CIVEA contributes to Levelling Up, Housing and Communities Committee
CIVEA gave evidence this week to the House of Commons Levelling Up, Housing and Communities (LUHC) Select Committee inquiry into Council Tax collection. The primary trade association for civil enforcement agencies in England & Wales, representing more than 95% of the industry, highlighted recent advances in technology and directed MPs to Cabinet Office work on data collection.
Russell Hamblin-Boone, CIVEA CEO and Paul Whyte, CIVEA President were joined as witnesses by Councillor Stephanie Cryan, Cabinet Member for Finance, Democracy and Digital, London Borough of Southwark, Kevin Stewart, Business Unit Leader, Revenues and Benefits, Mid Sussex District Council, Catherine Brown, Chair, Enforcement Conduct Board, Alistair Townsend, National President, Institute of Revenues, Rating and Valuation and Rachel Beddow, Principal Policy Manager, Citizens Advice.
CIVEA explained how the landscape of enforcement has shifted in recent years citing evidence from its recent report, Reflection and Collection – the Evolution of Civil Enforcement. They provided insight to the Select Committee on the reforms that enforcement firms have taken since regulations were implemented in 2014, including commentary on the value of enforcement to the public purse, the ongoing need for compassionate enforcement, the challenge of modern public debt collection and public perceptions of the industry during and after the onset of the coronavirus pandemic.
Explaining the dilemma facing councils, Hamblin-Boone told MPs, “The enforcement agent industry has had to respond to the changing circumstances, not just in terms of benefits changes but also becoming more sophisticated in supporting councils to discern those who are vulnerable and those who are able to pay but choose not to. This is the challenge that we have to recover as much revenue – particularly to support vulnerable people – while at the same time looking to collect debt from people who are vulnerable in the first place.”
Supporting the vulnerable
The enforcement industry has regularly pointed to the suspension of enforcement activity from March 2020 to September 2020 during the first coronavirus lockdown, and the resulting reductions in Council Tax payments, as evidence their work is necessary to ensure that local authorities can meet their legal obligation to recover tax arrears. The importance of assisting councils in identifying and taking appropriate action when someone is vulnerable and in need of support, as opposed to willfully not paying, was a focus of the parliamentary hearing, and was given as a key reason why collaboration and knowledge sharing are essential and work towards better outcomes for all. Collaboration with the debt advice sector on the new Enforcement Conduct Board has been a key aspect of sector reforms. The new chair of the ECB outlined the collaborative approach taken by the industry and debt advice sector.
CIVEA pointed to recent successes in data sharing that may provide inspiration and a model for future success. Russell Hamblin-Boone suggested, “The Committee might want to look at the work that the Cabinet Office is doing around the Digital Economy Act. It has been very open and encouraging – encouraging people to come to it, particularly Local Authorities, to suggest ways that the Digital Economy Act might be better used. There is a lot of work going on behind the scenes on that.”
Supporting local services
Discussing the economic case for enforcement, the CIVEA representatives cited several insights taken from projects that have recently considered whether people would be compliant if there was no or little enforcement of taxes and fines. This included an impact report produced by Europe Economics, a leading economic research specialist, including data from sources such as the Office for National Statistics, the Institute of Fiscal Studies, the Ministry of Justice (MoJ), and the enforcement industry. The report concluded that without enforcement agents an additional 7 million households would default on their council tax payments. The principle of early payment, as established in the fixed enforcement fee structure, remains an integral aspect of the CIVEA approach, and all evidence collated in recent reports suggests this still increases the likelihood of engagement from debtors, which in turn prevents further arrears.
While collection rates for Council Tax have remained high, at around 95%, the government says that over 4 billion pounds are still left uncollected. In the 12 months from April 2020 to April 2021, the total amount of arrears was an additional £847m on top of the amount unpaid for 2019-20. At the same time, Step Change reported that 36% of its clients have on average £1,292 in Council Tax arrears. The National Audit Office reports that the likely combined cost and loss of revenue from the pandemic may be as high as £10bn.
In its evidence, CIVEA pointed to these statistics as proof of the vital need for local authorities to continue collecting debts and suggested that working collaboratively, with partners such as the ECB, will be the appropriate way to limit funding gaps in local authority budgets.