3 ways councils can generate additional revenue without breaking the bank
Like their private sector counterparts, local authorities have been financially impacted by the pandemic. Working to protect local communities by reducing fees and charges, whilst still running essential services, came with a forecasted loss of £2.8 billion. Compounding this is the £554 million in lost income as a result of leisure centres, theatres and museums closing their doors for a large part of the past 18 months. All in all, councils hit by falling income and ever-increasing costs will need to find £2.98bn to balance the books by 2023-24.
Based on the current outlook, local authorities must be able to maximise revenues where they can. Taking advantage of government bonus schemes is one way for councils to access some much-needed funding. Alongside this, councils can update their records of businesses and residents to ensure that they are not missing out on any steady income, as well as ensuring fairness to taxpayers. As the public sector begins its road to recovery after the pandemic, here are three ways that councils can boost revenues, as well as deliver long-term savings.
The year-long business rates holiday, which was introduced to protect businesses during the pandemic, ended on 30th June 2021. Over the course of the last year, the state of UK businesses has completely transformed, with many businesses moving online and others, sadly, closing their doors for good. Now, as the economy reopens, councils need to ensure that businesses operating in the region are paying the appropriate rates.
Online businesses also pose new challenges compared to traditional businesses. Working out how much they should pay in rates relies on having a full log of where they operate – including warehouses, factories, and offices. Investing in the data and additional resources needed to find this information can be challenging, but councils can look to partner with external experts on-demand who can support them through the process.
Conducting a review is worth the effort as councils can achieve on average £420k in additional income per review. For larger local authorities, the income boost can be much higher. Leicester City Council, for example, identified over 10,000 new rateable items which equated to £1,150,000 of revenue.
It’s no secret that the UK is facing a housing crisis, yet around 710,000 properties are lying empty. The Ministry of Housing, Communities and Local Government (MHCLG) is addressing this problem and still supporting local authorities through the New Homes Bonus scheme (NHB).
Reviewing and validating long-term empty properties can help authorities achieve an average of £782,761 in bonus funding that can immediately reduce the budget deficit. It also reduces the political pressures that are being put on councils to reduce the number of empty homes, including from unhappy locals who want to reduce antisocial behaviour and prevent depressed property prices.
In the long term, updating the records of vacant properties and residents makes council tax collection more accurate. For the Borough of Pendle in Lancashire, improved tax collections brought in almost £3 million that could be reinvested in council services, such as recreation, care, or the option to re-use empty housing for the most vulnerable in society. .
There is uncertainty whether this scheme will continue beyond 2022, and if it does then in what form, so now is the time for councils to maximise on the returns available.
Councils could be losing an estimated £90m per year in council tax revenue due to incorrect or fraudulent Single Person Discount (SPD) claims. Similar to conducting an Empty Homes Review, data and personal contact can be used to verify SPD entitlements and improve the accuracy of council tax collections going forwards. In addition, councils can leverage online self-service to make processes such as applying for SPD or e-billing more straightforward for residents and more manageable for staff.
For example, in 2020 St Albans council uncovered incorrect SPD claims across all council tax property bands in the area. There were 17,588 claims for a discount, putting a huge pressure on staff to sift through. By implementing a dedicated single person discount mailbox, staff were able to quickly identify which applications were costing the most money and reduce the caseload by 430, achieving £217,719 in savings.
As the economy restarts, now is the time for councils to take action to reduce their budget deficits and reinvest in public services in this time of need. Through augmenting existing teams with external expertise and resources, councils can ensure more accurate revenue collection and set their sights on the future.
To find out more about how Capacitygrid’s services can help your council drive additional revenues, visit our website. Also, watch this space for information about our upcoming CTax and NNDR arrears solution, ‘One Debt.’