Not to put too fine a point on it, tackling the cost-of-living crisis in local government is a state of emergency. They say that the economy is cyclical and that we inevitably go through periods of expansion, a peak, contraction and a trough. But, for a generation, it’s difficult to remember a time where GDP, interest rates, and inflation, were under so much pressure. Not even the financial crisis of 2008 hit the pockets of people in quite the same way. Wherever you turn, prices are increasing – whether it’s energy, fuel, or food – while the cost of borrowing is also skyrocketing.

Given that the cost-of-living crisis has come in quick succession to the extremely damaging coronavirus pandemic, it’s little wonder that local authorities have been left reeling, as they try to recover mounting debt in the face of a squeeze on income and consumer spending.

Set against that backdrop, Voicescape held a ‘State of Emergency’ webinar with a panel of local authority experts to explore the issues being faced in the sector as a result of the current economic climate, while sharing best practice around engaging and having meaningful conversations with residents, particularly in relation to income collection. We were joined by Ian Ferguson from the IRRV, who chaired the session, Nick Rowe from the London Borough of Ealing, Newcastle City Council’s Andy Jeffs, Kevin Shaw from the Money and Pensions Service, and Louise Freeth from the Royal Borough of Windsor & Maidenhead.

The overriding theme from the extensive and in-depth conversation was the significant challenges facing revenue and benefits teams over the next 12 to 18 months.

Nick Rowe commented that the sector has ‘lurched’ from one crisis to the next, before having the opportunity to recover from the first and make any inroads into the mounting arrears that formed during the pandemic. It was clear from the panel that we cannot understate the challenges facing households.

Andy Jeffs said: “This is putting new people into the area of debt, where they’re juggling multiple bills, not just those from the local authority. Understandably, they will be prioritising mortgage and rents, in order to keep a roof over their heads. The consequence and impact of homelessness for local authorities is devastating. As such, as organisations, we need to also prioritise our own debts, in terms of rents, then council tax, and so on.”

When we talk about a ‘state of emergency’ and the cost-of-living crisis, it’s difficult not to discuss the ‘Covid overhang’ that remains. For many local authorities, there have been significant increases in arrears. If you consider that before the pandemic council tax debt stood at £3.6bn, rising to £5bn in March 2022, then you begin to realise that we are not talking about insignificant amounts of money.

Nick Rowe pointed out that local authorities need to be clear about what people can genuinely afford when it comes to setting up payment arrangements, to avoid the costly action of liability arrangements and enforcement.

Andy Jeffs added: “We need to try and do things differently. We have to use the data and insight we hold to become more proactive in early intervention to try and avoid people going through the recovery process in the first instance. Unless we can identify those people who are struggling earlier, and then use technology and automation to drive that positive engagement, then we are really going to struggle.”

While the appetite for change is clear, there are still significant constraints that local authorities are having to deal with – not just financially. “Some local authorities have been paired back to the bone,” explained Louise Freeth. “With staff having been diverted to other areas, such as administering the energy rebate scheme. I also don’t ever recall seeing as many vacancies in the revenues world, with a number of authorities struggling to recruit. Yes, there is more that we should be doing and could be doing, but we are constrained not only by the financial situation we find ourselves in, but dealing with the resources available to us.”

Homeless charity, Crisis, estimates that the average cost for a local authority, if someone becomes homeless, is £9,000. If the right intervention isn’t made, then this cost will undoubtedly become a burden to local authorities – not just financially, but also socially. One thing is clear from the panel - the need to focus on ‘eventual collection’ over a longer period of time, while prioritising keeping roofs over people’s heads.

“We need to move away from ‘in-year’ collections, and the associated league tables that come with it, and take a longer term view,” explained Nick Rowe. It’s that longer term view that will be vital in responding to the cost-of-living crisis, as the UK faces a new wave of people in debt.

To view the ‘A State of Emergency’ – tackling the cost-of-living crisis in local government webinar, visit https://info.voicescape.com/revs-bens-replay-form

Sean Sutton is Head of Local Government at Voicescape – a customer engagement technology business providing solutions for local authorities and social landlords.

This article is sponsored by Voicescape.