28th January 2020

Business Rates Collection an issue or an opportunity?

Vipul Patel, Divisional Managing Director, Managed Services at Civica explores how Civica's Income Maximisation projects are delivering results.

As Local Authorities face the ever growing challenges of delivering savings, whilst maintaining the quality of service to its citizens, there is an equal demand to maximise income at a time of increased budget pressures and austerity. 

In April 2013, the UK Government introduced a Rates Retention Scheme, giving Councils the opportunity to maximise their Rates Yield and increase revenue. The Government’s Autumn statement 2016 stated the Revenue Support Grant will be abolished and there will be 75% or even 100% rates retention by 2021.

As part of the new scheme, Central Government will also be resetting the baseline funding levels for all authorities. The impact of this can be significant, particularly if unrecoverable debt is still held as a potential income. In short, Local Authorities would be facing the full impact of up to a 100% loss as MHCLG will no longer be sharing the bad debt. Worse still is that Central Government will still include this amount as a potential Income and adjust the baseline funding to the Council’s disadvantage.

This will sharpen the focus even further on the need to maximise collection rates and Business Rates debit but also ensure that the irrecoverable debt is written off so that funding levels are accurate.

Since the Business Rates Income Maximisation Project’s inception in 2017 Civica has delivered outstanding year on year results to our partner authorities, whether through increases in the ‘in year’ collection rate and/or targeting ring fenced/general arrears.

We are working with both District and Unitary Councils using our defined target operating model based upon local needs, as we understand that one size does not fit all. But it is not just about words: we have been delivering additional revenue to each of the Local Authorities we work with.

A couple of highlights from some of our key customers are set out below:

Within our South Worcestershire Partnership of 3 Local Authorities (Wychavon District Council, Worcester City and Malvern Hills District Council) we were asked to run an Income Maximisation project for both current year and arrears. This has been a great success on both aspects, in particular with Wychavon where the collection rate (as measured through Central Government’s QRC4) has risen from 98.2% for the 2016/17 financial year to 99.51% for the 2018/19 financial year. An additional challenge for the team was the significant Rateable Value growth, creating additional debts at the same time.

Vic Allison, Deputy Managing Director of Wychavon District Council has commented "like most councils business rates income is now a very important part of our overall financing.  Prior to this project with Civica we were achieving good collection results, but given the continuing pressure on council finances, we needed more.

We engaged with Civica to create an innovative solution that delivered not only higher ‘in year’ collection rates but also increased arrears collection. The results have exceeded our expectations with significant increases in collection for both project strands. This project generated additional income to the council of £348,000 which has been made available for our corporate priorities. Without this project this simply would not have been possible."

In another Income Maximisation project at Hull City Council - a Unitary Authority in the North of England - we were tasked with collecting ring fenced arrears of £2.66m prior to 1st April 2016. The project started in earnest during Oct 2017 and during the first year we collected £757k of this debt.

Since Oct 2018 Hull City Council has asked that we include the 2016/17 and 2017/18 arrears debts and the results are equally impressive, with collection from 1st Oct up to 31st March 2019 at £1.125m. Whilst this project is about arrears collection, by employing the same methodology for current year debt we have also been able to increase the collection rate from 97.2% to 98.3%, generating additional ‘in year’ revenue against a net collectable debt of £89.3m.

So how can we help you?

We have a great team that are highly skilled professionals, with significant levels of experience and knowledge who administer Business Rates for 11 District and Unitary Local Authorities across the UK. Some of the key services we provide are:

  • Full or part administration of the Local Authority’s Business Rates service
  • Administration of Business Improvement Districts
  • Training or Systems Support through our dedicated Support Teams
  • Arrears collection and current year improvements
  • Reviewing Local Guidance and Policies
  • Undertaking Rates Relief reviews such as Mandatory, Discretionary and Small Business Rates Relief
  • Providing short term offsite processing support
  • Advising on Government Policy changes and their impact

We have a proven track record of delivering above expectations for our clients and would welcome any enquiries.