ‘requires specialist teams’ to make their public sector payments, many tasks can be automated using a more flexible solution, speeding tasks up and freeing civil service or local authority staff to focus on value-added projects.

Advances in open banking technology are driving this shift. Safely and securely, APIs allow third-party financial service providers – including payment systems such as Pay360 – to access consumer banking data that enables them to process public sector payments seamlessly, using new or customised parameters managed by the provider.

It’s just the tip of the iceberg, though, with some industry specialists saying it could help everything from facilitating more reliable mortgage lending guidelines to monitoring fraud.

Public sector payments rely on data

All of this is based on data – another area that the Treasury Committee commented on when addressing the constraints of the government’s current payment systems. Harriet Baldwin MP advised that collecting more data could also help them to monitor the effectiveness of the household support fund and could offer insight into the true figure of low-income households that fall short of the benefits system. Imagine, then, the uses for real-time financial data elsewhere and how it could transform service delivery for local authorities in several other areas.

Implementing any new software comes with its own unique challenges due to the different SIZES and SCALES of most public sector organisations

Of course, implementing any new software comes with its own unique challenges due to the different sizes and scales of most public sector organisations compared to independent companies. Yet it’s not impossible – when The Access Group acquired Pay360 there were already several local authorities such as Lambeth, Newcastle City, Southwark and others using the modular payment platform to manage their community services.

With costs still rising and inflation showing no signs of slowing down, it’s likely that the Cost of Living Payment – or other new packages – will continue to offer essential financial assistance to some of the most vulnerable people in the UK. But to deliver them most effectively, it might be time for the public sector to update its digital payment systems too.


This piece was written and provided by Andrea Dunlop, Managing Director at Access PaySuite.


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