Three ways to make revenue collection less taxing

21st February 2022

With councils under huge pressure to make every pound count, digital tech can play a crucial role in better tax collection. Civica’s Jon Gibbs discusses how to put citizens and smart use of data at the centre.

Council Tax is a crucial source of revenue for local councils across the UK, accounting for more than half the financial resources they use to deliver vital public services, from social care to housing. Robust and effective revenue collection systems and practices are therefore crucial to support councils to provide high quality services and improve lives. But the COVID-19 pandemic has seen a steep rise in the number of new and different types of debtors emerging, many in debt for the very first time.

To address this challenge, the UK government has released new guidance, Council tax collection: best practice guidance for local authorities, aimed at identifying the good work which already exists and helping councils to be fair, innovative and more effective at collection in the current climate. As the guidance states, ‘tax collection should never come at the cost of fair treatment of residents’ – and local authorities are working tirelessly to ensure this is the case, often rescheduling payments to support individual’s budgets and reducing bills through council tax support schemes.

We believe digital technologies can transform the relationship between councils and the communities they serve. Equipped with the most complete citizen data, councils can build a clearer picture of those who are struggling to pay, why this is happening and the best means of recovering outstanding debt.

The guidance suggests several focus areas to make council tax collection more efficient and fair. For some councils, certain areas will be more attractive or feasible than others. But the experience of more innovative local authorities shows investing in recovery can improve outcomes for both the council and citizens. We’ve summarised three key areas below:

1. Use data more wisely

Smart software helps councils to use the valuable data they already hold to create a better, more personalised user experience for people and communities. Managed, shared and used effectively, data can help council staff properly understand a given debtor’s profile, including any historical payment issues or personal difficulties they may at present be experiencing, such as unemployment or illness. The key to getting maximum value from data lies in what we call the 3S’ – Standards, Skills and Sharing. Councils and other public bodies which apply robust standards to the collection and management of data, and ensure they have people with the right skills to use that data and which share data securely, will always deliver the best for those they serve.

Understanding patterns in the data can help councils make the best choices when contacting citizens and choosing the best recovery method. With all data in a suitable recovery matrix, this will help identify potential cases in difficulty and show where more personal, one-on-one intervention may be required.

2. Engage with the bill payer

Councils engage with citizens through a growing number of channels, from social media to the more traditional letter in the post. Where it comes to late council bills, people need to be contacted in a way which will prompt timely payment from those who can pay – and engage early on with those who may have difficulties. Fully automated software can personalise bills to appeal more to target audiences. For example, councils may wish to use plain English or translate into several languages, reach the visually impaired with Braille communications, or employ ‘nudge theory’ where different wording can be tried out to see if better results are achieved. It’s also important to understand the best way to send payment reminders, whether by text, email or online portals. Where someone wishes to make a payment, these portals can be prepopulated with account references and amounts to make it as easy as possible.

Citizen portals are also very useful in helping people have their own information at their fingertips. They can see the status of their bills, find out about available debt advice, and receive notifications and prompts to make payments.

3. Work with debt advice experts

There’s support out there for people struggling to pay. Interaction with debt advice agencies such as the National Debt Advisory Service and initiatives including the Breathing Space scheme, where debtors can seek advice from an agency and are given a timeframe to sort out their finances. This helps treat people in a more holistic way, seeing the bigger picture and ultimately leading to debt recovery.

Smart technology can help here too: cloud software can help show which residents are struggling to pay, not just in a current year but in prior years too. This can provide a list of potentially vulnerable people ahead of time and allow councils to step in and offer help and advice both internally and via external debt advice partners.

It’s clear that there’s not a ‘one size fits all approach’ to collections. But the right combination of accurate data, smart online portals and the ability to identify and help those most struggling to pay will make a real difference. Used together, we can create a better, more personalised user experience for residents while ensuring the funds are efficiently collected to provide better services for all our communities.