Latest Public Sector News

27.11.14

Councils fail to collect £4.55bn in council tax and business rates

A total of £4.55bn in council tax and business rates went unpaid at the end of 2013/14, according to figures published by the Audit Commission.

The local spending watchdog said local authorities in England gathered on average 97% of the council tax they were owed in 2013-14, down 0.4% on the previous year. Rates varied from 91.7% up to 99.3% in some authorities. Had the previous year’s collection rate been maintained, councils would have collected around an additional £94m in 2013/14.

In comparison the collection rate for business rates increased from 97.7% in 2012/13 to 97.9% in 2013/14. The slight improvement means that councils collected £47m more than the previous year.

The amount uncollected represented a 6% increase on previous years, with more than £1.2bn in unpaid in-year council tax and business rate payments, and a further £3.34bn outstanding from previous years.

Jeremy Newman, Audit Commission chairman said“While collection rates are high, at 97.0 and 97.9 per cent for council tax and business rates respectively, when we consider such large sums of taxpayers’ money, even a small percentage shift can produce substantial changes in the income councils have to deliver their services. With £4.55bn uncollected and individual councils’ tax arrears ranging from £11.1m to £105.2m, there has to be room for improvement for many councils.”

The Local Government Association said the unpaid council tax is no surprise to those in local government and is a consequence of the government cutting funding for council tax support.

“This cut has left local authorities with little option but to reduce discounts for people on low incomes, some of whom have found it a struggle to pay,” said LGA chair Cllr David Sparks. "The high collection rates for local taxes could be improved still further if government gave local areas more control over them. If councils were able to set council tax discounts locally, we could ensure they are targeted at those who need them most. The backlog in unpaid business rates could be better tackled if councils were able to take into account whether a business is up to date with its payments when deciding on whether or not to grant a licence.

"We are urging the Chancellor to address these issues in next week's Autumn Statement."

(Image: c. Joe Giddens)

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