Councils 'missed' £530m in taxes

Cash-strapped local authorities in England, Scotland and Wales failed to collect £530m in council tax in 2009-10, a BBC investigation has found.

This is despite the fact that many councils face cuts due to reductions in funding from central government.

But many local authorities point out that these figures represent less than 2% of all council tax, and say they are continually clearing arrears.

The figures were obtained through a Freedom of Information (FoI) request.

Separate figures obtained by the BBC also show a backlog of about £2.5bn in unpaid council tax between 1993 and 2010.

However, local authorities stress they are continuing to pursue these debts and will recover many of them.

The figures do not include Northern Ireland, which has a different local tax called rates.

Shifting populations

The BBC contacted 408 local authorities, although 27 were county councils who do not collect council tax.

They were asked how much council tax was outstanding from the last financial year and also about their total arrears, going back to 1993, the date when council tax was brought in.

Although collection rates are often above 98%, millions of pounds are still going unpaid and uncollected each year.

The local authorities that had the most amount in uncollected council tax in the last financial year were those which covered cities with large populations, including Glasgow, Birmingham and Liverpool.

Tony Travers, a local government expert at the London School of Economics, says inner-city local authorities in particular face challenges because they have to collect money from large and often shifting populations.

"There's a large population moving in and out all the time. At the last census [in 2001] it proved difficult to even find all the households in some local authorities, so it's not surprising councils would have a problem," he told the BBC.

Mr Travers added that some councils will still be dealing with the legacy of unpaid bills for poll tax, the unpopular levy that council tax replaced.

"There are some councils which had great problems when the poll tax was introduced and big arrears built up. Even now they're probably fighting the ghost of the poll tax," he said.

'Poor communication'

Joanna Kennedy, the chief executive of Z2K, a charity which helps people with council tax debts, says the arrears collection process is often slowed down by administrative problems.

"Local authority computer systems are riddled with errors and so details of non-payers are often sent to the magistrates' courts when perhaps legal action isn't appropriate," she said.

"There is poor communication between the council tax collection offices and the council tax benefits offices, which means people entitled to benefits are instead listed as debtors."

But Baroness Margaret Eaton, chairman of the Local Government Association (LGA), which represents local authorities in England and Wales, says councils have an excellent record.

"Councils in England collect council tax from more than 20 million properties every year and these figures show that last year councils collected more than 98% of council tax owed," she said.

"The amount that is uncollected is a tiny proportion of council tax income."

The Convention of Scottish Local Authorities (Cosla), also says that collection rates are high, and it is a small minority of non-payers who are proving difficult to deal with.

"This figure for Scotland is historical and it is about people who go out of their way not to pay," a Cosla spokesman said.

"All too often in the past, despite our success, councils have been blamed for not collecting outstanding debt but it is not uncollected - it is unpaid and there is a massive difference between the two."