Wednesday, 16 January 2013

"Rates debt in Northern Ireland doubles in last five years"

... screams the headline at the BBC:

The amount of rates debt in Northern Ireland has doubled in the last five years and now stands at £160m.

A report from the assembly's Public Accounts Committee (PAC) said the body responsible for collecting [Domestic Rates], the Land and Property Service (LPS), must explore all ways to help those in rate arrears to pay their debts.

The recession has made the job of recovering rate debt more difficult. In recent years, a further £53m worth of debt has been written off...

Land and Property Services is responsible for the billing and collection of rates on 840,000 properties in Northern Ireland. Over £1bn was raised in rates revenue in 2011-12.

Ho hum, so cumulative arrears and write offs in the last five years were [half of £160 million] = £80 million arrears + £53 million now written off = £133 million arrears/write offs, divide that by five is an annual uncollected amount of £27 billion.

Compared to the total revenues of £1 billion, that's a collection rate of ninety-seven per cent. Not exactly briliant, but still much better than the collection rates of taxes on output, employment, profits etc (which are only ninety per cent at most).

The LPS Annual Report 2011-12 shows that it tales a thousand civil servants to collect all this cash; their total net running costs are £36 million a year (Note 5.4), which is 3.5% of the amount collected*. Again, not brilliant, but still a lot lower than for other taxes, remembering that the compliance and form-filling costs for the Domestic Rates payer is precisely nil (unlike taxes on output etc, where filling in all the forms costs payers another couple of per cent on top of the amounts paid over/collected).

* Please note: the 3.5% running costs is a separate issue to the 3% demanded but not collected.


mombers said...

They could of course just acknowledge that the owner gets the benefit of local services so should pay. Collection costs go right down and zero bad debt as the Land Registry can refuse to transfer title until rates are cleared. This is how it works in South Africa and the US

Mark Wadsworth said...

M, exactly, the same goes for the unregistered ones, just auction them off and keep the balance of the selling price to one side in case the original 'owner' turns up.

As it happens, UK local authorities already have these powers, but they hardly ever use them.

Lola said...

Isn't wonderful how the facts in their own articles argue the opposite way to which they intended?

Mark Wadsworth said...

L, it's "big numbers", anything more than £1 million and the average reader thinks that the world is coming to an end.