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The Government’s co-funded payroll scheme was poorly communicated, should have been better ‘road-tested’ before it was introduced, and the Treasury was too quick to use the threat of legal action when it judged someone had been overpaid, according to a new report.
The findings were issued this morning by the official body which hears complaints against ministers or Government departments.
It upheld one made against the Treasury by self-employed islander Natalie Mayer.
While praising the speed and effectiveness of the covid-related emergency support scheme, the States of Jersey Complaints Board concluded in its report that the treatment that Ms Mayer and others in a similar position had received “had been contrary to the generally accepted principles of natural justice”.
Like thousands of businesses and individuals, Ms Mayer applied in 2020 for co-funded payroll support, which provided support of up to 90% of total income up to a maximum of £2,500.
However, it was not clear what ‘monthly gross income’ meant for sole traders – did it relate to actual earnings or business turnover?
Having read the guidance carefully, Ms Mayer spoke with others in a similar position and rang the helpline to check that she was claiming the correct amount. The Board concluded that she “had taken all possible steps to seek clarity” on the matter.
However, in January 2022, she was told by the Treasury that there was a discrepancy in her submission for CFPS and she had wrongly claimed in relation to turnover instead of earnings.
Ms Mayer – along with several other sole traders – argued that the guidelines and advice had not been clear, which had led to them making claims in good faith, only later to be pursued for monies owed, through the Treasury’s debt recovery system, with threats of legal action against those in default of repayment.
In upholding her complaint, Board chair Geoffrey Crill concluded: “The covid pandemic was an unprecedented event and the introduction of the CFPS was a bold and brave initiative by Government, which provided invaluable and speedy support to many islanders and small businesses.
“The Treasury and Exchequer made it clear that applications would be checked retrospectively and where any overpayment was found to have been made, would seek to recover the amount. However, the key element of this case was communication.
“There was an assumption that people were able to understand what they could claim for by reading the Guidance Notes and the FAQs, but this case has shown that the difference between the eligibility criteria and the amount that could be claimed from the CFPS was not clear to some applicants.”
He added: “Those involved in establishing the CFPS should take considerable and justifiable pride in the speedy and effective support that the scheme provided.
“However, the department had used the term ‘turnover’ in determining an applicant’s eligibility for assistance under the scheme, while using the term ‘gross income’ in order to calculate the level of support.
“The department did not take adequate steps to ensure that the distinction was understood by all applicants and the helpline simply referred applicants back to the guidance. The threat of legal proceedings should have only been introduced as a last resort if the people involved failed to engage with the Department.”
In making recommendations, the Board concluded that future schemes should be better ‘road tested’ by “as wide a range of intended beneficiaries as is practicable in the circumstances.”
It added: “The Board is also concerned that as soon as an overpayment had been identified, its recovery was put into the Department’s debt recovery system, with threats of legal action in default of repayment.
“Given that in the vast majority of cases - and certainly in the case of this complainant - any overpayment was the result of genuine mistake or misunderstanding, this was insensitive, excessive and deeply distressing for people who were suffering considerable financial hardship even with the benefit of the assistance provided under the scheme.
“The Board recommends that the threat of legal proceedings should have only been introduced as a last resort following a complete failure by the alleged overpayment to engage with the Department.”
Commenting on the Board’s findings, Ms Mayer said: “I am pleased and relieved that my complaint was correctly understood and upheld.
“The surprise reclaims, which were the responsibility of the previous Government, had a huge effect on the peace and mental wellbeing of many individuals who run small businesses and I wanted to speak up for them, as much as myself.
“We were left feeling like petty criminals, at a time when we were quietly trying to rebuild our livelihoods following the shock of our business closures during the lockdowns.
“It appeared to be difficult for those in office whose income was not affected by the pandemic, to understand the perspective of those whose business were shut down and had their income taken away."
She continued: “I was pleased to have the opportunity, during the hearing, to explain this perspective to the department in charge of administering the reclaims.
"I hope the fact that the unclear Government communication has now been acknowledged will give some peace of mind to others who knew they followed the steps both as they had been instructed to understand it, and with the best intention at heart.”
Responding this afternoon, Assistant Chief Minister Constable Andy Jehan thanked the Complaints Board for its report.
"The Panel rightly recognises the speed and effectiveness of the support that the previous Government and officials put in place to make the Co-Funded Payroll Scheme (CFPS) a success during an emergency lockdown," he said.
"The Scheme was devised and implemented, by a small island jurisdiction with unprecedented pace, in response to a global pandemic.
"We are pleased to note the Panel's acknowledgment of the extensive efforts made to engage with a wide range of stakeholders, including consultation with trade representative bodies and organisations representing small and medium-sized enterprises, such as Jersey Business. This collaborative approach made sure that the Scheme considered the perspectives and needs of various stakeholders."
He continued: "This Government introduced a repayment appeal process because we recognised many people with repayment requirements had mistakenly claimed more than they were entitled to.
"With the benefit of hindsight, there is always more that could be done to ensure that all claimants had a complete understanding of the Scheme's rules. Though it is important to note that the circumstances of the lockdown made conventional user testing impossible and we must remember that 92% of claims were made successfully, indicating that the overwhelming majority of claimants understood the requirements of the Scheme.
"Reflecting on the panel's suggestion that ex gratia reductions should be made to the amount owed by the complainant in this case, we are acutely conscious of the need to balance the interests of those like the complainant and the interests of other business owners – some of whom may be direct competitors – who understood the rules and claimed as the Scheme intended.
"We will take the necessary time to carefully consider the findings of the report to ensure that similar schemes are implemented even more effectively going forward."
You can read the full States Complaints Board report here.
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