Headlines: May 11th, 2006

The Audit Commission has issued practical guidelines to help local councils and housing associations make increasing use of direct debit to cut up to 15 million pounds from their administration costs. It follows the publication in November of “The Efficiency Challenge – the Administration Costs of Revenues and Benefits”, which identified direct debit collection of council tax as one area where councils accepted there was room for improved efficiency.Now, in a follow up study, the Commission has produced a new document, “Improving Income Collection: Efficient Collection of Council Tax, Housing Rent and Other Income by Direct Debit” as a practical tool to help councils and associations ensure greater debit take up of direct debit.

The new more detailed report looks at ways councils are already approaching the issue and gives many examples of steps to improve collection of tax through direct debit. To support local authorities and housing associations the report is supplemented by an interactive web tool, making the information accessible in a user friendly form.

One key finding of the latest work is that even in some of the most deprived areas of the country it is possible to achieve high rates of council tax and rent collection by direct debit. The report says there is a big incentive for councils in those more deprived areas to improve direct debit so they can free resources to deal with other more complex debt issues. It recognises that many councils are concerned about closing their cash offices and seeks to address those concerns. It says that the right balance can be achieved through alternative arrangements such as one-stop shops, or providing other convenient payment points.

Frances Done, the Commission’s Managing Director for Local Government, said there were big incentives for all councils to improve direct debit rates to release resources to deal with vulnerable people who may have difficulty paying their council tax and rent. Changes could mean significant improvements for people in deprived areas and reduction in costs for all local tax payers. The study, she said, had identified many areas of good practice and case studies included in the report provided real-life examples to help councils and housing associations. The interactive tool is available on the Commission’s website at www.audit-commission.gov.uk/directdebit