An estimated 3.5 million people in the UK are in council tax arrears – 51% of them as a result of the COVID-19 pandemic. It’s this incredible level of debt which is impacting local councils in the UK as they endeavour to climb out of the black themselves. In fact, with economists predicting that council tax debt could rise to £6.5bn by 2025, it’s vitally important that local councils institute data management strategies to navigate the challenging times ahead. 

Single View of Debt

According to localgov.co.uk, “72% of citizen records held by one department are missing key information that another department holds. Only 0.5% of accessible data is ever analysed or used”. Inaccurate data results in poor levels of debt recovery. Instead, leading debt recovery software for local councils can maximise their debt recovery efforts via a ‘Single View of Debt’. This 360-degree view of citizen debt empowers councils and local authorities to help each individual to pay off their arrears via a method which meets their own circumstances. Why have one department pursue parking fines and another pursue council tax arrears? If you gather and consolidate an holistic view of arrears, you increase debt recovery efficiency overall. It’s an important tool for all local authorities and local councils to have in their arsenal. 

An Analytics and KPI Enabled Debt Recovery Model

Local authorities are also using the power of advanced analytics and machine learning to evolve their collections processes during these challenging times. Debt recovery software can automate insightful reports. Regular KPIs (Key Performance Indicators) can be reported on, depicting collection rates against local and national targets. Measuring Collection Effectiveness Index (CEI), and citizen/client satisfaction levels will lead to actionable strategies and improved data management overall. 

Reducing Council Tax Fraud

Fraud and error costs local government £2.1bn per year, which equates to to £71 per household. In fact, council tax fraud represents 78% of all local authority fraud. If a local authority can get a grip on fraud, they can get a grip on their budget. A Single View of Debt (see above) makes fraud anomalies easier for councils to see and respond to, and it serves as an effective counter-fraud strategy when it comes to noticing cases of Single Person Discount (SPD) fraud and Council Tax Reduction (CTR) fraud.

Debt Recovery Data Compliance and Breathing Space Regulations (Debt Respite Scheme)

On 4 May 2021 the Debt Respite Scheme (Breathing Space) came into force; legislation meaning individuals can have “breathing space” from their creditors. This has impacted local authorities in two ways. Local authorities primarily may be a potential creditor of an individual who now has “breathing space”, which asserts more financial pressure on the local authority. Also, local authorities may be called upon to provide  debt advice to their citizens — and thereby become administrators of the regulations. In both scenarios compliance can be challenging and investment in legal and data-protection compliant software should be a priority. 

The local authority landscape has changed immeasurably over the last few years. The Covid crisis, the decentralisation of government, and increasing citizen debt, means local authorities are facing increasingly challenging circumstances. To learn more about how Lateral’s leading local authority debt collection software can help you adapt and evolve, get in touch today.