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Districts reject County Council criticism
February 2020 Most people accept the inevitability that if they live in a house then each year a Council Tax bill will drop through the letterbox. Many have Direct Debit arrangements in place, so after a groan or moan the bill is probably filed and forgotten. Most people pay up even if they don't look happy but some don't, perhaps because they can't because of their personal circumstances.
Local authorities work hard to collect Council Tax and can take defaulters to Court to try and recover what is due. Those residents who pay on time may not be aware of this back-office operation to collect unpaid Council Tax.
District Councils collect more than just the tax they are due, as the annual bill also includes not only revenue due to Parish Councils and the Police Authority, but also the much larger amounts payable to the County Council.
County Council concerns
The Districts may have been dismayed in June 2017 when Leicestershire County Council (LCC), that has no experience of collecting taxes directly from every householder, raised concerns that the level of council tax collected was lower than they would expect for the area. They said that forecasting needed to be improved and argued that weaknesses in forecasting were leading to a shortfall of £3.2m. Their concern over the level of collection by the Leicestershire district councils, was that it fell below the national average and if this were achieved they believed it would add an extra £3.1m to the area.
The district councils noted these concerns, although they felt that they were not “fully thought through”, as there was no consideration of council tax collected after the financial year end. But they had to take these comments seriously and embarked on a detailed analysis to determine if there was any substance to the LCC suggestion. The LCC report prompted a review of practices and the sharing of information across the district councils in Leicestershire to consider any potential issues that indicated an area needed to be addressed to improve performance.
The findings
The study found that council tax not collected in the year in which it is due is not lost, but is mainly delayed until the following financial year. When after year-end collection is included in the recovery performance, the combined recovery from all the Leicestershire district councils was 99.21% in 2018/19.
The results show that all districts have a high level of overall collection, with six out of the seven Leicestershire districts collecting over 99% of the debit figure, and all seven were above the 98.85% noted in the LCC report. In addition, councils may continue to collect arrears in later periods. For example, there were £689,000 of arrears for 2016/17 or earlier years collected in 2018/19.
The analysis indicates that improving in year collection does not necessary increase overall collection when considering after year-end receipts of council tax that relate to previous years. The message to the County Council was summed up in a single sentence - “ A better understanding of how this can be budgeted for by LCC may help their decision making.”
Particularly in these days of the need for food banks it may be impossible to recover the whole debt in the year it is due, and council officers are keen to differentiate when collecting arrears between those who 'can't pay' and those who 'won't pay.' It may be better to agree a payment plan to recover arrears from someone in hardship than to increase the amount outstanding by adding hundreds of pounds of recovery fees to a debt that they already have difficulty in clearing.
If comments are received from the the County Council on the conclusions reached by the District Councils they will be printed below February 2020