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debt recovery

Extent of new cuts to councils' budgets becomes clear

Reports this week indicate that the Department for Communities and Local Government (DCLG) and three other arms of government have agreed a provisional deal to cut spending by an average of 30% over four years. What does this mean for UK councils?

Deepening austerity

The scale of the predicted cuts is unprecedented, and follows Chancellor George Osborne's controversial plans to cut tax credits. The Institute for Fiscal Studies says that areas likes transport and policing face day-to-day budget reductions of over 25% by the end of this parliament, or more than 50% since 2010.

Chancellor Osborne argues that the proposed measures will take control of government spending and guarantee economic security by bringing the budget into surplus by 2019-2020. In contrast, Labour’s shadow chancellor, John McDonnell suggests that Mr. Osborne is continuing on a path of “cutting investment to the lowest of any developed economy, and [delivering] the slowest economic recovery on record.”

Impact on local authorities

As things stand, the provisional DCLG agreement only applies to revenue spending and excludes the local government settlement. This is good news for councils, especially as the Local Government Association estimates cuts of this magnitude could cost councils £16.5bn by 2020.

Mr. Osborne says fiscal adjustments will require “further efficiencies” and closure of "low value programmes”, but local authorities must be wary of what this means in practice. Stephen Joseph of the Campaign for Better Transport highlights potential knock-on costs to councils that mightn't be obvious at first sight, such as “more potholes in local roads [and] more cuts in local bus services”.

If deepening austerity is extended to local government, budgets may be stretched to breaking point. A large proportion of council reserves are already allocated, and Cambridgeshire councillor Steve Count recently pointed out that existing cuts are “starting to hit at the front...that must inevitably include vulnerable people.”

Maintaining a steady cash flow will be essential to alleviate pressure on local authorities' budgets in coming years, and must involve effective debt recovery strategies. If you're a council worker who's concerned about how new cuts will impact your area, contact a Dukes Debt Advisor to discuss how our services could help.

How can council tax debt recovery be improved?

The UK's national deficit currently stands at around £12bn, making the recovery of monies owed to local and central government more important than ever. Although councils across England have reported improved collection rates since 2012, government figures indicate that as much as £2.4bn has been left uncollected in recent years.

What is being done?

Manchester City Council, Salford City Council, HMRC and the Cabinet Office have already participated in a pilot scheme that aimed to streamline council tax recovery. In order to build on the success of this project, the Department for Communities and Local Government (DCLG) recently proposed a consultation that will let local authorities suggest ways in which collection rates could be improved.

Barrie Minney, a senior enforcement manager at Brighton and Hove City Council, has already given his views on how more unpaid tax could be recovered. Mr. Minney suggests that landlords should be made liable for paying council tax on student properties, and would like to see liability orders registered as County Court Judgements. Although these ideas must be considered, we believe there's an easier way to collect unpaid sums.

Enforcement Agents

Local authorities called on Enforcement Agents 2.1 million times during 2014, but there is still considerable scope for ethical companies like Dukes Bailiffs to boost council tax recovery rates.

While some sections of the press have criticised councils' use of Enforcement Agents, we at Dukes Bailiffs pride ourselves on delivering a genuinely ethical service that protects councils' reputations.

Our representatives work with debtors to build sustainable payment plans, and have a proven track record when it comes to efficient council tax recovery: our services helped Staffordshire Moorlands Council to achieve a collection rate of 99.17% in 2011.

Though the coming consultation will no doubt improve council tax recovery, local authorities may be able to boost their rates simply by switching to Dukes Bailiffs. If you work for a council that's struggling to keep budgets in check, contact one of our representatives to discuss sensitive debt collection today.

How might the Transatlantic Trade and Investment Partnership (TTIP) affect local councils in the UK?

The Transatlantic Trade and Investment Partnership (TTIP) has been attracting a lot of negative publicity as campaigners against the deal grow in number. Commentators remain divided on whether the deal will ultimately help or hinder the UK economy, but while the debate rages on, one thing is becoming certain: councils will need to choose a side.

The implications of TTIP 

The planned agreement between the US and the EU intends to remove all remaining trade tariffs between the two markets. It’s a bold move that could make a big difference to the economies of the wealthiest regions in the world, and represents a chance to stir stagnant European economies into life.

If businesses are able to increase exports through the removal of limiting tariffs, the positive impact on the economy will see councils among the first to benefit. A stronger economy will free government to stem the tide of budget cuts.

Growing campaigns

On the other side of the fence, campaign groups insist that the agreement poses a threat to European sovereignty. They fear that the removal of tariffs will increase the likelihood of unfavourable American systems, such as increased healthcare privatisation and use of GM crops, seeping into the UK.

While online petitions against TTIP may have had little direct impact on councils initially, authorities are now being encouraged to support citizen activists as their numbers grow.

Looking to create a united front, campaigners are calling for local authorities to declare themselves ‘TTIP Free Zones’ and stand in opposition to the agreement. It’s a movement buoyed by past successes in hampering national policy, particularly the anti-fracking movement in which campaigners pushed Lancashire County Council to stand up to Westminster.

Balancing risk and reward

While councils and politically-minded councillors must be aware of the interests and activities of their constituents, we believe it’s vital that they act prudently and keep long-term interests in mind.

On the one hand, working with citizens to influence national policy in a way that matches local needs and ambitions is an attractive prospect that furthers the cause of devolution. On the other, councils risk putting themselves permanently against Westminster, or thwarting a policy that could help safeguard front line services during economically precarious times.

For more information about Dukes Bailiffs and our debt recovery services, contact an advisor today.

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