Councils failed to collect £4.5bn in council tax and business rates in 2013/14, even though the amount collected rose this year, according to new figures published by the Audit Commission.
The figures show that uncollected rates increased by 6% compared to the previous year, even though the income raised from council tax rose by 2.7% in this time period.
The Audit Commission said changes to council tax benefit and 123 councils increasing council tax levels rather than taking the grant to freeze or reduce it could explain this increase in income.
The figures also show that only 13 councils chose not to write off council tax arrears that were deemed uneconomical to collect. The amount written off ranged from £1.1m to £25.3m.
Jeremy Newman, chair of the Audit Commission, said: ‘While collection rates are high, at 97.0 and 97.9% 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.’
However, councils did collect more in business rates compared to last year, up from 97.7% to 97.9%. The Audit Commission said changes to allow councils to retain some of the business rates collected had incentivised them to improve collection rates.
The Local Government Association (LGA) blamed the findings on cuts for council tax support and challenged central government to match its collection rates to those of councils.
Chair of the LGA, Cllr David Sparks, said: ‘The slight increase in unpaid council tax will come as little surprise to those in local government, who warned that this would be a consequence of 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.
‘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.’
