COUNCIL TAX COLLECTIONARRANGEMENTS INSCOTLAND ANDENGLAND & WALES

COUNCIL TAX COLLECTIONARRANAGEMENTS IN SCOTLAND

AND ENGLAND & WALES

Institute of Revenues, Rating and Valuation

Scottish Executive Central Research Unit1999

CONTENTS

FIGURES AND TABLES

ACKNOWLEDGEMENTS

EXECUTIVE SUMMARY

INTRODUCTION 1GENERAL OBSERVATIONS 2ENVIRONMENTAL FACTORS IMPACTING ON COLLECTION RATES 3PROVISIONS AND PROCESSES IMPACTING ON COLLECTION RATES 3IMPROVING SCOTTISH COUNCIL TAX COLLECTION RATES 4CONCLUDING REMARKS 7

CHAPTER 1 INTRODUCTION TO THE REPORT

BACKGROUND 8REPORT OBJECTIVES 9RESEARCH DESIGN 10

CHAPTER 2 CONTEXTUAL DIFFERENCES BETWEEN SCOTLAND AND ENGLANDTHAT MAY IMPACT ON THE COLLECTION RATES OF COUNCIL TAX

INTRODUCTION 12DEMOGRAPHIC CONSIDERATIONS 12THE REORGANISATION OF LOCAL GOVERNMENT 14ISSUES ARISING FROM REORGANISATION 15COMPARISON OF STATISTICAL BASES 18THE LEGISLATION GOVERNING COLLECTION AND RECOVERY OF LOCAL TAXES 20THE SCOTTISH AND ENGLISH COURTS SYSTEMS FOR EFFECTING THE RECOVERYOF COUNCIL TAX 20THE LEVEL OF CHARGES FOR COUNCIL TAX 22THE POLITICAL DIMENSION 27THE LEGACY OF COMMUNITY CHARGE 29SUMMARY OF CONTEXTUAL DIFFERENCES 33

CHAPTER 3 A COMPARATIVE ANALYSIS OF THE COUNCIL TAX LEGISLATIONSIN SCOTLAND AND ENGLAND

INTRODUCTION 35CALCULATION OF THE COUNCIL TAX BASE 35PROVISION FOR BAD DEBTS 36ADMINISTRATION 38BILLING FOR COUNCIL TAX 38HOUSES IN MULTIPLE OCCUPATION 48PAYMENT OF COUNCIL TAX 50PAYMENT METHODS 54ALLOCATING THE PAYMENTS BETWEEN CURRENT AND FORMER YEARSÕ DEBTS 59PURSUING PAYMENTS AT PRE-ENFORCEMENT STAGE 61MANAGEMENT STRUCTURES OF REVENUES AND BENEFITS FUNCTIONS 62SUMMARY 66

CHAPTER 4: A COMPARATIVE ANALYSIS OF THE COUNCIL TAX PROCESSES INSCOTLAND AND ENGLAND

INTRODUCTION 69THE ENFORCEMENT PROCESS 69ATTACHMENT OF INCOME SUPPORT 75POINDING AND WARRANT SALE AND DISTRESS 82PENALTIES FOR FAILURE TO SUPPLY INFORMATION 99EARNINGS ARRESTMENTS/ ATTACHMENT OF EARNINGS 99ARRESTMENT OF BANK ACCOUNTS 101ATTACHMENT OF MEMBERSÕ ALLOWANCES 101LETTERS OF INHIBITION AND CHARGING ORDERS 102SEQUESTRATION AND BANKRUPTCY NOTICES 102COMMITTAL IN ENGLAND 103OTHER ENFORCEMENT METHODS SUGGESTED IN INTERVIEW 107INTERACTION OF COMMUNITY CHARGE DEBT WITH COUNCIL TAXENFORCEMENT 108EFFECTIVENESS OF ENFORCEMENT PROCESSES 108SUMMARY 110

CHAPTER 5 A COMPARATIVE ANALYSIS OF THE USE OF INFORMATIONTECHNOLOGY AND INFORMATION PROCESSES

INTRODUCTION 117REORGANISATION 117IMPACT OF IT/ IS ON COUNCIL TAX FUNCTIONS 118IN-HOUSE AND EXTERNAL SUPPLIERS 119EMBRACING NEW IT 121PROGRESS SINCE REORGANISATION 121COMPARATIVE ANALYSIS OF USE OF IT/ IS 122SUMMARY 125

CHAPTER 6 CONCLUSIONS AND CONSIDERATIONS

INTRODUCTION 127GENERAL OBSERVATIONS 127WHY IS THE COUNCIL TAX IN-YEAR COLLECTION RATE IN SCOTLAND LOWERTHAN IN ENGLAND? 128WHAT IMPROVEMENTS IN IN-YEAR COLLECTION RATES ARE TO BE AIMED FOR? 131WHAT WOULD BE THE IMPACT OF CHANGE ON THE COUNCIL TAX SYSTEM? 131FINAL REMARKS 140

GLOSSARY 141

BIBLIOGRAPHY 146

ANNEX 1 ARTICLES EXEMPT FROM POINDING AND WARRANT SALEIN SCOTLAND, AND ARTICLES EXEMPT FROM DISTRAINTIN ENGLAND 148

ANNEX 2: EXAMPLE OF THE MINIMUM CODE OF PRACTICE TO WHICHA MAJOR FIRM OF BAILIFFS WILL WORK TO IN THE ABSENCEOF ONE BEING PROVIDED BY AN ENGLISH COUNCIL 150

ANNEX 3: POSTAL QUESTIONNAIRE ISSUED TO SCOTTISH LOCALAUTHORITIES 154

ANNEX 4: POSTAL QUESTIONNAIRE ISSUED TO ENGLISH LOCAL AUTHORITIES 167

ANNEX 5: SAMPLE INTERVIEW SCHEDULE: HEADS OF REVENUES 181

ANNEX 6: RESEARCH METHODS 185

FIGURES AND TABLES

Table 1 Council tax valuation bands in Great Britain 8

Table 2 Council tax: in-year collection rates 9

Table 3 Council tax benefits claimants in Scotland, England and Wales 13

Table 4 Authorities with council tax billing and collection responsibilities 15following reorganisation

Table 5 Amounts to be raised from council tax as a percentage of the 19total net council tax collectable for England (1998/99) togetherwith figures for Scotland (excluding water and sewerage charges)(1997/98)

Table 6 Analysis of council tax arrears on basis of households awarded 24full, partial or no council tax benefit in one scottish authority;for year 1997/98

Table 7 % share of total net amount of council tax paid to the Water 26Authority by one Scottish authority in 1997/98

Table 8 Degree to which responding authoritiesÕ councils are perceived 29by chief revenues staff to involve themselves in the administrationof recovery of council tax

Summary 1 Showing main points raised in Chapter 2 33

Table 9 A comparison of sample councils, grouped to show those with 37similar provisions for bad debts and their in-year collection rates;and an indication of those councils with dedicated recovery teams.

Chart A1-1 Scotland: Due date of first instalment expressed in elapsed 40days from 1/4/97 and the average number of elapsed days fromthe due date of an instalment to reach court action

Chart A1-2 England: Due date of first instalment expressed in elapsed 41days from 1/4/97 and the average number of elapsed days takenfrom the due date of an instalment to reach court action

Table 10 Administrative procedures for optimally-timed recovery in 42model councils in scotland and england

Table 11 Average time lapses between key recovery stages in Scotland 43and England

Table 12 Shortest and longest time lapses reported by Scottish and 44English councils between instalment due date and the issueof reminder notices and court action

Chart B1-1 Scotland: Days from due date of reminder until application 45for summary warrant compared with the in-year collection rate

Chart B2-2 England: Days from due date of reminder until application for 46liability orders compared with the in-year collection rate

Table 13 Arrears accounted for by council and other tenants 50

Table 14 Payment profile for council tax for year 1998 54

Table 15 Scotland: Methods of payment used by councils to collect council 56tax in year 1997/98

Table 16 England: Methods of payment used by councils to collect council 57tax in year 1997/98

Table 17 Comparative number of dwellings administered per head of staff 64in Scotland and England and the relevant in-year council taxcollection rate (1997/98)

Table 18 Approaches taken in the administration of various functions in 66Scotland and England from survey data

Summary 2 Showing main points raised in Chapter 3 66

Table 19 Principal differences in execution of remedies in Scotland 71and England

Chart A4-1 Actual number of applications for summary warrant expressed 73as a percentage of a maximum number of 10 - comparison withpercentage collection levels

Chart A4-2 Actual number of court summons runs expressed as a 74percentage of the maximum number of 10 - comparisonwith percentage collection levels

Flowchart 1 Typical processes for recovery of Council Tax through 76Income Support in Scotland

Flowchart 2 Typical processes for recovery of Council Tax through 77Income Support in England

Table 20 Percentages of residents on income support in Scotland, 79Wales and England, 2 May 1998

Flowchart 3 Minimum time scales over which deductions of Income Support 80were processed in 1997/98, in respect of the fastest performingauthority, an average-performing authority and the slowestperforming authority

Chart A5-1 Scotland: Percentage of net amount of 1997/98 council tax 84billed passed to Sheriff Officers for collection compared withthe % of that amount still outstanding with Sheriff Officersat 31/3/98

Chart A5-2 England: Percentage of net amount of 1997/98 council tax 85billed passed to the Bailiff for collection compared to the% of that amount still outstanding with Bailiffs at 31/3/98

Chart A6-1 Scotland: Use of diligences together with sequestrations and 90inhibitions shown with the in-year collection rate

Chart A6-2 England: Use of enforcement powers granted by the liability 91order together with insolvency and legal charges shown withthe in-year collection rate

Table 21 Scotland: one Scottish council's analysis of the results of 103threatening sequestration over a five year period

Table 22 Survey information relating to committals in 1997/98 in England 105

Table 23 Opinions regarding effectiveness of recovery and enforcement 109actions - Scotland

Table 24 Opinions regarding effectiveness of recovery and enforcement 110actions - England

Summary 3 Showing main points raised in Chapter 4 110

Table 25 Use of different types of document systems within survey 121groups in Scotland and England in 1997/98

Table 26 Use of IT/IS services in Scotland and England in 1997/98 123

Table 27 Percentage of 30 Scottish local authorities using the listed 124software providers

Table 28 Percentage of 20 English local authorities using the listed 124software providers

Table 29 Main environmental factors causing lower in-year collection 128rates in Scotland compared to England in 1997/98

Table 30 Main legislative and processing factors contributing to lower 130in-year collection rates in scotland compared to england in 1997/98

Table 31 SWOT analysis of changes to council tax system based on 132views of the research team

Table 32 Showing more detailed areas in which changes to council 136tax system could be considered

ACKNOWLEDGEMENTS

Thanks are due to all those who supplied information for the research project. Some aspectsof the postal questionnaires required data that was not easily available, and we are grateful tothose who went out of their way to supply the requested information. The views andexperiences expressed during the interviews were a valuable source of information and theopenness and generosity of time of the respondents are much appreciated.

We are grateful to officials from the Scottish Courts Administration and the Society ofMessengers-at-Arms and Sheriff Officers for their time and helpful comments; and to twoSheriff Officers firms for the supply of information at interview. The help of MargaretConlon of the Chartered Institute of Public Finance and Accountancy, Philip Evans of theCertificated Bailiffs Association, Gary Keith of BACS Ltd and the information service ofOFWAT is much appreciated. Staff of North Ayrshire Council and Oxford City Councilprovided very helpful comments during the concluding stages of the reportÕs compilation, asdid the Directors of two bailiff companies.

Thanks are due to those within the Institute of Revenues, Rating and Valuation who haveassisted at various stages on this work. The contribution of the Scottish Branch of theInstitute in developing the questionnaire for Scotland and contributing to aspects of theresearch has been invaluable; likewise the input of local authority members of IRRV Councilon the development of the English questionnaire. Thanks are also due to the Institute staffwho helped on various administration matters.

Finally thanks go to the spouses of the research team members for the support they havegiven and the patience they have shown.

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EXECUTIVE SUMMARY

Introduction

1. This report presents the findings of a study to identify the factors that may beresponsible for the higher council tax in-year collection rates in England and Wales (hereafterreferred to as ÔEnglandÕ except in those cases where a distinction is necessary) compared toScotland. The research was commissioned by the Scottish Office (now the ScottishExecutive) on behalf of the joint Scottish Office/Convention of Scottish Local AuthoritiesWorking Group on Council Tax Collection. The Institute of Revenues, Rating and Valuationundertook the work. The report encompasses:

• quantitative research examining the characteristics of council tax administration,billing, payment, recovery and enforcement methods in both Scotland and England;

• a comparative examination of the relevant legislation in England; and

• qualitative research which focused on the experiences and views of local authorityrevenues practitioners, enforcement agents and key specialist government officers.

2. 30 Scottish levying authorities and 20 English and Welsh billing authorities provideddata for the study. Interviews were conducted with Heads of Revenues Sections in 10Scottish levying authorities and 10 English billing authorities and with key contacts in threeadditional organisations with interests in the field of council tax collection and enforcement.Informal interviews were carried out with 9 private sector bailiff firms in England. Theproject team used as its baseline the financial year 1997/98 and gathered data and viewsrelating to that period.

3. The report identifies the factors that contribute to non-payment in Scotland and theextent to which they contribute to the collection problems faced. It also lists measures thatcould be considered for improving in-year collection rates for council tax in Scotland.

• Chapter 1 presents background information relating to the research and the reasonswhy the research was commissioned.

• Chapter 2 examines the contextual differences between the systems in Scotland andEngland that impact on the council tax collection rates. The findings are summarisedat the end of the chapter;

• Chapter 3 provides a comparative analysis of council tax legislation and processes inScotland and England up to the enforcement stage, and the related management issues.The findings are summarised at the end of the chapter;

• Chapter 4 presents a comparative analysis of council tax legislation and processes inScotland and England from the enforcement stage. A summary table is provided at theend of the chapter.

• Chapter 5 examines the use of information technology and the general processing ofinformation in Scotland and England;

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• Chapter 6 examines broad areas in which system change might be considered; it alsobrings together specific suggestions for changes which if implemented could bringabout improvements to in-year council tax collection rates in Scotland, based on thefindings of the research;

• Six annexes to the report are also included.

4. This report focuses on the in-year collection rates achieved by Scottish and Englishauthorities, as opposed to the overall collection rates. The statistics available do not allow forcomparisons of Scottish and English overall collection rates in terms of total amounts billedand the amounts of tax collected in relation to each year.

General observations

5. Scottish authorities were required to deal with numerous difficult issues during thefinancial year 1997/98 and many of these impacted upon their council tax in-year collectionrates. English authorities either were not affected by some of these issues, or were affected toa considerably lesser degree than were Scottish authorities.

• The complete reorganisation of Scottish authorities in 1996 still affected ScottishauthoritiesÕ revenue functions in 1997/98 and indeed still impacts on those functions inmany of the councils today. The simultaneous aggregation and dis-aggregation offunctions of former Scottish councils upon the creation of unitary authorities in 1996brought about large-scale change to computer systems and to both staffing structuresand complements. This scale of change did not arise following the reorganisation ofEnglish and Welsh authorities during the same time period. The newly establishedWelsh unitary authorities in 1996 faced the task of aggregating systems of the formerDistricts, but this was a relatively easier task than disaggregation, and certainly easierthan dealing with disaggregation and aggregation of housing and council tax benefit atthe same time. Only one newly created authority in England had to deal with solelyaggregating functions of former authorities. The project baseline year of 1997/98 wasonly the second year of operation for the Scottish Unitary authorities, and many of thetransitional problems of reorganisation were still being (and are still to be) settled.

• Some Scottish Unitary authorities faced particular difficulties in relation to theselection of IT solutions for their revenues systems. One supplier won Scottishrevenues contracts on the basis of a proven successful track record with Englishauthorities, but failed to provide the required Scottish system enhancements within thenecessary time scale. Another supplier left client authorities looking for new ITsuppliers after they withdrew their product from the Scottish market.

6. In the opinion of many interviewees, the Debtors (Scotland) Act 1987 affordsconsiderable protection to the debtor in terms of how, and against what goods, recoveryaction may be taken. It is their view that debtors in England do not enjoy such levels ofprotection under any comparable legislation. Scottish revenue practitioners in interviewclearly linked the impact of this protection with the widespread political resistance to theoperation of poinding and warrant sales, and identified these combined factors as a significanthurdle in the effective enforcement of council tax.

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7. Every Scottish local government officer interviewed was well aware of theimportance of council tax collection rates to their authority and wanted to bring about year-on-year improvements. Since 1998 some had sought to achieve this through the improvedtake-up of direct debits and had increased the proportion of payers by this methoddramatically. Others had discarded procedures inherited from the former regional councils.For example, some had reviewed their relationships with their sheriff officers and establishednew liaison and monitoring methods; a number had implemented new IT; others had unifiedtheir benefits administration; and some were replacing instalment books in favour of plasticpayment swipe cards, making it more convenient for customers to make payment.

Environmental factors impacting on collection rates

8. There were environmental factors that impacted on the ability of Scottish authoritiesto achieve comparable in-year collection rates with England in 1997/98. These included:

• The legacy of community charge debt, which was greater in Scotland than England ona per capita basis by an approximate factor of ten;

• The separation of payment of local taxes from the payment of rent by public sectortenants, which commenced under the previous community charge system, and whichsevered previously well maintained local tax payment profiles for many counciltenants. Although this separation also applied to England, the impact was greater inScotland due to its higher proportion of public sector housing;

• The impact of the Debtors (Scotland) Act 1987; which in the view of Scottish revenuepractitioners and English bailiffs, provides for greater restrictions in the range of goodsthat can be taken and sold in settlement of a debt than does the correspondinglegislation for distress in England;

• Political resistance to Poinding and Warrant Sales by some authorities;

• Greater impact of the local government re-organisation which took place in 1996 andwhich gave rise to changes that are still settling down;

• Higher bills in Scotland because they incorporate water and sewerage chargescollected on behalf of the Water Authorities;

• Greater public resistance/ inurement to paying local taxes in Scotland, first manifestedunder the community charge system;

Provisions and processes impacting on collection rates

9. English authorities enjoyed a number of provisions and processes that differ to thoseavailable to Scottish authorities, which in the view of the research team helped Englishauthorities to achieve higher in-year collection levels in 1997/98. These included:Differences in legislation

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• The ability to issue bills in advance of the financial year, and to set the date for thefirst instalment to be paid on 1 April or thereafter;

• The ability to issue a combined first and final reminder notice, so that only the onenotice needs to be issued prior to enforcement action being taken;

• The power to Issue individual summonses, compared to the corresponding Scottishprocess, to debtors at low cost and low administrative complexity requiring them toappear before MagistratesÕ Court to contest the issue of a Liability Order;

• The power to request the Magistrates Court to carry out a means enquiry in relation toa debtorÕs ability to pay; and if satisfied that the circumstances justify it, and that therehas been willful refusal and culpable neglect to pay the debt, the power for theMagistrates to make an order to commit the debtor to prison;

Differences in processes

• Greater control of the caseload being dealt with by external agents for enforcementaction;

• Direct control over the enforcement powers they themselves institute;

• Greater stability of council tax systems during the time period studied in the report,both in terms of staffing and computer processes.

• A lesser proportion of cases requiring applications for attachments of Income Supportvia the Benefits Agency, and therefore fewer difficulties in terms of applicationbacklogs, principally because of the absence of non-rebated water and seweragecharges.

Improving Scottish council tax collection rates

10. The research team is of the opinion that there is no one single measure which could beintroduced that would bring about an immediate transformation in collection rates;improvements will come from adopting a range of improvement strategies. The researchteam believes that councils in Scotland could improve their in-year collection performance ifconsideration is given to introducing changes in a number of the following areas relating tolegislation and processes.

Legislative issues:

• Clarify the interpretation on the transitional benefit regulations for both communitycharge and council tax;

• Consider whether the Debtors (Scotland) Act 1987 requires re-examination in terms ofthe range of goods protected from poinding and warrant sale or whether guidance onits scope should be issued;

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• Consider whether the issue of using committal as an ultimate measure for non-paymentof council tax should be re-examined;

• Consider encouraging the wider use of decrees in an action for payment in appropriatecases; in tandem with the more general use of applications for summary warrant.

• Address the issue of Scottish councils demanding instalments one month later thanEnglish councils;

• Reconsider the need for Scottish authorities to issue a combined reminder and finalnotice;

• Consider making available to revenues officers the same powers as are available toAssessors to require information from a taxpayer;

• Consider Introducing a requirement that a debtor who is subject to an earningsarrestment must inform the Council or Sheriff Officer of any change in employmentdetails;

• Consider up-rating each year, for changes in inflation, the maximum wage deductionsthat can be made for earnings arrestments;

• Consider lowering the minimum level for sequestration from £1500 to £750;

• Consider denying the right to buy council houses to those who are in arrears withcommunity charge/council tax;

• Consider changes in tenancy agreements so that in future any council tax debt inrespect of a council tenancy could carry the penalty of eviction;

• Consider changes to give greater effect to the provisions relating to homes in multipleoccupation, or dwellings where there is a high turnover of residents;

• Consider joint billing of council tax with rent though council tax revenues systems;• Consider a requirement for banks to advise the Sheriff Officer when an arrestment has

been successful and to release funds promptly;

• Consider provisions to allow Income Support claimants to make requests to theBenefit Agency to deduct council tax payments at source and to have remitted thosepayments direct to the local council.

Process issues:

• Address the legacy of community charge debt, through write-off provisions;

• Consider making it a condition of employment that Council staff do not fall intoarrears with their council tax;

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• Address the impact that re-organisation has had upon staffing and accrued expertise byproviding central government funding for both training and special schemes forrecovery;

• Address the backlog of applications for deductions from Income Support by makingavailable more staff resources in relevant Benefits Agency offices, and encourageliaison between local authorities and the Agency offices in order to successfully planfor workload peaks;

• Consider the use of incentives to pay either by direct debit or in a lump sum;

• Consider the greater use of payment card facilities i.e. Visa, Delta, Switch;

• Fully exploit the facilities provided by imaging and workflow documentation systems;

• Improve management information from computer systems;

• Consider the introduction of dedicated recovery teams;

• Consider the use of visiting teams to advise debtors and others on council tax paymentarrangements, benefit eligibility and enforcement processes;

• Encourage debtors to allocate any payments made in a financial year to that currentyearÕs bill first, and once that is fully paid to allocate any additional payments toprevious yearsÕ arrears; this would be a major step towards reducing the overallindebtedness of individuals in terms of council tax;

• Execute billing, reminder and recovery procedures as promptly as possible and passdebtor files to Sheriff Officers timeously;

• Address the issue of political resistance in some authorities to the use of poinding andwarrant sale and the related restrictions on revenues practitioners which prevent themfrom selecting freely from any of the enforcement options available to them;

• Establish comprehensive written agreements with Sheriff Officers which identify theCouncilÕs view on the use of the various diligences and the required levels of service;and to carry out effective and regular monitoring of performance in accordance withthose agreements;

• Implement greater control of the caseload going forward to Sheriff Officers forenforcement action, through improved communication, monitoring and writtenprocedures;

• Consider leaving it to Sheriff Officers to decide the maximum time period over whichspecial arrangements to pay must be settled, rather than directing them to acceptwhatever is offered by way of payment;

• Ensure that local authorities fulfill their responsibilities under a service levelagreement by prompt response and feedback to the Sheriff Officer;

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• Consider the use of a range of debt collection and recovery processes and facilities,both statutory and non-statutory, that Sheriff Officers and other commercial agenciescan supply.

11. The Research Team does not advocate changes in legislation to provide local councilswith powers either to apply earnings arrestments themselves instead of the Sheriff Officer orto have access to Inland Revenue data, as had been suggested by several respondents. It is feltthat if improvements were made to legislation requiring the defaulter to provide informationregarding employment details, and additionally to provide other information as might beprescribed regarding the debtorÕs financial situation, then this would obviate the need forsuch changes.

Concluding remarks

12. It is the view of the research team that neither a settled period after re-organisationnor improvements within the existing environmental and legislative framework will, on theirown, bring about a national average collection rate comparable with that in England within asatisfactory time scale. It is important to acknowledge that if an in-year collection rateequivalent to that achieved in England is to be the aim, significant and immediate changesrelating to both environment and process issues, as identified above, must be considered. Theresearch team offer no view on the optimum time scale over which any consolidation ofchanges could be take place; but that decision would be a key factor in determining the extentof the improvements which might feasibly be considered. The best value process beingintroduced within revenue functions should in itself assist local authorities in developing bestpractice and will be a driving force in trying to achieve higher rates of collection. It isimportant to recognise that local authorities are at very different stages in the bedding in ofrevenue processes and thus individually will achieve improvements in their collection levelsat different rates.

13. The research team put forward a final point for consideration; that the issue of seekingto improve in-year council tax collection rates should be set against a backdrop of ensuringthat the rights and responsibilities of the citizen are fully addressed. All aspects of the billing,collection and enforcement processes should be carried out with a commitment to deliveringthe highest standards of customer care. But with rights come responsibilities. Council tax is atax borne by all households (with some statutory exemptions) to pay for services enjoyed byall households, and it is a duty of each liable citizen to pay the amount due. Local authoritiesdiffer from the majority of creditors in that they cannot stop the provision of many of theirservices to individuals who default in their payments. If individuals seek to ignore theirresponsibilities to pay, local authorities must have in place the mechanisms to quicklyidentify and deal with such cases. They must also be able to access a range of efficient,effective and acceptable enforcement powers, that will enable both actions to be tailored tothe individual cases and the collection of the amounts outstanding within a reasonable timeperiod.

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CHAPTER 1 INTRODUCTION TO THE REPORT

Background

1.1 This report presents the findings of a study of the main factors, both legislative andothers that affect council tax collection rates in Scotland and England. It identifies and makescomparative assessment of the procedures and practices in council tax collection in bothcountries, and provides comment on the relative effectiveness of those processes. The reportalso provides points for consideration regarding ways in which the council tax system inScotland could be amended in order to bring about improvements in the council tax collectionrate.

1.2 Council Tax is a local charge on domestic property set, in England, by chargingauthorities and their precepting authorities, and in Scotland by local councils. It is based onthe value of property and the number of residents. Properties in each authority area areassigned to one of eight valuation bands, A to H (see Table 1). The tax is set on the basis ofthe number of Band D equivalent properties. Tax levels for dwellings in the other bands areset relative to the Band D baseline. Council tax has operated in Scotland, England and Walessince 1 April 1993, when it replaced the community charge system. The property bandingprocess in Scotland is the responsibility of the Assessor, an officer appointed by andemployed by the Unitary Authorities, but who remains an independent professional valuer.Valuation Office Agency officials carry out banding in England. The value bands aredifferent for Scotland, England and Wales and are shown in the following table.

Table 1Council tax valuation bands in Great Britain

RANGE OF VALUESValuation

BandScotland

£England

£Wales

£Proportion ofBand D bill

payableA Up to 27,000 Up to 40,000 Up to 30,000 2/3B 27,001 Ð 35,000 40,001 Ð 52,000 30,001 Ð 39,000 7/9C 35,001 Ð 45,000 52,001 Ð 68,000 39,001 Ð 51,000 8/9D 45,001 Ð 58,000 68,001 Ð 88,000 51,001 Ð 66,000 9/9E 58,001 Ð 80,000 88,001 Ð 120,000 66,001 Ð 90,000 11/9F 80,001 Ð 106,000 120,001 Ð 160,000 90,001 Ð 120,000 13/9G 106,001 Ð 212,000 160,001 Ð 320,000 120,001 Ð 240,000 15/9H Over 212,000 Over 320,000 Over 240,000 18/9

1.3 In terms of national average figures, Scotland achieves significantly lower in-yearcollection rates1 than England and Wales. Table 2 shows that for the year 1997/98 the in-year collection rate for Scotland was 8.2 per cent lower than for England and 6.7 per centlower than for Wales. In-year collection rates of council tax in both Scotland and Englandincreased in 1997/98 compared to the previous year, but only marginally, while Walesexperienced a decrease. Scotland achieved a 0.6 per cent increase in collection rates between1996/97 and 1997/98; in England the corresponding increase was 0.3 per cent, whilst inWales there was a 1 per cent decrease.

1 This is the proportion of the net amount of council tax billed for the given financial year, which is actuallycollected within that year.

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Table 2Council tax: in-year collection rates

Receipts as a percentage of net collectable debt1996/97 1997/98

% %Scotland 86.7 87.32

England 95.2 95.53

Wales 95.0 94.04

1.4 In early 1998, the Accounts Commission for Scotland published a report on counciltax collection in Scotland. The report highlighted a number of key aspects of best value,benchmarking and the sharing of good practice, which it was considered might lead tosignificant increases in council tax collection. That report also included a number of areaswhere legislation could be changed to allow authorities to pursue debtors more effectivelyand allow additional payment options to taxpayers. These mainly reflected proposals thatwere put to the former Scottish Office Ministers by elected representatives of the Conventionof Scottish Local Authorities (COSLA) and included:

• Joint billing and collection of council tax with rent;• Reduction in the debt level for sequestration from £1500 to the previously applying

level of £750;• Prohibition of the sale of council housing under ÒRight to BuyÓ arrangements for

community charge and council tax debtors;• Bypassing of summary warrant procedures for debtors who agree to a direct deduction

from their Income Support; and• Providing councils with access to Inland Revenue data relating to employment details.

1.5 As a response to the recommendations listed in the report, the then Secretary of Statefor Scotland and COSLA agreed to establish a joint Scottish Office / COSLA Working Groupon Council Tax Collection, to explore ways of improving collection rates. In November 1998the Working Group issued a consultation document, ÒIt Pays to CollectÓ5. This consideredlegislative solutions to the list of measures formerly proposed by COSLA, and other issuesand measures that might improve collection levels in Scotland. The paper also proposed astudy to examine differing statutory arrangements relating to council tax collection inScotland and England; this report provides the findings of that study.

Report objectives

1.6 The remit of this research project has been to provide information on factors, bothlegislative and other, that affect collection rates for council tax in Scotland and England. Thestudy provides the joint Scottish Executive (formerly known as the Scottish Office)/COSLAWorking Group with information on the procedures and practices used by local authorities in

2 Scottish Office Statistical Unit3 DETR finance statistics4 Welsh Local Government Financial Statistics5 It Pays to Collect Ð A Consultative Document by the Joint Scottish Office/ COSLA Working Group onCouncil Tax Collection

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collecting council tax debts, and with an assessment of the relative effectiveness of theprocedures and practices used. Specifically, the research objectives have been:

a) to gather information on the procedures followed by local authorities in Scotland andEngland in collecting council tax and recovering council tax debts, and on the successof those procedures;

b) to identify differences in procedures and practice of council tax collection in Scotlandand England, and the reasons for these differences;

c) to identify the main factors affecting in-year collection rates in Scotland and England;and

d) to identify problems (if any) with current administrative and legal arrangements andpossible suggestions which could assist Scottish local authorities in their duties tocollect and recover council tax.

Research design

1.7 The study has employed a variety of research methods. It was necessary to quantifythe different council tax processes in Scottish and English authorities as much as possible.To this end a postal survey of a sample of local authorities was conducted. The Scottishauthority questionnaire was designed with the assistance of the Executive Committee of theScottish Branch of the Institute of Revenues, Rating and Valuation (IRRV). The Englishquestionnaire received design comment from those members of the Law and ResearchCommittee of the IRRV who were based in English local authorities. Qualitative data,concerning individualsÕ experiences and views of the council tax processes, was gatheredthrough in-depth, semi-structured interviews with key revenues officers in local authorities.Less formally structured interviews were held with officials of the Scottish CourtsAdministration, elected representatives and officers of the Society of Messengers-at-Armsand Sheriff Officers, and partners of two firms of Sheriff Officers. The information arisingfrom these interviews provided very useful insights into council tax recovery andenforcement issues as seen from non-local government perspectives. The project alsorequired an analysis of the relevant available statistical information, and the relevantlegislative arrangements. Additional information regarding specific issues identified by theresearch team during the drafting of the report was supplied by an officer of the CertificatedBailiffs Association and by a professionally qualified public sector revenue consultant withwide ranging experience of English revenue practices.

1.8 At the final drafting stages of this report, a Members Bill to abolish poindings andwarrant sales was introduced to the Scottish Parliament by Tommy Sheridan MSP. In viewof the interest generated by this development, the research team obtained additional viewsregarding the current use of both poindings and warrant sales for council tax purposes and thecomparable action of distraint in England. Some of this extra data was obtained throughinformal interviews with bailiffs and Directors of nine private sector bailiff firms in England.

1.9 It was important that all Scottish authorities were given the opportunity to contributeto the report. All 32 Scottish authorities were invited to complete the postal questionnaire.Responses were received from 30 of the authorities. A sample of 10 Scottish authorities was

11

visited for follow-up interviews. These authorities to be interviewed were chosen as arepresentative sample spanning the Ôfamily groupsÕ6 of local authorities as identified by theAccounts Commission. In each family group, one authority was selected from each of theupper and lower quartiles and mid-range of collection rates, with one additional authority alsobeing selected. A number of other factors which it was hypothesised could have an impacton collection rates were identified as important in selecting the individual authorities forinterview:

• housing tenure mix;• whether aggregation/ disaggregation had occurred upon re-organisation;• population sparsity/density;• population mobility;• proportion of population in receipt of Income Support; and• use of local area offices for collection.

1.10 Postal questionnaires were issued to 33 English authorities. These were selected inorder to provide a broad match to the Scottish authorities selected for postal survey, using thesame criteria as listed above. Returns were received from 20 authorities. Follow-upinterviews were conducted with a sample of 10 authorities, chosen to broadly match thoseScottish authorities selected for interview, again on the criteria listed above. The lowerresponse rate from English authorities had been anticipated, and is attributed to the lowermotivation of English authorities to take part in the survey. A number of them saw littlepoint in allocating resources to the survey at a very busy time in the revenues calendar, whenthere was little perceived payback for them in terms of the studyÕs findings. Copies of thequestionnaires are attached as annexes to this report, as is a copy of the interview schedule.

1.11 It should be noted that the research only sought information and views from localcouncils, sheriff officers, private sector bailiffs and the Scottish Courts Administration andtherefore does not include the views of other parties with an interest in this issue, e.g. moneyadvice workers and Citizens Advice Bureaux.

1.12 The timing of the project meant that the bulk of the information gathering exercisecoincided with an extremely busy time in local authority Revenues sections, as they preparedfor the issuing of annual demand notices. This impacted on the study in terms of the actualnumber and completeness of the returned questionnaires, the scheduling in of interviews withkey staff and general delays in the provision of information by local authorities.

1.13 Supplying data for the projectÕs baseline financial year 1997/98 presentedconsiderable problems for several (mostly Scottish) authorities. Changes to computersystems within and since that year meant that some authorities found it difficult to retrieverelevant information within the project time scale for questions relating to issues such asstaffing ratios, take-up of payment methods and recovery processes. A few of the Scottishrespondents attached a Ôhealth warningÕ to the information they provided, since they felt itwas not representative of how things would be in normal times, once computer systemconversion had been completed.

6 Both the Accounts Commission for Scotland and Audit Commission uses family groupings of authorities.These allow more of a like-for-like comparison than would be the case by comparing all councils with oneanother.

12

CHAPTERÊ2 CONTEXTUAL DIFFERENCES BETWEENSCOTLAND AND ENGLAND THAT MAY IMPACT ON THECOLLECTION RATES OF COUNCIL TAX

Introduction

2.1 The collection and recovery procedures for council tax are similar in Scotland andEngland in many respects. Points of similarity include the following:

§ council tax payers are entitled to pay the total annual amount in 10 instalments;the first instalment in Scotland cannot be payable before 1st May, whereas inEngland the first instalment can be payable from 1st April;

§ enforcement may commence after any instalment is due but unpaid, although inEngland enforcement may not commence until 14 days have elapsed from the duedate of payment of the instalment;

§ a pre-requisite to court action is the issue of both a reminder requiring theinstalment to be paid within 7 days, and a final notice requiring payment of thefull yearÕs charge (although the reminder and final notice can be combined in onenotice in England); and

§ successful court action results in a variety of enforcement options becomingavailable.

2.2 This report examines the hypothesis that there are key differences in the operation ofcouncil tax procedures in Scotland and England that account for the lower collection ratebeing achieved in Scotland. Before looking in depth at these council tax processes, it isimportant to set the Scottish and English systems in the context of the different environmentsin which they operate. This chapter identifies the main contextual differences betweenScotland and England that affect the collection and recovery of council tax, and theadministration of housing and council tax benefits. The issues contained in this chapter arebased partly on the results obtained from the survey questionnaires, but principally on theinterviews conducted with local authority officers in England as well as Scotland, the ScottishCourts Administration and the Society of Messengers-at-Arms and Sheriff Officers(SMASO).

Demographic considerations

2.3 Scotland has a higher percentage of public housing than most other parts of GreatBritain. The proportion of council taxpayers from the public tenancy sector is generallyhigher in Scottish authorities than in England.

2.4 The collection of council house rents inclusive of local authority taxes was prohibitedwith the introduction of the community charge in 1989. Whilst this applied throughoutScotland and England, the move away from inclusive rents was more significant for Scottishlocal tax collection rates. A high proportion of the Scottish tax base had used this method ofpaying their local tax, and it was now no longer available to them.

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2.5 The continuing process of house sales under the Tenants Rights Etc. (Scotland) Act1980 has significantly increased the proportion of owner occupied dwellings in Scotland,from 36% in 1981 to 60.2% of total dwelling stock in 1997. The outcome has been anincrease in the proportion of remaining council tenants dependent on housing benefit7. Thehighest proportions of 100% council tax benefit claimants are generally within the publictenanted sector.

2.6 Those receiving 100% council tax benefit in Scotland must, however, still pay waterand sewerage charges to local authorities (an annual charge payable for water and sewerageservices in respect of dwellings that are connected to mains water and sewerage)8. Many ofthe Scottish revenues practitioners interviewed were of the opinion that it was relatively moreexpensive to collect small sums of money billed, such as the water and sewerage chargeelement paid by 100% council tax benefit claimants, than larger non-rebated sums billed. Inview of this there is reluctance by many local authorities to exercise diligence against debtorsin this category, favouring instead applications for attachment of Income Support. Thepercentage of Summary Warrant cases where attachments of Income Support were maderanged from 15% to 53% in 1997/98 in those authorities responding to the question.

Table 3Council tax benefit claimants in Scotland, England and Wales

Numbers expressed as % ofNumber of Claimants 02/05/98

DwellingsTotal Claimants

Council Tax Benefit Scotland England Wales S E W S E W% % % % % %

Claimants at 100% 378,000 2,973,000 208,000 17 15 17 64 67 73Other Claimants 212,000 1,480,000 75,000 10 7 6 36 33 27

Total Claimants 590,000 4,453,000 283,000 27 22 23 100 100 100

Notes:1.Source of Benefit figures DSS Housing Benefit and Council Tax Benefit Management Information

System - 1% sample taken on 2/05/98.2. Source for Number of Dwellings from Scottish Office Statistical Returns; DETR; Welsh Office.

2.7 From Table 3 above it can be seen that Scotland has a higher percentage of CouncilTax Benefit Claimants in receipt of Income Support (claimants at 100% benefit level) as apercentage of non-exempt dwellings: the figure in Scotland being 27%, compared with 22%in England. It is therefore likely that Scotland will require the administration ofproportionately more Attachments of Income Support than would be the case in Englandbecause of the existence of Water and Sewerage charges.

7 Page 19 - Managing Housing Benefit- Accounts Commission Report 19938 In Scotland Water and Sewerage charges are collected, as part of the council tax demand, by the localauthorities on behalf of the three Water authorities. In England local authorities are not involved in the billingand collection of water and sewerage charges as these processes are carried out by the 29 Water Companiesthemselves (some of these issuing bills in respect of water charges only).

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The reorganisation of local government

2.8 The structure of local government throughout Scotland, England and Wales hasrecently undergone substantial reorganisation. These changes have impacted upon localtaxation collection in these countries in substantially different ways.

Scotland

2.9 Reorganisation in Scotland became effective on 1st April 1996. It brought about theabolition of 9 Regional Councils, 53 District Councils and 3 Islands Councils, and thecreation in their place of 32 Unitary Authorities and three independent water and sewerageauthorities. Prior to local authority reorganisation the function of collection and recovery oflocal taxes (council tax, residual community charge and non-domestic rates) rested with the 9Regional Councils and 3 Islands Councils, as did the responsibility for the provision of waterand sewerage services. Responsibility for administration of Housing and Council TaxBenefits was divided, with the Regional Councils responsible for Council Tax Benefit and theDistrict Councils responsible for Housing Benefits while the Islands Councils dealt with both.

2.10 Reorganisation meant that, in most instances, the functions of the former RegionalCouncils in respect of collection and recovery of local taxes and council tax benefits weredis-aggregated to become the responsibility of the newly formed Unitary Councils. Theformer District CouncilsÕ functions in respect of housing benefits were passed over to, or inmost cases aggregated to, the new Unitary Authorities.

Wales

2.11 The corresponding reorganisation in Wales resulted in the abolition of the 11 CountyCouncils and 32 District Councils and the creation in their place of 22 Unitary Authorities.Prior to this reorganisation, which also came into effect on the 1st April 1996, the function ofcollection and recovery of local taxes rested with the District Councils as too didresponsibility for administration of Housing and Council Tax Benefits. Reorganisationmeant that in all instances the three functions were passed to, or aggregated to, the newUnitary Authorities.

England

2.12 The reorganisation in England was rather different from that of either Scotland orWales. The 32 London Boroughs, the City of London Corporation and 36 MetropolitanDistrict Councils were not reviewed and their functions remained unchanged; they were, andremain responsible for all collection and recovery duties in connection with local taxes andthe administration of Housing and Council Tax Benefits.

2.13 The remaining 33 Counties and 297 District Councils of England were reviewed. Theresult was the creation of fourteen new Unitary Authorities (in addition to some other minorchanges). Thirteen of these new authorities had previously been District Councils,responsible for all collection and recovery duties in respect of local taxes and for alladministration of Housing and Council Tax Benefits. Thus on reorganisation, there were nochanges in jurisdiction or level of responsibility for these local authorities so far as local taxesor benefits were concerned. The remaining one new Unitary Authority was an amalgamationof a number of District Councils. Reorganisation meant that in all instances the three

15

functions were passed over to, or aggregated to, the new Unitary Authorities. The remainingdistricts and counties were left more or less undisturbed within a two-tier structure. Thus outof the full review of English authorities, only one new Council took on an aggregation oflocal tax and benefits responsibilities from other former authorities, and no authority had todeal with taking on local tax and benefits responsibilities from a disaggregating authority. InEngland 238 District Councils and 47 Unitary Authorities were in place followingreorganisation. The following table shows the authorities with council tax billing andcollection responsibilities following reorganisation in 1996.

Table 4 Authorities with council tax billing and collection responsibilities following

reorganisationScotland England Wales

32 Unitary Authorities 3213647

238

London BoroughsCity of London CorporationMetropolitan BoroughsUnitary Authorities (includingthe Council of the Isles of Scilly)Shire Districts

22 Unitary Authorities

Issues arising from reorganisation

2.14 Scotland has been uniquely affected by the recent reorganisation of local government.The new unitary authorities had to deal with taking on local taxation information from formerauthorities (the Regions) that were disaggregating their systems and combining them with thework of the former district councils. At the same time these new authorities had to deal withaggregating housing benefit systems without the benefit of the continuity of former highlyexperienced IT staff, many of whom had either retired or had moved to different councils orprojects.

2.15 In Scotland the abolition of the Regional Councils meant that major local taxationfunctions were transferred to a much larger number of Unitary Authorities. This meant thatnot only were senior officers in the new authorities faced in many instances with functionswith which they were unfamiliar, but so too were many of the politicians comprising theCouncils of those new unitary authorities.

2.16 Thus were created a number of new issues. The most significant of these for theirimpact on local taxation and benefits administration were:

§ the desegregation or aggregation as appropriate of manual and computer systems;§ the division or combination of resources (including Revenues and IT staff and

sharing of common computer hardware and software) for these functions amongthe new unitary authorities; and

§ the learning curve for both revenues staff and members of Councils, many ofwhom had had no previous experience with collection and recovery of local taxes,their only previous revenue collection function having been collection of councilhouse rents.

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2.17 The same conditions did not however exist in England and Wales. Although therehad been major changes, they did not, except in a very few cases, impact upon theadministration of local taxes and benefits. Thus members and officers alike were able tocontinue with systems, administration and policy in respect of these functions with very littledisruption or need to learn new regulations or cultures. The only even nearly comparablesituations have been where local authorities have amalgamated, with the consequent need forthe aggregation of systems, staff, facilities and policies; this situation poses substantiallyfewer problems than the situation in Scotland where the mixture of disaggregation andaggregation has been a major hurdle.

The impact on IT systems

2.18 The fast pace of change in local government has also impacted upon support services.There is evidence that the IT service suppliers to local government have not alwayssucceeded in keeping up with the pace, particularly in so far as their services to Scottish localgovernment is concerned. Of particular note is a comment by Kneen and Travers9 maderegarding the council tax implementation in Scotland:

"It would appear that those who were reliant on external suppliers had a more difficulttime, partly because of the orientation of the software houses to the dominant Englishmarket. There was no software available which was designed specifically to meetScottish requirements, and Scottish users had to make do with often imperfectadaptations of English software"

2.19 The IT suppliers are now addressing more specifically the needs of the Scottishmarket but there is still a long way to go before the needs are fully met. This is discussedfurther in chapter 5.

The impact on staffing

2.20 The nine former regional councils responsible for the issue of council tax bills heldthe body of expertise over the wide administration and policy formulations of the RevenuesService. This expertise since 1996 has been spread over 29 mainland councils and thescarcity of such experience has had an impact on the pace at which many tasks areaccomplished. Responses at interviews in Scottish authorities indicate that a number of staffresource issues arose from reorganisation: staff had to take on new responsibilities and had toadapt to new working practices; staff used the opportunity either to leave revenues workentirely or to look for better paid employment; a large scale training requirement was created;and at least some increases in workload occurred. Responses at interviews in Scottishauthorities included:

ÒWe have a mixed bag of staff skills. The majority [of staff] from the formerRegional Council is very good. The quality of revenues staff from the former DistrictCouncil is generally mediocre. The District staff had previously been on lower payscales. They were upgraded on reorganisation, but had a larger change to make in theshift to generic working. Recruiting staff is now very difficult because there are a

9 Page 15 of Implementing The Council Tax by Pat Kneen and Tony Travers sponsored by both the JosephRowntree Foundation and Local Government Chronicle - published by LGC Communications 1994

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number of neighbouring authorities offering higher pay than usÓ. [This authorityÕscollection rate for 1997/98 was below the national average figure.]

ÒThe quality of our staff is variable. When we went over to generic working those[the former District staff] with a benefits background did not want to be involved inthe collection of revenues and this caused considerable problemsÓ. [This authorityÕscollection rate for 1997/98 was above the national average figure.]

ÒWhen you look at the staff to chargeable dwellings ratio, reorganisation has meantthat we are now working with one third less staff than before. This has caused usproblems in terms of achieving good collection rates, particularly as some of the bestexperienced staff left rather than go through reorganisation.

Ò The staff we have are very willing and able, but only 35% of the revenues staff thatwere here at reorganisation are still with us. We have no formal programme oftraining Ð financial incentives from central government for this would be helpful. Thestaff have had some training in telephone debt recovery techniques and this has beenusefulÓ. [This authorityÕs collection rate for 1997/98 was below the national averagefigure.]

2.21 Not all Scottish authorities reported difficulties regarding staff resources:

Our staff is fine. They are good, committed, well motivated and well trained. Wellover 40% have gained technician qualifications with the IRRV. It has been difficultto ÔpinchÕ experienced staff from other authorities because of geographicconsiderations, so we have had to train up new staff from scratchÓ. [This authorityÕscollection rate for 1997/98 was above the national average figure.]

2.22 The following observation by a revenues officer in one of the few English authoritiesto undergo full scale reorganisation, reinforces the point made by Scottish practitioners that areorganisation process impacts on staff resourcing, and that Scottish authorities were notunique in terms of the difficulties they experienced:

ÒOur staff quality is poor. [A number] of authorities aggregated into this one atreorganisation and most of the good staff went elsewhere. On a scale of one to ten,with ten being the best quality, I would rate our staff as 5Ó. [This authorityÕscollection rate for 1997/98 was below the national average.]

2.23 It was clear from interviews that several senior Scottish revenue officers felt that interms of staff expertise, their authorities were still trying to improve council tax collectionfrom a position of weakness. Staff training was perceived as very important, but anycomprehensive training programmes required financial support that would strain currentbudgets. A number of the revenues officers interviewed were of the opinion that financialassistance from central government to support staff training would be welcomed by theirs andother Scottish authorities. The research team supports the view that an allocation of centralfunds for training of council tax staff merits consideration.

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Comparison of statistical bases

2.24 When comparing average collection rates for Scotland and England, it should benoted that a large sized authority whose collection rate was significantly lower than that forother authorities would have far greater impact upon the Scottish average collection ratefigure than a poorly performing English authority. This is due to the far greater number ofauthorities with council tax responsibilities in England than in Scotland and to their relativeproportion of the national total to be collected by each council in England. For example,GlasgowÕs amount to be raised from council tax as a percentage of the total Scottish netcouncil tax collectable (excluding water and sewerage charges) is 11%10 and its number ofcouncil tax dwellings equates to 12.3% of the national total11. Birmingham's amount to beraised from council tax is 1.7%12 of the total English net council tax collectable, and itsnumber of council tax dwellings equates to 2.0%13 of the English total (excluding Wales).Although the data shown for England relates to the data year 1998/99, Table 5 illustratesthese relative proportions and shows the average in-year collection rates for different groupsof billing authorities.

10 Scottish Office Annual Returns of Council Tax11 Scottish Office Grant Aided Expenditure 1999Ð00 Report12 Audit Commission's Annual Council Tax Collection figures for 1998/99.13 DETR Finance Statistical Unit

19

Table 5Amounts to be raised from council tax as a percentage of the total net council tax collectable for

England (1998/99) together with figures for Scotland (excluding water and sewerage charges)(1997/98)

Councils

1998/99 Net Collectable

£000Õs

Amount Collected in-

year 1998/99

£000Õs

% in-year

Collections

1998/99

% of Total Net

Billed Nationally

England

Inner London Boroughs 500,759 443,024 88.5 4.7

(incl. City of London)

Outer London Boroughs 1,042,636 977,574 93.8 9.8

London Boroughs 1,543,395 1,420,598 92.0 14.6 *

Metropolitan Districts 2,066,719 1,961,624 94.9 19.5 *

All Purpose Authorities 1,613,449 1,531,698 94.9 15.2

Shire Districts 5,372,915 5,219,024 97.1 50.7

Shire Areas 6,986,364 6,750,722 96.6 65.9 *

England - Totals 10,596,478 10,132,944 95.6 100 *

Birmingham City 168,458 158,303 94.0 1.7

1997/98 Net Collectable

£000Õs

% of Total Net

Billed Nationally

Aberdeen City 52,370 4.6

Aberdeenshire 49,260 4.3

Angus 21,980 1.9

Argyll & Bute 24,570 2.2

Clackmannanshire 9,810 0.9

Dumfries & Galloway 32,440 2.9

Dundee City 32,330 2.9

East Ayrshire 22,460 2.0

East Dunbartonshire 31,080 2.7

East Lothian 21,720 1.9

East Renfrewshire 22,950 2.0

Edinburgh City 132,180 11.7

Western Isles 4,090 0.4

Falkirk 26,120 2.3

Fife 73,070 6.5

Glasgow City 124,500 11.0

Highland 47,330 4.2

Inverclyde 17,510 1.5

Midlothian 19,990 1.8

Moray 16,250 1.4

North Ayrshire 25,840 2.3

North Lanarkshire 56,530 5.0

Orkney 3,070 0.3

Perth & Kinross 34,030 3.0

Renfrewshire 39,480 3.5

Scottish Borders 21,300 1.9

Shetland 3,160 0.3

South Ayrshire 28,150 2.5

South Lanarkshire 62.730 5.5

Stirling 21.470 1.9

West Dunbartonshire 23,150 2.0

West Lothian 31,670 2.8

Scotland 1,132,560

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The legislation governing collection and recovery of local taxes

2.25 Collection and recovery of council tax in Great Britain is governed by the LocalGovernment Finance Act 1992 together with the associated Regulations relating to Scotlandand England respectively. Chapter 3 examines in detail the differences in council taxlegislation between Scotland and the rest of Great Britain and sets out the implications ofthose differences. Collection and recovery in both Scotland and England is also governed bylegislation covering debt recovery more generally.

2.26 Scotland has had a substantial review of its law relating to debt recovery and theimpact of the Debtors (Scotland) Act 1987 has recently been evaluated by the Scottish OfficeCentral Research Unit (now known as the Scottish Executive Central Research Unit). Theprogramme of research was commissioned by the Scottish Courts Administration on behalf ofthe Lord Advocate. The aim of the research was, "to provide an overall assessment of theimpact of the Act and the extent to which it has met its objective of achieving an equitablebalance between its two main aims of ensuring effective machinery by which creditors canrecover their debts and protecting debtors from undue economic hardship and personaldistress14". It should be noted that the evaluation of the Debtors (Scotland) Act 1987 did notexamine summary warrant procedures.

The Scottish and English courts systems for effecting the recovery of council tax

2.27 There are many similarities between the legal powers in England and Wales and thosein Scotland in relation to the collection and recovery of local taxes. However, The differinglegal codes and courts systems do introduce some marked differences in the application ofthose powers between the two countries. The main differences are noted below.

Court orders: Scotland

2.28 The local authorities in Scotland have available to them the summary warrantprocedure which is essentially an administrative procedure. This involves the submission ofa list of defaulters with a covering application for Summary Warrant to the Sheriff. Thedebtor is not summoned to appear in court, nor is the local authority required to ÒproveÓ eachdebt individually and the fact that Summary Warrant has been granted against a namedindividual is not recorded in the Court records. Summary Warrant provides quick, efficientand cheap means for councils to obtain recovery powers to enforce the payment of localtaxes. Councils also have the option of obtaining a decree granted in an action for payment15

on an individual basis against each defaulter; this is similar to the English system of obtaininga liability order. It is not open to a Scottish council, however, to raise an action for paymentif it already has been granted Summary Warrant and has executed any one of the diligences;16

Diligences are the procedures by which debt decrees are enforced in Scotland. The mostcommonly used diligences are poinding and warrant sale, earnings arrestment and anarrestment and action of furthcoming or sale.

14 Executive Summary - Evaluation of the Debtors (Scotland) Act 1987 - The Scottish Office Central Research

Unit -199915 Para. 2(1)(b) of Schedule 8 of the Local Government Finance Act 199216 Para. 2(5) of Schedule 8 of the Local Government Finance Act 1992

21

• Poinding, carried out by officers of court, enables the attachment of a debtorÕs moveableproperty by the creditor. Warrant sale, which can only commence after poindingprocedure has been carried out, is the sale of a debtorÕs moveable property to repay thedebt.

• An earnings arrestment enforces a debt against the earnings of a debtor.• An arrestment and action of furthcoming attaches or freezes a debtor's moveable property

which is in the hands of a third party. It prevents the third party from giving uppossession of the property, which the creditor may obtain by raising an action offurthcoming.

2.29 Once Summary Warrant is granted it affords the council the power to recover theamount due and unpaid by each person specified in the application, along with a surcharge of10% of that amount, by any of the diligences. Diligences under the Debtors (Scotland) Act1987 must be executed by a sheriff officer who is an officer of the court. Sheriff Officersnevertheless work within independent private firms who are regulated by the Act.

2.30 The Summary Warrant further grants powers to a sheriff officer to enter premises forthe purpose of poinding and to open shut and lockfast premises17. Where a summary warrantor a decree in an action for payment has been obtained the local authority may apply to theSecretary of State asking him to deduct sums from any income support that may be payableto a person in order to secure payment of any outstanding sum due. This is known as anapplication for attachment of income support.

2.31 There are other means of recovering the debt other than those afforded by theSummary Warrant and these comprise in the main sequestration and letters of inhibition18.

Court orders: England

2.32 In England each defaulter is summoned to appear before a MagistratesÕ court todefend the issue of a liability order19, the issue of which is recorded in Court records.Furthermore an English local authority must prove each debt presented to Court. Oncegranted, the order provides for recovery of unpaid sums. The remedies and the relationship20

between them are as follows:

• attachment of earnings, which may be resorted to more than once;• deductions from income support, which may be resorted to more than once;• distress, which may be resorted to more than once;• attachment of earnings, deductions from income support and distress (or any two of

them), which may be resorted to in any order or alternately (or both);• steps by way of attachment, deduction, distress, commitment, bankruptcy, winding up

or charging which may not be taken while steps by way of another of those methodsare being taken;

17 Form 61 - Act of Sederunt (Proceedings in the Sheriff Court under the Debtors (Scotland) Act 1987) 1988 asamended18 An inhibition is not, strictly speaking, a means of recovering debt. It prevents a person who has an interest inheritable property from disposing of that interest to the detriment of his creditors and can only strike at futurevoluntary acts. It is a personal or prohibitory diligence, which does not create any nexus over the property. Ifthe inhibition fails to have the desired effect, the creditor would have to resort to further diligence to make hisright real.19 Para. 3(1)(a) of Schedule 4 of the Local Government Finance Act 199220 Para 12(1) of Schedule 4 of the Local Government Finance Act 1992

22

• where a warrant of commitment is issued against (or a term of imprisonment is fixedin the case of) the person concerned no steps, or no further steps, by way ofattachment, deduction, distress, bankruptcy or charging may be taken.

Earnings arrestments

2.33 The Scottish system requires earnings arrestments to be effected by an Officer ofCourt, a Sheriff Officer. In England local authorities may effect service of Attachments ofEarnings or Attachment of Members Allowances direct, after the Magistrates have granted aliability order.

Committal

2.34 In the case where an English authority has attempted to levy distress but has beenunsuccessful, and all other applicable remedies have been tried and found ineffective orinappropriate, the authority can apply to the MagistratesÕ Court for a Warrant to commit thedebtor to prison. Willful refusal or culpable neglect on the part of the debtor must be shown.Such a power does not exist in Scotland.

Letters of Inhibition/Adjudication and Charging Orders

2.35 English authorities may apply for a Charging Order on heritable property. This actionby application to the County Court may be founded on the Liability Order. The equivalentprocess in Scotland is the application for Letters of Inhibition/Adjudication, which cannot befounded on a Summary Warrant but instead must be founded on a decree granted in an actionfor payment (see para. 28). Scottish authorities wishing to pursue this option must abandonthe Summary Warrant in relation to the particular debt outstanding and seek decree in anAction for Payment, then raise the matter in the Court of Session. This action is onlycompetent if none of the diligences authorised by the Summary Warrant have been exercised.

The level of charges for council tax

2.36 Another major area of significant difference between Scotland and the rest of GreatBritain lies in the level of the bottom line amount on the bill. Scottish bills include water andsewerage charges while in England, local authorities play no part in the billing for waterservices charges and therefore council taxpayers there do not have a combined bill for counciltax and water and sewerage charges. The total amount billed for by Scottish local authoritiesis thus relatively higher than in England. This fact may have a bearing on collection rates,although this could not be quantified within the scope of this research because of the complexissues at play.

Water services charges

2.37 Scottish local authorities have a statutory duty to bill, collect, and recover domesticwater and sewerage charges on behalf of the West of Scotland, East of Scotland, and North ofScotland water authorities21. The sum due for this charge is separately identified from thecouncil tax on the demand notices, but for the purposes of collection and recovery and for the

21 The Water Services Charges (Billing and Collection) (Scotland) Order 1997 SI No 362 (s27).

23

purposes of analysis by the research team, the two charges are combined and it is the totalsum due that is significant. For the purposes of the Scottish Office statistical returns and forthe Performance Indicator for Council Tax Collection Rates it should be noted that theseexclude water and sewerage charges.

2.38 The amount of water and sewerage charge levied on a property depends on thecouncil tax Band in which it is placed; the differences in the charge levels are in the sameproportion as those between the council tax charge levels for the various Bands. In 1997/98,a Band D property would have generated a water and sewerage charge of £118.43 in West ofScotland Water Authority; a charge of £122.79 for Borders, Edinburgh and the Lothians areasin East of Scotland Water Authority; and a £128.26 charge for Aberdeen, Highland andMoray areas in North of Scotland Water Authority (all amounts being inclusive ofgovernment sewerage subsidy)22. It should be noted that for the latter two Water Authoritiesdifferent levels of charge exist for Band D for different parts of their areas; the figures shownrepresent the charges for the most populous areas.

2.39 Water and sewerage services charges attract no council tax benefit. Council taxpayersin Scotland with resources at or below Government needs assessment levels will receivethrough council tax benefit, direct assistance in meeting the council tax demand. They will,however, have to meet the water and sewerage charges element of their bill from othersources of income, such as income support23.

2.40 The significance of this is reflected in the council tax recovery levels. It is clear frominterviews that Scottish revenues staff believed that the council tax debtor generally makes nodistinction between the sum actually due to the council for their own council tax charges andthat being collected on behalf of the Water Authority. Council taxpayers in Scotland on lowincomes face a higher level of monthly instalments than their English counterparts because ofthe inclusion of the water and sewerage charges with Scottish bills. Where a taxpayer isunable to meet the instalment in full, previous experience in revenues sections indicates thatthere will be a tendency for the taxpayer not to make any payment rather than attempt tomake a partial payment on account. This additional point becomes even more significantwhen considered in connection with those council taxpayers that receive 100% council taxbenefit. In these cases the debt for council tax itself is fully rebated and so the debtor has nosum to pay for council tax. However, as the water and sewerage services charge is notsubject to council tax benefit, the debtor has to pay the full charge to the local authority. Forpeople already on limited means this can be a considerable sum of money to be paid to thelocal authority, although the actual sum due in each case is comparatively small when takenin the context of the sums for council tax being paid by non-rebated payers. Over all,Scotland has a higher percentage of households on benefit (27%) than England (22%) orWales (23%) (see Table 3).

2.41 One Revenues Manager has made available a special analysis of his council's counciltax debt for 1997/98, which breaks the debt down over those on 100% benefit (rebate), thoseon partial rebate and those with no rebate. The water and sewerage charges, which areoutwith the benefit scheme, are reflected in these cases. Table 6 shows the following:

22 Scottish Water and Sewerage Customers Council.23 It should be noted however that within Income Support there is an element to cover water and seweragecharges.

24

• Of the three categories, households on partial rebate are the most likely to be in arrears(20% of households, but 39% of arrears cases), households on 100% rebate are slightlyless likely (29% of households, 44% of arrears) and households with no rebate wereleast likely (51% of households, but 28% of arrears);

• Unpaid water and sewerage charges for those on 100% council tax benefit account foronly 7% of the unpaid council tax. [i.e. if this council had 90% collection rate,removing the water and sewerage charges for those on 100% benefit would improvethe collection rate by only 7% of 10% equating to 0.7 percentage points.];

• The average council tax debt for those on partial rebate suggests very strongly that inthe main in this category of households are in arrears on council tax and water chargesrather than solely water and sewerage charges; and

• The small average debt for those on 100% benefit draws out very clearly that thisgroup is likely to be the least cost-effective to pursue for arrears. 44% of arrears caseswere in respect of council taxpayers with 100% rebate, yet they only accounted for 7%of the total debt outstanding. Those on partial rebate accounted for 39% of the numberin arrears, which accounted for 17% of the debt. Thus, those on full rebate, and to alesser extent those on partial rebate, account for a disproportionately high number ofarrears cases.

Table 6Analysis of council tax arrears on basis of households awarded full, partial or no council

tax benefit in one Scottish authority; for year 1997/98% of TotalNumber ofHouseholds

Within Category

% of TotalNumber of

Arrears WithinCategory

% of TotalValue ofArrearsWithin

Category

Average CouncilTax Debt Within

CategoryHouseholds on 100% rebate 29 44 7 £54Households on partial rebate 20 39 17 £214Households on no rebate 51 28 76 £507

Totals 100 100Note: Total number of arrears cases accounts for 35% of all council tax payers and the average debt is£276.

2.42 Of additional significance is the fact that, since 1997/98, the level of water servicescharges has increased by a higher percentage than council tax.24 The smallest percentageincrease to their bill by any of the three water authorities for 1998/99 was 28%; for the year1999/2000 the bill increases range from 18% to 23%. This is largely due to the withdrawal ofgovernment subsidy for sewerage charges. In the case of non-rebated debtors this has meantan overall increase to their bill of less than 10% (after the much lower increases in council taxwere taken into account). In the case of 100% rebated debtors however, since there is nocouncil tax debt to moderate the increase, these debtors face the full water bill increase. Thissituation leaves the local authority having to devote the same resources to collection andrecovery of these comparatively small sums of money as they do to larger debts. As thedebtors in these cases are often the least able to pay even these small sums, the effort devoted

24 Figures supplied by Scottish Water and Sewerage Customers Council.

25

to collecting them is proportionately higher than for the larger sums due from non-rebateddebtors.

2.43 Another consequence of the local authoritiesÕ obligation25 to collect water andsewerage charges is that they are required to pay to the Water Authority a monthly proportionof net income collected. The proportion is what the total amount of water and seweragecharges for the year bears to the total amount billed for the year including these charges. Netincome collected is the amount collected by councils in response to the issue of net counciltax demand notices inclusive of water and sewerage charges less any refunds made to counciltaxpayers. In many cases this means that local authorities are effectively subsidising WaterAuthorities for those debtors who have no council tax (other than the water and seweragecharges element of the bill) to pay i.e. those council taxpayers who are on full benefit. Inother words, in respect of those council taxpayers who are in arrears and on income supportand have no council tax liability other than the water and sewerage element of the bill, the'proportion calculation' means that a payment is made to the water authority from incomecollected from the other council taxpayers.

2.44 One Scottish Revenues Managers interviewed has provided a special analysis of hisdatabase for 1997/98, based on his file at the 4th July 1999. The analysis shown in Table 7highlights the position in relation to those council taxpayers that receive 100% rebate andtherefore only have the water and sewerage charges to pay. Had the monthly proportion paidto the Water Authority recognised the position in relation to those taxpayers who were on100% rebate then this council would have improved its collection performance by 0.2%. Ineffect the calculation regarding the amount to be paid to the Water and Sewerage Authoritiesin the Water and Sewerage Order means that local authorities are subsidising the costs of theWater and Sewerage Authorities. The same Revenues Manager supplying the above data hasfurther stated his opinion that, in practice, the removal of the requirement to collect water andsewerage charges would directly generate an overall improvement in council tax collectionrates in his authority (having a relatively low proportion of Income Support cases) of one halfof one percentage point. He surmises that for authorities with average and higher proportionsof Income Support cases, the improvement in collection rates by such an action would beeven greater.

25 The Water Services Charges (Billing and Collection) (Scotland) Order 1997 No. 362 (S.27)

26

Table 7% share of total net amount of council tax paid to the Water Authorities by one Scottish

authority in 1997/98By Category

Category ofCouncil

Taxpayers

% Billed of TotalNet Amount

Relating to NetCouncil Tax

Excl. Water &Sewerage (WS)

% Billed ofTotal NetAmount

Relating toWater &Sewerage

% Billed ofTotal

CombinedNet C/TaxTax Bills

%Collection

% InArrears

% ofTotal

ArrearsBalance

% of Waterand Sewerage

Share afteradjust. for

100% rebates

O n F u l lRebate

0.0 1.1 1.1 90.0 10.0 3.5 1.0

On PartialRebate

4.2 1.8 6.0 83.7 16.3 31.1 1.6

T o t a l o nRebate

4.2 2.9 7.1 84.6 15.4 34.6 2.6

N o t o nRebate

79.8 13.1 92.9 97.8 2.2 65.4 13.2

Totals 84.0 16.0 100.0 96.9 3.1 100.0 15.8

Water Authority Share based on formula 16.0

Excess percentage paid to Water Authority 0.2 0.2

Council's adjusted percentage collection 97.1

Water and sewerage arrears - England

2.45 The Office of Water Services for England and Wales supplied data regarding thearrears in 1997/98 for water and sewerage charges. A total of 20,386,000 domestic accountswere billed in that year26 (4,470,000 or 21.9% of which were for water services only). Of thistotal number of accounts, 587,344 (17.6%) received presummons notices27, 307,255 (1.5%)received summonses, and in respect of 191,331 cases (0.94%) court judgements wereobtained28. Whilst as a percentage of the total number of accounts the number of accountsreaching judgement stage is small, this nevertheless indicates that a significant number ofhouseholds have difficulties paying for water services in England and that non-payment ofwater and sewerage charges is not a problem confined to Scotland. English householdshowever have the option open to them to "juggle" the payment of their council tax and waterand sewerage bills, which is not open to households in Scotland. The research team is unableto detail corresponding arrears figures for Scotland because the relevant managementinformation is not available. Since June 1999 it has been illegal for consumers of waterservices in England to have services disconnected for non-payment of water charges29; thisfalls in line with provisions that have been in place in Scotland since 198030.

26 1997/ 98 Report on Tariff Structures and Charges, published by OFWAT.27 A notice sent after the issue of a final ÔredÕ bill, indicating that legal action may be taken for non-payment.28 In-house reference papers, OFWAT29 Water Industry Act 199930 Water (Scotland) Act 1980

27

The political dimension

2.46 Local government councils have many discretionary powers. They are often able tomodify national schemes to suit local needs, or they can decide not to recover arrears usingdiligence in certain cases.

2.47 In relation to collection and recovery of local taxes, the range of discretionary powersis limited, but nonetheless there are areas where a measure of discretion can be exercised. Forexample payment methods, incentives and instalment payment dates can be chosen (so longas basic statutory requirements are met) so as to suit local needs. Such discretions can also beseen in the operation of Applications for Attachment of Income Support, where most councilsopt for this procedure for recovery rather than subject those who are on very low incomes torecovery by Sheriff Officers (See paragraph 5 of this Chapter). Council tax legislation31 doesnot require a local council to recover arrears of council tax by diligence. This was also trueunder the community charge system when the then Government acknowledged32 that therewas no express statutory obligation upon levying authorities to take steps to recover arrears ofthe local tax in this way.

2.48 Generally discretion is exercised responsibly and to the benefit of all members of thecommunity. Peter John in his research into Community Charge in Scotland33 said:

"Some Labour councillors, under pressure from the SNP, considered dropping the useof warrant sales. COSLA wanted to test the matter in the courts, but found, aftertaking legal advice, that it was illegal for a local authority, as a matter of generalpolicy, not to make use of warrant sales".

2.49 Peter John went on to say that:

"It was the threat of a sale which prompted people to settle the debt. The threat,however, was less likely to succeed in the charged political environmentÉÓ

2.50 Interviews with Scottish practitioners reveal that the political environment in whichthey work impacts on the enforcement methods they choose for pursuing council tax arrears.Revenues officers in three Scottish authorities stated that their Councillors would be contentfor Warrant Sales to proceed, but only in cases where none of the dwelling occupants were inreceipt of Income Support, and the value of the goods to be sold would be significant.Officers in several other authorities reported that political pressures prevented Warrant Salesaltogether. One officer stated:

Ò Warrant Sales are an absolute Ôno-noÕ. For non-domestic rates they are ok, but forcouncil tax a case has to go to Committee for approval, and the atmosphere is noteven to bother to send a case forward, because of the aggro involved. To be fair, theCouncillors would have riots in the streets if they gave approval, because Sales arenot in the culture here nowÓ

2.51 Views, as expressed to the research team both immediately before and during theperiod of this research, that Warrant Sales should not be carried out, have been held by some 31 Schedule 8 para.2(1) of the Local Government Finance Act 199232 Hansard H.C. Vol.III, col.106733 Page 41 - The Community Charge in Scotland - Peter John- Joseph Rowntree Foundation 1991

28

local politicians throughout the operation of council tax. This view has been held despite theprotections that are given to the debtor following the introduction of the Debtors (Scotland)Act 1987. West Dunbartonshire Council is recently reported to be the first Scottish council tostate as policy that it has banned the use or threat of warrant sales by sheriff officers workingon its behalf.34 A Members Bill introduced to the Scottish Parliament by Tommy SheridanMSP in September 1999 proposes to abolish poindings and warrant sales in relation to alltypes of debt.35

2.52 It is noted that the findings of recent research suggest that local authoritiesÕ attitudestowards and use of this diligence are similar to other creditors. That research36 has found thatalthough about half of those commercial creditors interviewed used the diligence, they did sorarely and in some cases did not pursue the diligence to a Warrant Sale. The diligence wasrarely cited as the Ôpreferred diligenceÕ. The comparison with commercial creditors has to bequalified however. Commercial creditors are different in that they are attempting to recover aone-off debt whereas a council is providing a statutory service on an on-going basis andunlike the commercial creditor cannot simply refuse to provide goods or services.Furthermore commercial creditors are not generally subject to the same political pressures aslocal authorities. Additionally, far fewer summary warrant poindings enforcing council taxand community charge arrears proceed to warrant sale than in the case of poindings and salesby unsecured creditors enforcing ordinary debt37. In 1997 the ratio of council tax/community charge sales to poindings was only 1:324; in ordinary debts, the correspondingwarrant sale/ poinding ratio was 1:13.

2.53 The questionnaires for this survey, which were issued to councils in Scotland andEngland, asked revenues officers to give indications as to the extent to which councilsinvolved themselves in the administrative decisions regarding the use of various recoverymethods. Such involvement can be positive or negative and there is no evidence to supportthat greater involvement can mean a lower level of in-year collection or vice-versa. InEngland, where the revenues function has not had to deal with the pressures of local authorityreorganisation, one council with "some" level of council involvement in the administrativeapproaches regarding most of the recovery methods had an in-year collection level of 97.5%,another with a "fair" to "great" involvement had a collection level of 89.5% and one councilwhich had no involvement had a collection level of 82%. The following table (Table 8) givesan analysis of the returns. Additional analysis of the data by the research team suggests thatthe differing levels of involvement by Councils in the administrative approaches regardingrecovery does not have any appreciable effect on council tax collection levels.

34 The Evening Times, 22 September 1999.35 Abolition of Poindings and Warrant Sales Bill, introduced 24 September 1999.36 Chapter 6, paras 41 to 76 of Platts, A (1999), Evaluation of Debtors (Scotland) Act 1987: Study ofcommercial Creditors, Scottish Office Central Research Unit.37 Civil Judicial Statistics Scotland 1996 Ð 98, Tables 5.2, 5.4 and 5.5.

29

Table 8Degree to which responding authoritiesÕ councils are perceived by chief revenues

staff to involve themselves in the administration of recovery of council tax

In the use of the following actionsThe extent to which councils involve themselves in

the use of different actions

Scotland Great Fair Some NoneDon'tKnow

TotalNos. ofReturns

Income Support Attachments etc. 3 2 24 29Earnings arrestments 1 4 23 1 29Arrestment 1 4 23 1 29Actions of furthcoming 3 24 2 29Poinding 1 5 22 1 29Poinding and sale 4 5 19 1 29Insolvency/Sequestration 1 4 22 2 29Use of debt collection agencies 2 3 22 2 29Inhibitions 1 3 24 1 29

The extent to which councils involve themselves inthe use of different actions

England Great Fair Some NoneDon'tKnow

TotalNos. ofReturns

Income Support Attachments etc. 1 1 1 15 18Attachment of earnings 1 1 1 15 18Distraint with seizure of goods 1 2 15 18Distraint without seizure of goods 1 3 14 18Legal charges 17 1 18Committal 1 2 15 18Insolvency 2 15 1 18Use of debt collection agencies 2 13 3 18Attachment of Members Allowances 1 17 18

2.54 When domestic rates were being recovered under S.247 of the Local Government(Scotland) Act 1947 the case of Roberts v. Hopwood38 was invoked in support of theexistence of a fiduciary duty owed to ratepayers requiring local authorities to carry out theirfunctions in a business like manner. That fiduciary duty still applies with respect to counciltax in addition to the statutory duty to collect the tax, and should be manifest in the exerciseof unfettered recovery action by local authority officers. This means that there should be nopolitical involvement that prevents, as general policy, any recovery action being undertaken,notwithstanding a CouncilÕs right for this action to be carried out in a caring and sensitivemanner.

The legacy of community charge

Changes to the Community Charge Register and the role of the Assessor

2.55 Responsibility in Scotland for banding of dwellings for council tax rests with theAssessors. They are officers appointed by each local authority, which forms a valuation

38 Roberts v. Hopwood 1925 A.C. 578

30

area,39 but are statutorily independent of the local authority tax collection functions. AllAssessors have responsibilities40 for valuation of non-domestic property for non-domesticrating and all but one (for Dundee Council) have responsibilities for compilation, publicationand maintenance of the electoral rolls for their areas.

2.56 In England and Wales the responsibility for banding of dwellings rests with theListing Officer of the Valuation Office Agency, an Executive Agency of the Inland Revenue.This officer also has responsibility for valuation of non-domestic property for non-domesticrating purposes and other valuation responsibilities such as for compensation, sale of councilhouses, probate and estate duty etc. This officer has no responsibility for the electoralregisters of England and Wales, this duty resting with the Electoral registration officer ofeach District Council or Unitary Authority.

2.57 Under the legislation governing Community Charge in Scotland, the Assessor was theCommunity Charge Registration Officer, whilst the Regional and Islands Councils hadresponsibility for collection and recovery of Community Charge. In England, both dutieswere vested in the Chief Financial Officer of the appropriate local authority. Thus there wasa much more immediate link between the processes of identifying the person liable to paycommunity charge and the billing, collection and recovery of the sum due. Notwithstandingthe professionalism of the Assessors in conducting their duties as Community ChargeRegistration Officers, the much closer link in England between the two duties, carried out bythe same officers, gave an advantage that liability and exemption issues were considered inthe context of their collection potential and complexities. For example, some FinanceDepartments, wishing to end the issue of bills to individuals who were considered to haveÔgone awayÕ, would have notified the Registration Officer of Register entries to be deleted; itwas not uncommon however for the relevant entries to remain in the Community ChargeRegister (an entry in which indicated liability to the charge) because the Registration Officersrequired a greater degree of proof, such as written evidence that liabilities had ended beforeeffecting the Register deletions as requested by the Finance Departments. This situation mayhave continued or created, in Scotland, a number of liabilities which would not have beenmade in England, and which, whilst uncollectable, are still shown within the total arrearsfigures, and which thus impact on current council tax collection. Whilst it is no longerpossible to gather any data in support of this argument (community charge having beenabolished on 31st March 1993), a number of revenues practitioners north and south of theborder support this contention.

Community Charge Arrears

2.58 Scotland has suffered from a more marked resistance to payment of local taxes sincethe introduction of community charge than has England. A commonly held view amongScottish revenues practitioners is that the political resistance to community charge over thefour years of its existence in Scotland, expressed as actual non-payment of the tax, wasgreater than that experienced during the three years of community charge in England. Thelegacy is the much higher amounts of unpaid community charge in Scotland. It is also theview of many Scottish revenue practitioners that the community charge legacy is reflected ina continued resistance by some to pay council tax.

39 s27 of the Local Government etc (Scotland) Act 199440 s.8(7) of the Representation of the People Act 1983 as amended by Schedule 13(130) of the LocalGovernment (Scotland) Act 1994

31

2.59 As at 31 March 1998, the level of community charge outstanding in England (notincluding Wales) was estimated to be £500 millions41. The corresponding figure for Scotlandis set at £503 millions42. It is worth emphasising that Scotland carries a community chargedebt equivalent to that for England, but has a population base of approximately one tenth thatof England.

2.60 It is the contention of the research team, based on interviews with Scottish revenuesofficers, that the level of community charge arrears plays a significant part in ScottishauthoritiesÕ lack of success to date to achieve comparable in-year council tax collection rateswith England. The complex issues that are at play regarding the change in the system of localtaxation and local government reorganisation in Scotland make difficult any comparisons ofthose councils with high community charge arrears and those having low in-year council taxcollection rates.

2.61 Valuable resources are being used to administer arrears of community charge fromdebtors who are unlikely with the lapse of time ever to be able to make settlement; despite thefact that in all but one Scottish Council43 the total outstanding community charge debt has inactual practice been accounted for in authoritiesÕ bad debt provisions. This is also true insome parts of England. Since, however, the Community Charge in England only ran for threeyears compared with four years in Scotland, the Scottish community charge debt burden isworsened by at least the additional yearÕs liability. Additionally many English localauthorities learned from the early Scottish experience of community charge and initiatedrecovery and enforcement actions earlier and with more vigour in the first year. Indeed,English regulations allowed authorities to issue reminder notices for community chargepayment one month after issue of the bill, whereas Scottish legislation prescribedcommencement of recovery only after any three monthÕs instalments were unpaid.

2.62 The impact of this final point, whilst unquantifiable, has been judged by Scottishrevenues officers to have hindered Scottish collection levels in the then prevailing culture ofnon-payment, and especially impacted on efforts to collect payments from those in publicsector housing. Many tenants had under the rating system paid inclusive rent and rates on thebasis of a 48-week year. Under community charge legislation this had to be paid separatelyand those tenants saw their perceived "rent" reduced. There was a lack of legal remedy inScotland to recover arrears of community charge until 3 monthsÕ instalments were unpaid;coupled with the highly charged political environment at that time concerning the tax, thismeant that many taxpayers delayed payment. In doing so, many broke with the previouslywell-established patterns of regular payments of local taxes to the local authority. To quoteone revenues officer:

ÒBack in the days of domestic rates, all [Scottish] authorities had excellent collectionrates. [My] council, for example, had collection levels of 98% to 99%. Now it haslevels of 74% to 75%. If you ask me only one thing happened in between rates andcouncil tax to cause this Ð and that was poll tax.Ó

41 DETR Local Government Finance Statistics42 Scottish Office Finance Statistics for March 199843 Reported at the IRRV Scottish Revenues Forum Meeting in June 1999.

32

2.63 In the opinion of revenue officers, "won't pay" cases frequently progressed to "couldnot pay" cases. Debtors faced with additional on-going charges tended to ignore attempts bycreditors to recover these sums. Berthoud and Kempson44 said:

"It is in no-one's interests for arrears to be allowed to build up. Both the speed andnature of the response are critical in containing arrears".

2.64 Berthoud and Kempson went on to comment that in general they:

"found that creditors who threatened to take further action if they were not repaidwere more likely to have the debts cleared immediately than those who suggestedrepayment arrangements".

Awarding Community Charge Benefits Entitlement

2.65 A key contextual difference however in the accrual of community charge arrears liesin the way in which community charge benefit entitlement was determined and processed inScotland.

2.66 The Transitional Benefit Regulations 1989 provided that anyone in receipt of housingbenefit at 31st March 198945 was deemed to have applied for community charge benefit. Themajority of Scottish revenues interviewees were of the opinion that the non co-operation ofmany district councils who refused to make information regarding housing benefits claimantsavailable denied the regional councils from affording benefit. Thus in those areas of non-co-operation, a claimant of housing benefit through a District Council office would have not hada claim for community charge benefit automatically processed (via a transfer of informationto the Regional Council) as would have been the case for a housing benefit claimant inEngland. When cases came to light in respect of which community charge benefit shouldhave been awarded, there were no clear regulations relating to the retrospective making ofsuch awards. Thus many community charge payers on low income received no reduction intheir community charge bills. Since the creation of unitary councils in 1996, information hasbecome available to the councils regarding the cases in respect of which benefits may havebeen applicable under both the 1989 and 199346 transitional systems. Some councils areunclear as to their position in awarding benefit in respect of cases that should have hadbenefits applied. Clarification of these Regulations may fall outwith the sphere of interest ofthe Scottish Parliament. Such clarification however might help to ensure that:

• tenants are not denied their rightful benefit;• debtors are pursued for a lesser sum;• councils have their outstanding debt reduced; and• council taxpayers receive the benefit from the reduction in provisions for bad debts.

Where councils have made provision for debts that may prove to be uncollectable andsubsequently an award of benefit reduces that debt then this would reduce the need forthe provision. The extra monies that this would release could be used by a council forincreased spending on services or in the reduction of the ensuing year's council tax.

Summary of contextual differences 44 The PSI report, ÔCredit and DebtÕ, Richard Berthoud and Elaine Kempson (1992), Joseph RowntreeFoundation.45 Social Security: The Community Charge Benefits (Transitional) Order 198946 Social Security: The Council Tax Benefit (Transitional) Order 1992

33

2.67 The purpose of this chapter has been to set out the principal differences betweenScotland and England and Wales, so that subsequent chapters can be read in the context ofthese differences. Broadly therefore the principal contextual differences can be summarisedas follows:

Summary 1Showing main points raised in Chapter 2

Para. Summary Point2.1 the first instalment in Scotland cannot be payable before 1st May, whereas in

England the first instalment can be payable from 1st April;the reminder and final notice can be combined in one notice in England,whereas in Scotland authorities are required to issue a separate reminder andfinal notice.

2.3and2.4

There is a higher percentage of public housing in Scotland than in Englandand the move away from inclusive rents was more significant for Scottishlocal tax collection rates because of this.

2.6 Those receiving 100% council tax benefit in Scotland must pay water andsewerage charges to local authorities as part of the council tax bill; manycouncils will collect arrears of these amounts through attachment of IncomeSupport.

2.7 Scotland has a higher percentage of Council Tax Benefit Claimants in receiptof Income Support (claimants at 100% benefit level) as a percentage of non-exempt dwellings. It is therefore likely that Scotland will require theadministration of proportionately more Attachments of Income Support thanwould be the case in England because of the existence of Water and Seweragecharges.

2.8 to2.13

Reorganisation of local government has impacted upon local taxationcollection in Scotland and England in substantially different ways. In mostinstances in Scotland, the functions of the former Regional Councils inrespect of collection and recovery of local taxes and council tax benefits weredisaggregated to become the responsibility of the newly formed UnitaryCouncils. The former District CouncilsÕ functions in respect of housingbenefits were passed over to, or in most cases aggregated to, the new UnitaryAuthorities. No disaggregation of functions took place in Wales or England.

2.16to2.22

Particular resourcing and staff experience issues arose in Scotland due toreorganisation; support services were also affected.

2.23 Several senior Scottish revenues officers felt that in terms of staff expertise,their authorities were still trying to improve council tax collection from aposition of weakness. Staff training was perceived as very important, but anycomprehensive training programmes required financial support. The researchteam supports the view that an allocation of central funds for training ofcouncil tax staff merits consideration.

2.27to2.35

The differing legal codes and courts systems do introduce some markeddifferences in the application of enforcement powers between the twocountries

2.36 The inclusion of water sewerage charges in council tax bills in Scotlandmeans that Scottish households face a higher bottom-line bill to pay than their

34

Para. Summary PointEnglish counterparts. Higher monthly commitments can have an effect oncollection levels should the taxpayer be unable to meet the full amount of themonthly instalment.

2.28to2.42

Band D water and sewerage charges in 1997/98 equated to at least 15% of theaverage Band D council tax exclusive of this element: these charges attract nobenefit; water and sewerage charge -only debts account for a large percentageof the total number of arrears cases as do the debts of those of on partialrebate.

2.43to2.44

In many cases this means that local authorities are effectively subsidisingWater Authorities for those debtors who have no council tax (other than thewater and sewerage charges element of the bill) to pay i.e. those counciltaxpayers who are on full benefit. The limited data suggests that the removalof the water and sewerage element of the council tax bill may generate overallimprovements in collection rates.

2.45 1.5% of domestic water accounts in England receive summons notices, andcourt judgements are made against 0.94% of accounts. Households inEngland are able to ÔjuggleÕ the payment of council tax and water andsewerage charges; this is not open to Scottish households.

2.50to2.52

Political involvement in Scotland impacts on the enforcement methodsadopted by Revenues Officers. The ratio of warrant sales to poindings wassignificantly lower for council tax and community charge debt than forordinary debts.

2.540 A fiduciary duty is owed to ratepayers requiring local authorities to carry outtheir functions in a business like manner. This should manifest itself in anunfettered exercise of recovery action by local authority officers.

2.58 Scotland has suffered from a more marked resistance to payment of localtaxes since the introduction of community charge than has England.

2.61 Valuable resources are being used to administer arrears of community chargeaccounts from Scottish debtors who are unlikely with the lapse of time ever tobe able to make settlement

2.62 The lack of legal remedy to recover arrears of community charge until 3monthsÕ instalments were unpaid, coupled with the highly charged politicalenvironment at that time concerning the tax, meant that many Scottishtaxpayers delayed payment. In doing so, many broke with the previouslywell-established patterns of regular payments of local taxes to the localauthority.

2.650 A key contextual difference however in the accrual of community chargearrears lies in the way in which community charge benefit entitlement wasdetermined and processed in Scotland.

35

CHAPTERÊ3 A COMPARATIVE ANALYSIS OF THE COUNCILTAX LEGISLATION AND PROCESSES TO PRE-ENFORCEMENTSTAGE IN SCOTLAND AND ENGLAND, AND RELATED COUNCILTAX MANAGEMENT ISSUES

Introduction

3.1 This chapter identifies the principal differences in the law governing council tax inScotland and England up to the enforcement stage. It then compares the council taxmanagement practice and procedures in both countries. For the purposes of this chapter theterm "recovery" is to be taken as the legal and administrative processes of issuing firstreminders and final reminders together with the payment methods offered by councils tocouncil taxpayers. Enforcement on the other hand is the legal and administrative processesinvolved in applying to the court for the necessary power to recover outstanding arrears by anumber of statutory powers.

Calculation of the council tax base

3.2 Identical provisions exist in the 1992 Act for both England and Scotland regarding thedates for the setting of the level of council tax. The tax must be set by 11th March in thefinancial year before that for which it is set, but it is not invalid merely because it is set afterthat date.

3.3 For England the 1992 Act provides for the calculation of the amounts of a billingauthorityÕs council tax in accordance with specified formulae. These take into account

§ the authorityÕs budget requirements;§ its estimate of Revenue Support Grant and redistributed non-domestic rates;§ any additional grant;§ any appropriate income from fees, rents (non-Housing Rent Accounts referred to

as non-HRA) and charges;§ its share of any estimated collection fund surplus/deficit for the preceding year;

and§ its council tax base47.

3.4 Application of the formula gives rise to a basic amount of tax, which represents theamount of the billing authorityÕs tax for a band D dwelling anywhere in its area.

47 The council tax base is the measure in the council tax system of the relative taxable capacity of differentareas, and is calculated in accordance with Regulations. The figure represents the estimated full year equivalentnumber of chargeable dwellings in the area expressed as the equivalent number of chargeable dwellings withtwo or more liable adults taking into account the billing authorityÕs estimated collection rate equated to bandÒDÓ using the statutorily prescribed proportions.

36

3.5 In Scotland there is no such formula set out in the Act because payments into aCollection Fund48 are not required. The Secretary of State for Scotland does not have powersto make Regulations49 for the calculation of a council's council tax base. In essence, theresult from the different approaches is the same in Scotland and England although there isscope in Scotland for Scottish authorities to take different approaches to their calculations,and differences do occur. Such differences may not have any effect on the collection ofcouncil tax but could have an effect on a councilÕs headline figure for budget purposes, whichis outwith the remit of the Team's research.

Provision for bad debts

3.6 Information on bad debt provision in 1997/98 provided by those councils whoresponded to the questionnaire are set out below, together with their percentage in-yearcouncil tax collection rate. The table shows a comparison of sample councils, groupedaccording to similarities in provisions for bad debts, and their in-year collection rates. TheTable indicates that English authorities generally make lower provisions for bad debt thanScottish councils. If all other things were equal, the research team would expect authoritieswith high provisions for bad debt (as is the case in Scotland) to have lower in-year collectionrates, and vice versa; the data in the table supports this expectation. Also shown on this tableare those councils with dedicated recovery teams. Of the 30 Scottish councils shown, 50%have dedicated teams compared to 84% in the English sample. The use of such teams isexamined in Chapter 4 (para. 44).

3.7 A higher provision for bad debts means that the Band D equivalents will bedepressed, giving rise to an increased level of council tax for that band. The higher rate ofcouncil tax will cascade through to a higher total of net billed council tax with that particularcouncil not anticipating to collect the percentage provision made. In-year collection rates aremeasured against the total of net council tax billed and consequently an in-year collection ratefor a council with a relatively high provision for bad debts will be lower than councils with amuch lower provision.

48 An account established and maintained by billing authorities, into which are to be paid receipts of council taxand non-domestic rates from ratepayers. Sums to be met from the fund are the authorityÕs own demands,precepts from major precepting authorities and payments to the non-domestic rates pool.49 The Local Authorities (Calculation of Council Tax Base) Regulations 1992 as amended.

37

Table 9A comparison of sample councils, grouped to show those with similar provisions forbad debts and their in-year collection rates; and an indication of those councils with

dedicated recovery teams.Scotland England

%Bad DebtProvision

%In-year

CollectionRate

DedicatedRecovery

Team

%BadDebt

Provision

%In-year

CollectionRate

DedicatedRecovery

Team

8.0 75.0 7.5 82.0 Yes7.2 85.56.8 80.76.0 88.96.0 83.2 Yes6.0 79.8 Yes5.0 95.9 Yes 5.0 96.0 Yes5.0 92.8 5.0 90.7 Yes5.0 89.7 Yes5.0 89.35.0 87.7 Yes5.0 87.15.0 85.85.0 85.7 Yes5.0 85.4 Yes4.5 91.4 Yes4.5 88.7 Yes4.5 85.4 Yes4.0 93.3 Yes 4.0 97.24.0 90.1 3.8 93.6 Yes4.0 89.6 Yes4.0 89.34.0 83.5 Yes3.0 93.1 3.0 93.83.0 91.7 3.0 93.0 Yes3.0 90.5 Yes2.6 90.8 2.5 97.4 Yes2.0 94.5 2.5 92.4 Yes2.0 94.2 Yes 2.0 97.5 Yes

2.0 96.2 Yes2.0 96.02.0 95.7 Yes2.0 93.9 Yes2.0 89.51.5 97.8 Yes1.0 97.5 Yes

0.5 93.8 0.5 98.0 Yes

38

Administration

3.8 Administration of council tax in Scotland and England is governed by the LocalGovernment Finance Act 1992. In Scotland the principal secondary legislation is TheCouncil Tax (Administration and Enforcement) (Scotland) Regulations 1992 as amended ÐS.I.'s 1992 No. 1332 (S.129); 1992 No. 3290 (S.264) and 1996 No. 430 (S.32). In England,the relevant regulations are The Council Tax (Administration and Enforcement) Regulations1992 SI 1992/613 as amended.

3.9 So far as liability to pay council tax, entitlement to single adult residentÕs discountand eligibility for exemptions and reliefs are concerned, there are no fundamental differencesbetween the regulations applying in Scotland and England, save for the following. InScotland, in order to be exempt from council tax liability during a period of majorreconstruction, a dwelling has to meet the definition of physically undergoing works; whereasin England and Wales there is a measure of discretion as to the exact timing of the works andan allowance for a period of inactivity, provided it can be shown that there is the intention tocarry out the works as soon as possible, although this is about to change in England wherethere is a proposal to limit the exemption to one year. It is understood that a similar timelimit will apply in Scotland from 1 April 2000; the Scottish definitions however will remainthe same.

Billing for council tax

Instalment dates

3.10 In both Scotland and England, councils must fix their council taxes for the financialyear by March 11 of the preceding year. In both Scotland and England, the authority mayissue demands (or bills) at any time after the council tax has been set. The statutory scheme inEngland50 prescribes that ten instalments are payable at monthly intervals (starting 14 daysfrom the issue of the demand) if the demand is issued on or before 30th April. Where ademand is issued on or after 1st May in the financial year, the number of instalments will bethe number of complete months remaining in the relevant year after issue of the demand, lessone. English local authorities are able to require payment of the first monthly instalment atthe beginning of the financial year, that is 1st April, if they so wish. In the sample taken, 10English and Welsh local authorities had a first instalment date of 1st April, and the remaining10 had instalment commencement dates up to and including 15th April.

3.11 In Scotland similar provisions51 are made for instalment arrangements for thecollection of council tax. A significant difference between the two systems is that ScottishRegulations specifically provide that the first instalment cannot be demanded earlier than 1st

May in the year of the charge. In 1997, 14 of the Scottish local authorities had first instalmentdates of 1st May; the rest had first instalment dates up to and including 28th May. Thus thereis a difference of one month between the earliest possible instalment demand dates inScotland and England. A rather obvious effect of this difference is that billing and recoverycycles in Scotland run over a maximum of eleven months in a given financial year, asopposed to twelve months in England. This was an issue picked up by most of the Scottish

50 Part 1 Schedule 1 SI 1992/613.51 Part 1 Schedule 1 SI1992/1332

39

authority respondents, who felt very strongly that Scotland should operate a first possible dueinstalment date of 1st April. The research team support this view.

3.12 Bar Charts A1-1 and A1-2 show for the Scottish and English sample authorities, theelapsed days from the 1st of April to the due date of the first instalment of council tax,overlaid with the average stated number of elapsed days from the due date of the instalmentto the date of court action being taken. The graphs highlight the fact that Scottish authoritiesÕearliest instalment dates commence at least 30 days after those set in England. If the statutory30 days later start date for earliest instalments in Scotland is discounted, there is nosignificant difference between the range of elapsed days in the Scottish and English samples;half of the sample authorities in both Scotland and England use the earliest instalment dateavailable to them. In general, earlier first instalment dates tend to be associated with smallernumbers of elapsed days between when instalments are due and the first court action is taken.There is however a trend for Scottish authorities to take considerably longer than Englishauthorities to reach court action.

40

Note: Payment date sorted by number of days from 1st April 1997

Chart A1-1 ScotlandDue date of first instalment expressed in elapsed days from 1/4/97 and

the average number of elapsed days from the due date of an instalment to reach court action

575757575757575757575757

4436

32303030303030303030303030

103100100

111112112112118

131182

201249

133163

128717677

84101101103104

118121124

139

0 30 60 90 120 150 180 210 240 270

1

3

5

7

9

11

13

15

17

19

21

23

25

27

Num

ber

of C

ounc

ils p

rovi

ding

dat

a

Number of days

Number of days before 1st instalment due Average number of days to reach court action

41

Note: i) Payment date sorted by number of days from 1st April 1997.ii) Authorities 11 to 20 had a first due instalment date of 1 April 1997

Chart A1-2 EnglandDue date of first instalment expressed in elapsed days from 1/04/97 and

the average number of elapsed days taken from the due date of an instalment to reach court action

17

16

14

14

14

14

14

9

5

4

0

0

0

0

0

0

0

0

0

0

49

55

55

63

68

70

75

84

140

240

42

52

63

70

79

80

81

84

91

142

0 30 60 90 120 150 180 210 240 270

1

3

5

7

9

11

13

15

17

19

Num

ber

of C

ounc

ils p

rovi

ding

dat

a

Number of days

Number of Days before 1st instalment due Average number of days to reach court action

42

3.13 Table 10 provides details of the time scales for the recovery procedures that modelcouncils in both Scotland and England could adopt, compared against the background ofdifferent recovery legislation. The table shows that the requirement to issue a second reminderin Scotland generates a 28-day difference in an authority operating an optimally timed recoveryprocedure.

Table 10Administrative procedures for optimally-timed recovery in model councils in Scotland and

EnglandRecovery Cycle Scotland England

Days Days StatutoryGrace days before issue of 1st Reminder 14 14 Statutory in England only

Number of days within which wholeoutstanding balance becomes payable 14 14 Statutory in both

Grace period to clear queries andresponses to instalment Reminders 14 14

Number of days from issue of finalreminder before application can be madeto the court 14 Statutory in Scotland

only

Grace days to clear queries and responsesto final notices 14

Benchmark days total 70 42

Reminder notices

3.14 Table 11 shows the differences in average lapsed times between key council tax recoverystages in both Scotland and England. From this table, it can be seen that on average the timelapse between date of first instalment and issue of first reminder in 1997/98 is 42 days inScotland and 34 days in England. The research team is of the opinion that this eight-daydifference is not a significant one. As was shown in Table 10, it should be noted that Englishauthorities could only issue a reminder following the elapse of 14 days from the due date of thefirst instalment. Scottish authorities however are able to issue a reminder at any date followingthe instalment becoming due. In practice, as shown in Table 10, reminders in Scotland wouldnot normally be sent out in the days immediately following the due instalment date, for reasonsof allowing time for any payments through banks to be processed and wider customer careconsiderations. Analysis of the data reveals that in general, the earlier an authorityÕs due date forfirst instalment, the earlier it issues its first reminder; there is however a great deal of variation.

3.15 Table 11 also shows in columns 2 and 3 the average time lapse between the due date ofpayment of an instalment and court action. Column 2 shows the average time lapse for allresponding authorities and indicates that Scottish authorities take on average 42 days longer to

43

obtain Summary Warrant than English authorities take to obtain liability orders. A difference inprocess which is likely to contribute to this difference is the requirement of Scottish councils toissue a final notice separate to the reminder notice (this was also shown in Table 10; also seelater in this section). Column 3 shows the average time lapse for all respondents bar the threeauthorities in each country recording the greatest average time lapse. The averages are lower incolumn 3 than in column 2; however, the difference between the averages in the two columns is3 days for Scotland and 12 days for England. This would suggest that in general the Scottishauthorities tend all to have greater time lapses between due date of payment of an instalment andcourt action than do English authorities. This was not surprising to the research team given thatthe data was collected from just the second year after reorganisation; the upheavals caused bylocal government reorganisation impacted greatly on Scottish authorities' ability to initiate courtaction promptly after accounts fell into arrears. It is interesting to note that three Scottishauthorities (whose data is not included in Table 11) never reached Summary Warrant stagewithin the billing year 1997/98. This was due to a variety of problems, including those causedby a switch of computer systems, following the change from the former Regional councilplatform (in respect of two authorities) and the withdrawal of system provision by a computerSupplier (in respect of one authority).

Table 11Average time lapses between key recovery stages in Scotland and England

Col 1Average time lapsebetween due date offirst instalment andissue of reminder

notice

Col 2Average time lapsebetween due date ofinstalment and court

action

Col 3Average time lapsebetween due date ofinstalment and court

action, excludinggreatest three lapses

Scotland (n = 26) 42 121 118

England (n = 19) 34 79 67

Note: n = number of councils

44

Table 12Shortest and longest time lapses reported by Scottish and English councils between

instalment due date and the issue of reminder notices and court action.

Shortest timelapse from 1st

instalment toreminder

Days

Longest timelapse from 1st

instalment toreminder.

Days

Shortest timelapse from 1st

reminder toliability order or

SummaryWarrant.

Days

Longest timelapse from1st

reminder toliability order or

SummaryWarrant.

DaysScotland(n = 26)

19 153 71 249

England(n = 19)

15 124 42 240

Note: n = number of councils

3.16 This table indicates that the fastest Scottish council, in terms of issuing reminders, iscomparably as fast as the fastest English council in the sample. Importantly, this suggests thatthere are no insurmountable factors limiting the timing of the process in Scotland whencompared to England. It is interesting to note that the English authority reporting the longesttime between first reminder to court action had a 100 day longer lapse time than the next longestreported lapse time. The authority in question reported that it had encountered major softwaredifficulties in migration from one computer supplier to another, and would otherwise haveanticipated a figure of 90 days in place of the actual 240.

3.17 Data from the returns enabled an analysis to be made of the average elapsed time fromthe due date of an instalment to the average date of court action compared to the in-yearcollection rate achieved. Charts B1-1 and B1Ð2 show this analysis, expressing the elapsed timeas a percentage of the total days in the year. The charts indicate that there appears to be nocorrelation between the early obtaining of Summary Warrants or Liability Orders and the in-yearcollection rates achieved. However, a difficulty in trying to examine a link between goodmanagement of the processes and improved council tax collection lies in the effect of strongexternal factors, such as overall social composition of the council area.

45

Note: Days expressed as a percentage of 365 days and sorted

Chart B1-1: ScotlandDays from due date of instalment until application for Summary Warrant

compared with the in-year collection rate

90.9

77.8

85.5

93.1

88.486.0

94.7 93.789.6

82.6

87.690.5

95.3

88.3 86.6

93.2

76.3

92.9 92.287.8

91.8 92.494.1

90.6

95.8

85.9

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

100.0

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26

Number of Councils providing information

Perc

enta

ge

% Days % Collection Rate

46

Note: Days expressed as a percentage of 365 days and sorted.

Chart B2-2 EnglandDays from due date of reminder until application for liability orders

compared with the in-year collection rate

97.5

82.0

89.5

96.2 95.7 97.8 97.2 96.0 97.5 96.093.0

97.4 98.093.6 93.9 93.8 92.4 94.4

90.7

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

100.0

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19

Number of Councils supplying information

Per

cent

age

% Days % Collection Rate

47

Combining Reminders and Final Notices

3.18 In Scotland, there is a legal requirement for the local authorities to issue a final notice inaddition to the reminder notices. Although there is a legal requirement on English localauthorities to issue final notices, this is only in cases where there has been a variation from thesum due after issue of the reminder notice. Thus English local authorities are able to combinethe legal requirements for collection into the single reminder and final notice. The largemajority of Scottish practitioners in interview stated that they wanted to be able to have thismechanism for combined notices at their disposal.

3.19 Some Scottish revenues practitioners have expressed the view that the notice (reminder)issued to a council taxpayer who has failed to make payment of an instalment due could perhapsbe combined with a final reminder under current legislation, in the same manner as can beadopted in England. The research team, whilst acknowledging that legal interpretation isultimately a matter for the courts, is unable to support this view on examination of theregulations, which in their opinion quite clearly stipulate that a final notice is to be issued toeach council taxpayer. In their opinion, the reason for this difference in approach compared tothe English legislation is that the Scottish taxpayers do not have an opportunity to defendthemselves in Court before a Summary Warrant is granted. The Part IV of the Regulations,generally with regard to the issue of notices, require councils to send them out in joint nameswhere they believe that residents will be jointly and severally liable52. Because the Regulationsunder Part VII require final notices53 to be issued to each defaulter, the concept that the noticeissued requiring instalments to be brought up-to-date can be combined with a final notice doesnot lie comfortably, in the research teamÕs view, with the requirements under those differentParts of the Regulations.

3.20 The Team's view on this is supported by comments expressed by Kneen and Travers54:-

"The authorities had wanted to be able to bill jointly throughout the whole process, rightup to the pursuit and collection of arrears. However, the Scottish Office insisted thatbecause of the existence of the expedited summary warrant procedure in Scotland, whichgives powers to the authority to pursue arrears without bringing people to court, it wasnecessary that the final notice should be sent individually to all those jointly andseverally liable. The reasoning behind this is that individuals - e.g. spouses, flat sharers -may not be aware of their liability if one person has taken responsibility for billpayment."

3.21 It should be noted that the interpretation placed upon the English Regulations55 to allowthe combination of the two reminders, stems from the fact that a council applying to theMagistrates Court56 for a summons only has to state that, at any time after an amount hasbecome due, a final reminder has been issued. It does not require such notices to be issuedseparately. 52 Part IV Regulation 19(2) Billing-Notices: general of the Council Tax (Administration and Enforcement)

(Scotland) Regulations 199253 Part VII Regulation 30(1)(b) Enforcement - of the Council Tax Administration and Enforcement) (Scotland)Regulations 199254 Page 13 of Implementing the Council Tax by Pat Kneen and Tony Travers - LGC Communication 199455 Regulation 23 SI 1992 No.613 - The Council Tax (Administration and Enforcement) Regulations 1992 asamended56 Regulation 33 SI 1992 No.613 - The Council Tax (Administration and Enforcement) Regulations 1992 Liabilityorders : preliminary steps

48

3.22 Twenty-two English councils returned information regarding their reminder processes:

• 15 sent out a combined reminder and final notice, with achieved in-year collectionrates ranging from 82% to 97.8% (median value 95.5%, average 94.4%)

• 6 sent the reminder and final notice separately, with achieved in-year collection ratesranging from 93.8% to 97.3% (median value 96%; average 95.4%); and

• One council had a policy of sending 2 reminder notices then a final notice, and had acollection percentage of 98%.

3.23 The size of the sample size makes it difficult to draw conclusions. However, the spreadof values suggests that the issue of reminder notices and final notices separately in Englandachieved about the same collection rates as the issue of combined reminders and final notices.As can been seen however from table 10, the issue of a combined reminder and final noticeprovides the advantage of allowing recovery procedures to commence at an earlier stage in thefinancial year. Although a link between joint reminders and final notices and improvedcollection rates is not identified through the data, this is a mechanism that the majority ofScottish practitioners interviewed would like to be able to use.

Houses in multiple occupation

3.24 Revenues officers from a number of larger conurbations in both Scotland and Englandidentified during interview difficulties in collecting council taxes in respect of properties withhigh resident turnover e.g. houses comprising bedsits occupied by individual tenants only forshort periods. Both Scottish and English legislation57 provide for the owner of a property tobecome liable for council tax on certain classes of dwelling, including houses in multipleoccupation. A local authority could designate a property of short-term bedsits as a Ôhouse inmultiple occupationÕ, and seek council tax payments from the owner instead from the transientresidents. The legislative provisions, described in the following paragraphs, have not workedwith any great success in either Scotland or England. The English regulations relating to housesin multiple occupation underwent revision in a bid to achieve easier revenue collection. In theopinion of English respondents dealing with large numbers of such properties, the revisedregulations have not achieved the objective of easier revenue collection. Both Scottish andEnglish practitioners have identified that the legislation relating to houses in multiple occupationrequires review to make it more effective.

3.25 Regulations lay out the definition of houses in multiple occupation. In Scotland58, thisclass applies to any dwelling which was originally constructed or subsequently adapted foroccupation by persons who do not constitute a single household; and which is occupied by oneor more persons each of whom is a tenant or has a licence to occupy, part only of the dwelling;or has a licence to occupy, but is not liable to pay rent or a licence fee in respect of the dwellingas a whole.

3.26 In England, up until 1st April 1995, the corresponding regulations59 mirrored thoseapplying in Scotland. With effect from that date, the regulations were amended, so that the class 57 Section 76 Local Government Finance Act 199258 The Council Tax (Liability of Owners) (Scotland) Regulations 1992 as amended by The Council Tax (Liability ofOwners) (Scotland) Amendment Regulations 199359 The Council Tax (Liability of Owners) Regulations 1992 No. 551 as amended by SI 1993 No. 151

49

applied to any dwelling which was originally constructed or subsequently adapted foroccupation by persons who do not constitute a single household, or which is occupied by one ormore persons each of whom is a tenant or has a licence to occupy, part only of the dwelling; orhas a licence to occupy, but is not liable to pay rent or a licence fee in respect of the dwelling asa whole. The regulation in England was altered so as to make the definition less restrictive in itsapplication. English authorities had pushed for the change to make the regulation more useable.

3.27 The amendment has not worked as the English authorities had hoped. From interviews,it is apparent that authorities find it very difficult to secure payment of council tax in respect ofdwellings in which there is a rapid turnover in occupiers. It is these difficulties which theÔhouses in multiple occupationÕ regulations were meant to alleviate. One English authorityinterviewed (but which was not included in the original survey sample) reports that 10% of itsdwellings are designated as houses in multiple occupation. Collection of council tax operatedsuccessfully only in respect of one third of these properties; that councilÕs bad debt provisionrelating to houses in multiple occupation alone equated to 2%. Another English council wheninterviewed highlighted this problem and stated that the difficulties affected their council taxcollection rate by between 1% and 2%.

3.28 An important difficulty in pursuing the owner for payment of council tax for suchproperties is that they and their letting agents are finding ways of ÔconstructingÕ joint tenancies.For example, when a person moves out of a bedsit, in many instances a new occupier is simplyadded as a party to any existing joint tenancy agreement. The authority interviewed stated that itwas usual to issue upwards of ten bills a year to many of these properties, just to keep up withchanges in tenants. In many cases the authority could not keep up with changes in tenants, andthis made the problem of chasing a debtor after a period of time even more difficult. TwoScottish councils identified houses in multiple occupation as causing significant problems, butthe difficulty was not quantifiable. Observed by one English revenues officer in interview:

ÒIf central government really wants to assist local government to achieve high [counciltax] collection rates and to embrace the principles of best value, it must help themovercome the problem of the definition of owner for houses in multiple occupation, sothat payment can be effectedÓ.

3.29 The issue of providing Scottish authorities with a workable collection scheme in respectof houses that are subject to a high turnover of residents other than those in multiple occupationis an important one. This is particularly so if the proportion of arrears attributed to private sectortenants in one authority (the only one being able to supply any kind of data) may be indicative ofthe national picture. An analysis of the authorityÕs council tax file for the year 1997/98 revealedthat 15% of council tenancies had council tax arrears, accounting for 17% of the outstandingdebt, while 20% of other tenancies (including private sector, Housing Association tenants andowner-occupiers) were in council tax arrears, accounting for 83% of the total outstanding debt(see Table 13). Although the analysis does not give details of the percentages applying to owner-occupiers, the revenues manager of that council stated that, based on the experience of the caseshandled, a significant proportion of the arrears relate to houses where there have been a highturnover of residents.

Table 13Arrears accounted for by council and other tenants

50

% of TotalNumber ofHouseholds

% of TotalHouseholdsIn Arrears

%Value of

totalArrears1997/98

Council House Tenancy 33 15 17Other Tenancy 67 20 83

Total 100 35 100

3.30 One Scottish revenues practitioner has suggested that one way to overcome the problemunder current regulations of charging owners of houses in multiple occupation would be to havea permissive provision similar to the s240 of the Local Government (Scotland) Act 1947. Thismade the owner liable for the domestic rates if a property was let for less than one year, in returnfor a payment of a percentage of the rate bill. A simpler option however, as suggested by anumber of practitioners, and one that the research team supports, would be to use the provisionunder current legislation60, which provides for the Secretary of State to prescribe a class ofchargeable dwelling in respect of which the owner will become liable, provided that class isadopted by the local authority by resolution. Such a class could allow councils to make theowner the council taxpayer in situations where the turnover in residents is too high to enableefficient and effective collection of the tax.

Payment of council tax

Civic rights and responsibilities

3.31 This section focuses on the actual mechanisms for making payments of council tax.Before going into the detail of such processes however, it is useful to set payment of the tax inthe context of the civic rights and responsibilities of the council taxpayer. All aspects of thebilling and collection (and enforcement) processes should be (and are) carried out by the localauthorities with a commitment to delivering the highest standards of customer care. However,with rights come responsibilities. Council tax is a tax borne by all households, save for a smallnumber of exemptions, to pay for services enjoyed by all households, and it is a duty of eachliable citizen to pay their amount due. Local authorities can play a key part in promoting aculture of civic responsibility among its taxpayers, to increase recognition in the community as awhole that local services are provided for all and should be paid for by all liable.

The statutory council tenants scheme in England

3.32 English local authorities have a discretionary power to resolve to collect council tax fromthe tenants of their own Housing Revenue Account properties by weekly or fortnightlyinstalments. To exercise this power, the local authority must make a formal resolution to adoptthe provisions. In doing so, it must specify the basis upon which the council tax instalments willbe due and payable. The purpose of this provision is to enable local authorities to collect thesums due from their own tenants at periods that are the same as the period at which the tenantÕsrent is due and payable. The amount for council tax remains a separately billed debt and doesnot form part of an inclusive rent. The payments of council tax are recorded separately frompayments of rent and any recovery processes necessary are taken according to the law relating to

60 s76(2) Local Government Finance Act 1992

51

collection and recovery of council tax as though the payments were being made under thestatutory 10 monthly payments to the year scheme.

3.33 Under this scheme, there can be no more than 52 payments in any year. Once adoptedfor that financial year, the 10 monthly payment scheme does not apply to tenants of the councili.e. there is no choice for the tenants. This scheme only applies to tenants of the council of thebilling authority so in the event of any housing stock being outsourced, this scheme would notapply to the tenants of those homes, even though they were formerly tenants of the council.

3.34 There is no corresponding scheme under Scottish council tax law. As far as the membersof the research team have been able to ascertain, no English local authorities currently use thispower and none are known to have used it in the past. The general view of practitioners inEngland is that the scheme would create more problems than it would solve, there is no politicalpressure to use the scheme nor is there any pressure from council tenants to use the scheme.Most tenants in England are now familiar with their responsibilities as council taxpayers (asdistinct from inclusive rent payers). The research team considers that, given the additionalcomplications and slower collection and recovery rates inherent in such a scheme, there is littlemerit in adopting it in Scotland. It should be recognised however that England does not havesuch a high percentage of houses in public ownership.

Consideration of a statutory scheme for joint billing in Scotland

3.35 Until 1989, domestic rates were usually collected with rent; especially for public sectortenants through rents systems whereby rent and rates were paid as one item. The ethos ofaccountability evident in legislation for both community charge and council tax prohibited this.Scottish practitioners accept that, as under domestic rates, council tax payments should alwaysremain distinct from that for rent on the home. In the opinion of most of these practitioners andthe research team however, this does not mean that they cannot be billed for or collectedtogether using the same documentation. Any move towards joint billing of council tax with rentwould mean complex arrangements being built into computerised rent systems for both billingand separate accounting. It is recognised that separate recovery and enforcement actions inrespect of council tax and rent would still be necessary. Based on the long systems experience ofsome members of the Research Team, the view is offered that some of the complexities of jointbilling could be resolved by consideration being given to collecting rent with council tax.Instead of importing council tax into rent systems, it would be relatively more straight forwardto provide for the billing, collection and accounting of rent within computerised council taxsystems. This is because the council tax and housing benefit schemes differ only in some smallrespects in terms of systems requirements. Additional debit fields for rent etc could be added tocouncil tax systems relatively easily.

3.36 Proposals have been put forward for powers to allow joint billing and collection ofcouncil tax (see para. 4 in chapter 1). A view61 has been expressed that any permissivearrangement for collecting council tax with rent could lead to a loss of accountability, because ofthe differing accounting procedures which operate for housing revenues and council taxes. But,nevertheless, a counter view has been expressed by many interviewed Scottish revenuespractitioners that if these permissive powers were given for each Local Authority to consider,"they should be promoted by the Government as good practice and in keeping with the Best

61 It Pays to Collect: A Consultative Document by the Joint Scottish Office/COSLA Working Group on CouncilTax Collection

52

Value principles."62 The Scottish Branch of the IRRV also goes on to state in their submissionto the consultation paper 63

" Whilst the Branch would accept that there may be some loss of visibility (and thereforeaccountability) if both charges are billed together this would be outweighed by thepotential for improved collection costs, the reduction in administration costs and theconvenience and improved service levelsÓ.

3.37 Concerns have been expressed by practitioners that if such a scheme did not provide forthe manner in which council tax and rent sums collected were applied to each account, theremay be a danger of the council tenant effectively subsidising the council tax payer, or vice versa,through the incorrect attribution of sums collected to the general and housing accounts.Therefore any primary legislation that might be introduced should ensure that satisfactoryadministrative arrangements were in place for the correct allocation of the sums collectedbetween the general and housing accounts, and for the appropriate separate debt recoveryprocedures to be followed.

3.38 Any consideration of joint billing must acknowledge the impact of the current move forlocal authorities to transfer their housing stock to housing associations. In these cases theowners are no longer be the local authorities but the housing associations. One HousingAssociation in Scotland has had some experience of trying to administer community charge onbehalf of councils; it encountered considerable administrative and practical difficulties in doingso. It is extremely unlikely that new landlords would be willing to take on this burden of taxcollection for the local authority and would undoubtedly seek to levy high charges for theservice. In view of the current climate of transferring local council housing stock to housingassociations it is the view of the research team that the cost effectiveness of any proposedchanges in legislation may have to be carefully examined, due to the cost of implementation ofcomputerised solutions arising in both local councils and private software houses for a relativelysmall number of councils.

Flexibility of statutory arrangements

3.39 In Scotland and England, there are provisions which allow the local authorities to enteragreements with individual taxpayers to pay by instalments not in accordance with the statutoryscheme. This allows local authorities a measure of discretion to vary the collection periods tomeet the individual requirements of certain taxpayers. In Scotland, the provisions are lessprescriptive and the research team believes that there is no need for change. The undernotedparagraphs describe the differences.

3.40 In England and Wales when non-statutory agreements are made, the terms andconditions must be set out in writing, and the terms must include a clear statement as to theactions that will be taken if the terms of the agreement are not honoured by the tax payer. Theterms for collection and recovery in default of the terms of the agreement are usually those thatwould be taken on default under the statutory scheme. However, as entry into a non-statutoryagreement takes payment, collection and recovery outside the statutory scheme, unless the

62 Response by The Scottish Branch of the Institute of Revenues, Rating and Valuation to "It Pays To Collect"Consultative Paper63 It Pays to Collect: A Consultative Document by the Joint Scottish Office/COSLA Working Group on CouncilTax Collection

53

actions on default are included in the terms of the agreement, the local authority would beunable to take action for recovery on default by the taxpayer.

3.41 In Scotland, the regulations64 are flexible and local authorities simply arrange with aliable person to make payments as set out in an agreement.

3.42 These powers, although directed at individual agreements between both Scottish andEnglish local authorities and their taxpayers, are used by a number of local authorities on a largescale to allow tax payers to pay by 12 monthly instalments instead of the statutory 10. Such anagreement is outside the statutory scheme and so must be subject to a full and separateagreement with each taxpayer taking advantage of the scheme. Any agreement reached with anytaxpayer under these provisions in either Scotland or England must be no less favourable to thetaxpayer than the statutory scheme; therefore, any agreement must provide for at least 10monthly instalments in the year. A scheme such as this is usually linked to a requirement thatthe instalments be paid by direct debit. An example of this use is the direct debit discountscheme offered over 12 instalments by one Scottish authority offering discount for taking updirect debit: see para 49 of this chapter.

64 Regulation 21(4), (5), and Reg. 22 (1) (c) of the Council Tax (Administration and Enforcement) (Scotland)Regulations as amended.

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Payment methods

Direct debit

3.43 The results of the questionnaire analysis indicated that the percentages of counciltaxpayers paying by the direct debit method for 1997/98 were 34.3% for England, and 30.8% forScotland. However, these figures need to be treated with some caution, as the sample size forEngland was very small, and some Scottish authorities could only provide estimates of directdebit take up in 1997/98, due to information retrieval problems. It is helpful to refer to figureson council tax payment methods as supplied by BACS Ltd, as these are viewed by the researchteam to be more robust than the sample information, covering as they do all authorities inScotland and England and not relying on local authority information retrieval. Table 14 belowreveals that the percentages of council taxpayers paying by direct debit in Scotland and Englandare 36% and 48% respectively. It should be noted that these figures relate to the calendar year1998. Households in receipt of 100% council tax benefit do not fall within the payment profiledata.

Table 14Payment profile for council tax for year 1998

Council TaxAccounts

Total UK(000's)

%UK

TotalWales(000's)

%Wales

TotalScotland(000's)

%Scotland

TotalEngland(000's)

%England

Total number 19,500 100 845 100 1,800 100 16,855 100

paid by cash 5,200 27 300 36 825 46 4,075 24

paid by cheque 3,600 18 159 19 229 13 3,212 19

paid by directdebit

9,000 46 307 36 640 36 8,053 48

paid by standingorder

500 3 17 2 23 1 460 3

paid by othermeans

1,200 6 62 7 83 5 1,055 6

*Figures supplied from BACS Ltd, and are based on household weightings of all direct debit payersat commitment level

3.44 Analysis of the sample data relating to Scotland and England shown in Tables 15 and 16suggests that in 1997/98, a low take-up of direct debit reflected in low in-year collection rates.Of the sample authorities in Scotland with direct debit take-up levels of 30% or more, all 15 hadcouncil tax collection rates higher than the national average (87.3%); of the remaining 13authorities with lower direct debit take-up levels, only three had collection rates above thenational average. Of the eight sample authorities in England with direct debit take-up levelshigher than 30%, all but two had council tax collection levels higher than the national average(95.5%); of the remaining eight authorities with lower direct debit take-up levels, all had counciltax collection rates below the national average.

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3.45 A high percentage take-up of the direct debit payment method is a worthwhile objectivefor local authorities, according to respondents, as it takes the uncertainty out of regularinstalment payments and reduces costs incurred in chasing late cash payments. Direct debitmay, though, only prove attractive to single person households or couples or others livingtogether where income is shared. In the case of dwellings with multiple occupants who arejointly and severally liable, direct debit is not likely to be a preferred option. There is a limit tothe percentage of taxpayers who will opt for this method however, and this will vary betweeneach authority, and depend on factors such as the percentage of taxpayers having currentaccounts, taxpayer income levels, ease of use of other payment methods etc. BACS Ltd.research indicates that in Scotland, England and Wales as a whole, 94% of the over 16 years agegroup have a bank/building society account of some type, and that 83% have a current account.For Scotland alone those figures are 93% and 76% respectively. This would suggest that in bothScotland and England there is more scope for direct debit take-up, at least in some authorityareas. The research team recognises that the main external influence on relative collection levelsby council is relative poverty; that low take-up of direct debit in some areas is likely to be linkedto low prosperity, and low collection rates are likely to be a result of that low prosperity. Mostauthorities do make regular efforts to convert council tax accounts to direct debit payments. It isthe view of the research team that direct debit should continue to be encouraged by authorities,and that it should be for each authority to determine the appropriate manner for such promotion.

3.46 Tables 15 and 16 also detail other methods of payment used by council taxpayers inScotland and England. Also shown in the tables are the numbers of offices where payment canbe made. Some of the data has been provided on an estimate basis and therefore care should beexercised in drawing firm conclusions.

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Table 15 - Scotland - Methods of payment used by councils to collect council tax in year 1997/98In- year Collection

Rate

Direct Debit Standing

Orders

Credit/ Debit

Cards

Central Cash

Office

Area/ District

Offices

Agency Cash

Facilities

Deduction

from Payroll

Via Payment

Books

Unspecified Total No. of Collection

Offices

% % % % % % % % % % %

94.2 53.0 2.5 33.0 10.0 0.5 1.0 100.0 16

88.9 45.6 8.5 16.2 6.2 23.5 100.0 16

89.7 41.0 2.0 30.0 27.0 100.0 7

92.8 40.0 1.5 10.0 40.0 1.5 7.0 100.0 13

93.1 39.5 8.3 8.5 21.3 22.4 100.0 2

95.9 38.0 28.0 2.0 7.0 25.0 100.0 2

91.7 38.0 12.0 14.0 36.0 100.0 6

94.5 37.0 18.0 22.0 15.0 3.0 5.0 100.0 11

93.3 35.5 1.9 6.1 42.0 5.1 9.4 100.0 8

89.3 35.0 5.0 51.0 9.0 100.0 26

90.8 32.0 17.0 26.0 18.0 2.0 5.0 100.0 16

89.6 32.0 1.0 35.0 4.0 23.0 5.0 100.0 4

93.8 30.6 8.6 60.8 100.0 1

87.7 30.4 3.9 10.0 0.5 36.5 5.9 12.8 100.0 2

89.3 30.0 7.0 23.0 40.0 100.0 7

90.5 29.0 4.5 12.0 15.0 32.0 5.0 2.5 100.0 11

88.7 29.0 7.0 2.0 10.5 4.0 45.0 0.5 2.0 100.0 17

87.1 29.0 4.0 17.0 25.0 25.0 100.0 7

85.8 29.0 3.0 9.0 39.0 17.0 3.0 100.0 5

91.4 28.0 5.0 61.0 3.0 3.0 100.0 51

85.4 28.0 5.0 7.0 15.0 15.0 1.0 4.0 25.0 100.0 18

85.4 22.0 2.0 76.0 100.0 7

83.5 22.0 5.0 68.0 5.0 100.0 9

83.2 20.0 4.0 10.0 10.0 55.0 1.0 100.0 15

79.8 19.3 5.8 11.6 1.6 61.6 0.1 100.0 4

85.7 18.0 4.0 27.0 27.0 24.0 100.0 12

80.7 17.6 4.2 27.8 49.4 1.0 100.0 6

75.0 13.0 4.0 9.5 15.0 48.0 0.5 10.0 100.0 21

Averages 30.8 4.0 0.1 12.7 16.4 21.8 1.5 6.3 6.4 7

Notes - 1. 28 Scottish Councils provided full or partial data;2. Where a council was unable to provide full analysis of their collections percentages are shown in columns "Other" / "UnspecifiedÓ;3. Table sorted by percentage using Direct Debits and then by % collection rate.

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Table 16 Ð England - Methods of payment used by councils to collect council tax in year 1997/98In-year

CollectionRate Direct Debit Standing Order Debit/Credit

Cards

Central CashOffice Area/District

Offices

Agency CashFacilities

Deductionfrom Payroll

etc.Other Unspecified Total

No. ofCollection

Offices% % % % % % % % % % %

95.7 55.0 4.0 23.0 17.0 1.0 100.0 697.8 50.0 1.5 48.0 0.5 100.0 197.4 48.1 4.9 46.3 0.4 0.3 100.0 397.5 42.0 2.0 55.8 0.2 100.0 3497.5 41.0 40.0 12.0 0.3 6.7 100.0 396.0 40.0 2.0 33.0 19.7 5.0 0.3 100.0 497.2 36.5 34.3 29.1 0.1 100.0 198.0 34.2 0.4 65.4 100.0 694.4 33.0 2.0 49.0 1.0 15.0 100.0 593.9 30.0 21.5 20.0 28.0 0.5 100.0 1282.0 27.0 3.0 1.0 66.0 3.0 100.0 1592.4 26.0 48.0 25.0 1.0 100.0 1093.0 24.0 4.5 69.0 2.5 100.0 1693.8 23.8 0.6 75.6 100.0 193.6 23.5 0.5 75.5 0.5 100.0 3289.5 14.5 20.6 64.9 100.0

Averages 34.3 3.9 0.1 27.8 17.5 5.5 0.7 0.9 9.3 9.3Notes - 1. 10 English and Welsh Councils provided full or partial data.

2. Where a council was unable to provide full analysis of their collections percentages are shown in columns "Other" / "Unspecified";3. Table sorted by percentage using Direct Debits and then by % collection rate.

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3.47 The tables for Scotland and England show the percentage amounts collected throughcentral cash collection offices and area/district offices. Some councils expressed difficulty inproviding the split for these figures and accordingly for the purposes of comparison these twopercentages are combined. For England the percentages collected through their combinedoffices is 45.3% while in Scotland this is 39.1%. The lower figure in Scotland may arisepartly from the number of payments offices operated by the former regional councils, whichwere not great in number. This view may be supported by the percentage amount, 21.8%,collected through agency facilities i.e. the Post Offices mainly in rural areas compared to5.5% in England. There is no strong correlation between the number of cash offices at whichpayment can be made, per thousand council taxpayers, and the in-year collection rate. InEngland there has been a movement towards closing down local cash office facilities and it isinteresting that in the areas where Local Service Centres (or local One-Stop Shops) are beingestablished, only a few have included cash payment facilities. In the London Borough ofNewham for instance, it has not been considered necessary to include cash payment facilitiesin the network of Local Service Centres currently being established in that Borough.

3.48 From the information provided, Scotland collects twice the percentage amountthrough payroll deduction than England. Notwithstanding this already greater proportion inScotland, the research team believes that councils could work to increase take up of thispayment method. Such a campaign could be a part of a wider aim to promote a generalculture of civic responsibility within the community (see para. 31 of this chapter). Councilsmight like to consider making payments through payroll deductions a part of the conditionsof service for their workforce.

Discounts for payments

3.49 Regulations in both Scotland and England allow for the provision of discounts forcouncil tax payments, the cost of which must be borne by the total taxpaying base. Only oneof the English authorities sampled indicated that they offered a discount scheme for paymentsin 1997/98, and this was in relation to lump-sum payments made at the beginning of thefinancial year. The authority offered a 5% discount on the bill, and this generated a 20%take-up of this method. In this authorityÕs view the 5% loss in council tax was adequatelyoffset by the improved cashflow and the reduction in costs of reminders and summons issues;though no evidence was available as to whether the discount had had a direct impact oncollection levels. Two Scottish authorities offered discounts. One (ÔAuthority AÕ) offered a3.5% discount on lump-sum payments, generating a 15% take-up. The other (ÔAuthority BÕ)also offered a 3.5% discount on the same payment method, generating a 12% take-up, and for1998/99 offered a £25 refund on the next yearÕs bill for those opting to pay by direct debit forwhich there has been a 51% take-up overall. ÔAuthority AÕ, when questioned about their3.5% Ôprompt paymentÕ, answered that they were satisfied that the scheme was cost effective.Although they could not say how many of the taxpayers would have made payment in a lumpsum without the incentive of the discount, they felt that the savings regarding their cashflowposition and administrative processes balanced the amount of discount. The amount ofdiscount offered was examined annually in the light of changes in bank interest rates. Thenumber of people paying by lump sum had remained static over the last couple of years, andthe respondent suggested that there would be a limit to the percentage of taxpayers takingadvantage of this discount, though the Authority did not have a target figure for take up.

3.50 ÔAuthority BÕ was satisfied Ôbeyond a shadow of a doubtÕ that its direct debit discountwas cost effective. The respondent had been ÔstaggeredÕ by the success of the direct debit

59

promotional campaign, which had required Ôquite a bit of leg work over a number of monthsÕto promote. However, its success was not wholly due to the £25 discount. The high take-uprate was also linked to the flexibility of the scheme which offered ten or twelve paymentinstalments, with payment dates on the 1st, 15th or 21st of the month (nearly 85% of thosetaxpayers pay at present by twelve instalments on the 1st or 15th of the month; just under 10%pay by ten instalments). The Authority understands that some English authorities achieve75% direct debit take-up, and feels that their own levels can go Ôquite a lot higherÕ.ÔAuthority BÕ respondents stated that its prompt payment discount was not presently self-financing in strict cashflow terms; to have been so in the financial year 1999/2000, givencurrent bank interest rates, the amount of discount on offer would have been Ònot particularlyattractiveÓ. Thus the current budget was examined, and monies secured in order to offer adiscount of 3.5%. However, as with ÔAuthority AÕ, this discount rate was viewed as costeffective when savings in administrative processes were taken in account.

3.51 ÔAuthority BÕ stressed that both schemes should be viewed as part of an overallstrategy to improve in-year council tax collection rates. Having a large proportion of payerssigned up to direct debit and paying in a lump sum means that the authority can freeresources to concentrate on those that do not pay. This freeing up of resources has alsocontributed towards the Authority being able to bring forward the recovery cycle within thiscurrent financial year to June, compared with September in previous years.

3.52 A large minority of the Scottish and English authorities interviewed were not infavour of operating discount schemes. The reason given against lump-sum discounts was thatit only benefited those who already have sufficient income to pay in a lump sum, and thatthere would be connected costs which would ultimately have to be borne by others includingthose less able financially than the discount recipients to bear it. All respondents voicingconcerns regarding discounts referred to the operation of lump sum discounts; intervieweesmade no reference to discounts for direct debit payments

Allocating the payments between current and former yearsÕ debts

3.53 When receiving payments from council taxpayers owing more than just the currentyearÕs liability, a decision needs to be made regarding the allocation of those payments.Sixty per cent (18) of responding Scottish local authorities allocate all payments to the oldarrears first and then allocate any surplus towards reduction of the current yearÕs debt. Thiscompares with only 12.5% (2) of English responding authorities who used this method ofallocation.

3.54 The practice of allocation of payments to previous years means that people withsubstantial former yearÕs debts (including in many cases debts in relation to communitycharge) may never Ôcatch upÕ on their position and will be continuously in arrears. If,however, this practice were to be reversed, and all payments allocated first to the currentyearÕs debt, then the situation regarding the current year debt could be stabilised if sufficientfunds were offered by the debtor. This stabilised situation could then provide a platformfrom which debt from earlier years could be slowly reduced.

3.55 Payments in all local authority revenues systems are credited to accounts usingaccount references. In computer systems where the account reference changes each year, ataxpayer offering payment with documentation showing a previous yearÕs account reference

60

would normally have that payment allocated to the year relating to the reference contained onthe payment documentation. Where several accounts are payable to the local authority byone debtor, the debtor may, when making a payment which is insufficient to discharge all thedebts, appropriate the money paid to a particular debt or debts and if the payment is acceptedas so appropriated it must be applied in the manner directed by the debtor. Some Scottishauthorities, as part of a debt management strategy, are now asking multi-year debtors if theywould like to have payments made to the current yearÕs debt. In doing this, the advantagesthat can be highlighted to the debtor are that:

§ the debtor will therefore find financial incentive to begin and/ or continuepayments on a regular basis; and

§ through establishing dialogue with the authority, the debtor may have previousyears' arrears looked upon as a separate debt management issue, whereby anyadditional payments made in the current year can be put towards those previousyearsÕ arrears.

3.56 An important benefit for the authority in following this strategy is that the debtor willbe contributing to the current year's liability, thereby increasing in-year collection rates. Theresearch team recognises that the allocation of payments to the current yearÕs liability maycause payment of arrears to be slowed down. However the overall effect may well be toincrease payments toward the authorityÕs total net council tax debit, because the debtor wouldincur fewer future enforcement costs, the saving of which could be put towards the amount ofcouncil tax outstanding. In any event, it is unlikely that the debtors, particularly those on lowincomes, would be able to pay appreciably higher payments over and above any currentyearÕs demand; so allocating payments to the current year may at least introduce consistencyof payments for future years.

3.57 Unless the debtor specifically requests payments to be credited to a particular year'sdebt, there appears to be no bar in Scotland (apart from computer software considerations Ðsee para. 58 below) on the council allocating payments to the current year's debt65. This isalso the situation in England66. In practice it is unlikely that a debtor would object toallocation of arrears payments to a current year, since this would ensure that the debtor didnot incur additional recovery costs through a further application for Summary Warrant.

3.58 A few of the Scottish revenues officers interviewed expressed interest in encouragingtaxpayers to make payment firstly to the current yearÕs account, and then to make payment ofany extra money towards previous yearsÕ arrears. In some authorities however, the design ofthe computer software will not allow the necessary flexibility in allocating payments in sucha way Ð payments must be allocated to the earliest yearÕs debt first. To get round thisproblem, and subject to the taxpayers agreement to such allocation change, it would be opento revenues practitioners to authorise the running of a computer programme to change theyear allocation data before presenting payments on update to the debtorsÕ accounts.

65 Page 56 - The Commercial Law in Scotland -W.D.Esslemont -William Hodge & Co. Ltd; ClaytonÕs Case:Devaynes v Noble 181666 Peter v Anderson (1814); (Stepney Corporation v Osofsky (1937); (R v Miskin Lower Justices (1953);Albemarle Supply Co Ltd v Hind and Co. (1928);

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Pursuing payments at pre-enforcement stage

3.59 The demands upon the limited resources of people in debt are heavy and it isproblematic for them to decide upon the order of priority for payment of debts. Somecreditors press harder for payment than others. Berthoud and Kempson67 comment that, ingeneral:

" creditors who threatened to take further action if they were not repaid were morelikely to have the debts cleared immediately than those who suggested repaymentarrangements".

3.60 A recent report which evaluates the Debtors (Scotland) Act 1987 states68:

Ò The majority of those interviewed described the relationship between themselvesand the creditor, even when relatively small sums of money were involved, asconfrontational: one side struggling to force its will upon the other:

The first person I dealt with, he wasnÕt a pleasant man at all. In fact, hethreatened me on the phone saying Ôyou pay this, or IÕll be up on SaturdayÕ

Banks, finance houses, charge card companies and mail order catalogues were thosewho were reported to be the most uncompromising in the pursuit of debtsÓ.

3.61 The same research reported that local authorities were regarded as moreaccommodating in their treatment of debtors69:

ÒIt was reported that there were some organisations who would go out of their way toassist people in managing their debts and respond to a change in the debtorÕscircumstances. These organisations tended to be in the public sector, such as localauthority housing departments.Ó

3.62 It is the view of the research team that it is not easy for the local authority to competewith these forceful creditors on equal terms without making additional effort to collect themoney from the debtor when it is available. Given these contrasts in approach, debtors maynot prioritise local authority debts.

Use of Visiting Teams

3.63 At least one local authority in England is currently employing a small team ofcollectors who visit the homes of debtors against whom the Magistrates have issued aLiability Order. They advise the debtor that the local authority is considering instructing thebailiff to levy distress on their goods and advise on ways to manage arrears payments.Although it is in its early days (within one year of inception), this experiment has showngood signs of success with an initial reduction of up to 70% in the number of instructions to

67 Page 300 - THE PSI Report "Credit and Debt" -Richard Berthoud and Elaine Kempson -- Joseph RowntreeFoundation 199268 Chapter 2, paras. 8 and 9 of Whyte, D (1999), Evaluation of the Debtors (Scotland) Act 1987: Study ofDebtors, Scottish Office Central Research Unit.69 Chapter 2, para. 55 of Whyte, D (1999), Evaluation of the Debtors (Scotland) Act 1987: Study of Debtors,Scottish Office Central Research Unit.

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the bailiffs. Staff security is of paramount consideration and such a visiting system may notbe appropriate in certain areas within authorities if risk assessments indicate a probability ofintimidation or threatened or actual aggression against visiting staff. A recent report70

identified that this strategy of visiting debtors is also adopted by a small number of othercreditors. It also stated that:

Òthose [creditors] who stressed the importance of making personal contact with thedebtor and finding out the reasons for default tended to incorporate visits andtelephone calls into their procedures. This tied in with the views expressed by somethat letters were ignored and that personal contact was more likely to generate goodinformationÓ.

3.64 In interview, Sheriff Officers stated that in a few instances they had acquired a role ofpseudo visiting officers, in that they were assisting people to complete claims for council taxbenefit. This applied in a minority of cases in their workload, and related mainly to peoplewho had only recently become eligible to claim benefit. These experiences by SheriffOfficers suggest that at least a section of the Scottish tax payer base would benefit fromvisiting teams making house calls, so that benefit entitlements and payment methods andarrangements could be fully explained. The research team believes that the use of suchvisiting teams in Scottish authorities should be given further consideration.

3.65 Two Scottish Councils have adopted an innovative approach to recovery. A letter issent out requesting the debtor to appear at the council's office at a specific time to discussproposals for the payment of arrears. If the debtor fails to keep the appointment, speciallytrained staff visit the debtor at home, parking the council van outside the debtors house. Thevan bears the council's name and address together with "Debt Recovery Section". The resultsof this initiative have been very positive in securing either full payment or arrangements topay over a restricted period.

Management structures of revenues and benefits functions

Staffing Resources

3.66 From the information gathered from the survey and gained from other sources71 thefollowing Table has been constructed to give some indication of the relative number of staffresources used to administer council tax (but excluding the administration of council taxbenefit) in Scotland and England. The Table shows staff numbers expressed as the averagenumber of dwellings administered per head of staff. The percentage relating to in-yearcouncil tax collection has also been shown. Those percentages that are highlighted showwhere the council has indicated that it has a dedicated recovery team. The data suggests thatthere is no correlation between council tax collection rates and ratio of dwellingsadministered per head of revenues staff.

70 Chapter 4, paras. 15 and 19 of Platts, A (1999) Evaluation of Debtors (Scotland) Act 1987: Study ofCommercial Creditors, Scottish Office Central Research Unit.71 Scotland -Number of dwellings on the Valuation List (excluding Lock-up garages etc): Scottish Office GrantAided Expenditure Report 1999/2000 - CIPFA Statistical Return for 1998

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3.67 The research team recognises that any comparisons made or conclusions drawn willbe crude and may not reflect the:-

• topography and population density of the area;• experience of staff and turnover;• computer systems inherited, being implemented or under migration;• level of deprivation, numbers on Income Support; or benefit;• level of decentralisation;• the type of tenure;• impact of water and sewerage charges on Scottish bills;• number and level of arrears being administered; and• accurate apportionment of staff time in generic workplaces in assessing

full time staff equivalents

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Table 17Comparative number of dwellings administered per head of staff in Scotland and

England and the relevant in-year council tax collection rate (1997/98)Scotland England

% In yearCollection

Number ofDwellings

Number ofDwellings

administered perhead of staff

% In yearCollection

Number ofDwellings

Number ofDwellings

administered perhead of staff

95.9 9,462 2,366

93.8 9,833 2,458

89.6 13,319 1,432

83.5 20,793 2,310 97.2 20,849 2,317

87.7 32,428 853

93.1 34,948 1,792 98.0 34,053 1,703

90.5 35,357 1,964 97.8 35,243 5,874

85.8 38,526 2,408 96.0 38,798 3,527

80.7 38,964 4,101 94.4 38,801 5,173

97.5 39,970 2,665

91.7 42,485 3,694

88.7 43,021 755 97.3 43,558 2,562

88.9 43,856 2,924 96.0 44,121 1,918

93.3 49,108 1,228

89.3 49,475 2,474

94.5 49,876 3,325

83.2 51,862 3,842 96.2 56,450 2,823

92.8 60,533 3,027

85.4 61,244 2,187

90.1 62,735 3,690

90.8 66,327 2,211

85.4 71,220 1,826

85.5 78,748 3,500 97.4 76,839 3,842

94.2 93,740 5,208 82.0 90,795 1,651

89.3 96,933 3,127

89.7 102,555 1,799 89.5 101,016 1,684

92.4 101,068 2,527

93.9 101,356 2,180

93.6 105,506 3,246

79.8 125,983 7,199 97.5 127,589 2,552

85.7 133,209 2,960 90.7 129,289 2,439

91.4 154,248 3,085

87.1 209,939 2,657

75.0 287,904 3,469 93.0 226,694 2,667

93.8 404,421 2,331

Note : Emboldened in-year collection rates indicate - council had a dedicated recovery team.

65

Staffing Structures

3.68 Generally, administration of revenues and benefits is managed either by a genericteam organisation or by use of specialist or dedicated teams.

3.69 The term Ôgeneric teamsÕ is generally recognised as meaning teams organised andtrained to deal with all matters relating to revenues collection and recovery and sometimesalso all housing and council tax benefits matters.

3.70 The term Ôspecialist teamsÕ is generally recognised as meaning teams of peopleorganised and trained to deal with specific functions. For example a team to deal with billingand collection of council tax, a second team to deal with recovery of council tax, another todeal with housing benefit for council tenants and so on.

3.71 There is no discernible pattern in the relative merits of either style of management inso far as success rates for collection of council tax are concerned. General debate amongstEnglish revenues practitioners suggesting that the full use of generic teams in England hasnot brought about any greater administrative benefits than the use of specialist teams, wouldseem to support this view. The in-depth knowledge gained by the members of specialistteams in their areas of work is unlikely to be fully assimilated by the members of genericteams working with large volumes of complex issues.

3.72 There are variations in how the housing and council tax benefits functions areadministered in local authorities. The following bullet points detail these variations and Table18 shows the approaches taken in the administration of these and other functions in theScottish and English sample authorities.

• the functions are administered in Finance by the Revenues and Benefits Manager;• the functions are administered in Finance, but are run separately by a Revenues

Manager and a Benefits Manager.• Revenues is managed within the finance function and the Housing and Council Tax

function is managed within the housing department.• the functions are managed together in the housing department.• the functions are managed in other departments such as Corporate or Community

Services departments.

66

Table 18Approaches taken in the administration of various functions in Scotland and England

from survey data.

Scotland:% of 30councilsresponding

England:% o f 2 0councilsresponding

In the administration of BenefitsCouncils where housing and council tax benefit administrationis not combined

40 15

Councils where another Service administers benefit 40 30Decentralisation of administrationCouncils where no administration has been decentralised 50 60Councils where council tax has been decentralised 23 5Councils where benefits has been decentralised 33 25Councils where other administration has been decentralised 30 15Inspection StaffCouncils having dedicated visiting teams 37 AllCouncils having only multi-disciplinary teams 17 15RecoveryCouncils having dedicated recovery teams 50 70

3.73 Analysis of the data indicates that there is no correlation between the use of dedicatedvisiting teams for council tax purposes, and the collection rate (meaning in this instanceteams that would check whether properties were actually empty when reported to be so, orwhether newly built properties had been completed, rather than teams offering help oncompletion of benefits forms, as discussed under para. 63). Such visiting teams as were inuse allocated such a small percentage of their time to council tax matters (havingresponsibilities for non-domestic rating visits as well) that no substantive conclusions couldbe reached as to their effectiveness.

Summary

3.74 The purpose of this chapter has been to examine the principal legislative differencesin the law governing council tax in Scotland and England up to the enforcement stage; and tocompare the council tax management practice and procedures in both countries. The mainfindings of the chapter are summarised as follows:

Summary 2Showing main points in chapter 3

Para. Summary Point3.2 to3.5

There are differences in approach to the calculation of Band D equivalents;these may not have an impact on council tax collection, but there may bemerit in reviewing the calculation process in a bid to establishingconsistencies.

3.5 &3.7

English authorities generally make lower provisions for bad debt thanScottish councils. If all other things were equal, the research team wouldexpect authorities with high provisions for bad debt to have lower in-yearcollection rates, and vice versa.

3.8 & There are no fundamental differences in the administration regulations

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Para. Summary Point3.9 applying in England and Wales.3.10 &3.11

There is a difference of one month between the earliest possible instalmentdemand dates in Scotland and England. A rather obvious effect of thisdifference is that billing and recovery cycles in Scotland run over amaximum of eleven months in a given financial year, as opposed to twelvemonths in England. The research team support the view that Scotlandshould be allowed to operate an earlier instalment demand date.

Table10

The number of days taken from due date for payment of an instalment tocourt action in authorities with optimally timed recovery processes inScotland and England are 70 days and 42 days respectively.

3.14 On average the time lapse between date of first instalment and issue of firstreminder in 1997/98 is 42 days in Scotland and 34 days in England. Theresearch team is of the opinion that this eight-day difference is not asignificant one.

3.15 Scottish authorities take on average 42 days longer to obtain SummaryWarrant than English authorities take to obtain liability orders. A differencein process, which is likely to contribute to this difference, is the requirementof Scottish councils to issue a final notice separate to the reminder notice. Ingeneral the Scottish authorities tend all to have greater time lapses betweendue date of payment of an instalment and court action than do Englishauthorities.

3.16 The fastest Scottish council, in terms of issuing reminders, is comparably asfast as the fastest English council in the sample. Importantly, this suggeststhat there are no insurmountable factors limiting the timing of the process inScotland when compared to England.

3.23 The research suggests that the issue of reminder notices and final noticesseparately in England achieved no significantly higher collection rates thanthe issue of combined reminders and final notices. Nevertheless, theresearch team would support the view of many Scottish practitioners thatthe use of such combined documents may help recovery to commenceearlier in the year.

3.24 to3.30

The legislation relating to Houses in Multiple occupation does not providefor efficient and effective recovery of council tax from these property types.Prescription of a class of dwelling under current legislative provisions mayassist in the collection of council tax in respect of these properties.

3.31 Local authorities can play a key part in promoting a culture of civicresponsibility among its taxpayers. They can help to increase recognition inthe community as a whole that local services are provided for all and shouldbe paid for by all liable taxpayers.

3.34 The research team considers that there is no merit in introducing in Scotlanda weekly or fortnightly statutory billing scheme as is available in England.

3.35 to3.38

There may be merit in considering joint billing of council tax with rent, ifthe rent is collected as part of the council tax system, as long as systemsafeguards were in place to prevent cross subsidisation. Joint billingprobably would not be feasible upon the transfer of housing stock tohousing associations, and the cost effectiveness of such a scheme wouldhave to be examined carefully.

3.39 to3.42

The use of provisions to allow instalment payments not in accordance withthe statutory scheme has greatest merit if linked with the direct debit

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Para. Summary Pointpayment method.

3.43 to3.45

The percentages of council taxpayers paying by direct debit in Scotland andEngland in 1998 are 36% and 48% respectively. Analysis suggests that lowtake-up in direct debit reflects in low in-year collection rates, though thelow take-up in some areas is likely to be linked to low prosperity; a highpercentage take-up of payment by direct debit is a worthwhile objective.

3.47 There is no strong correlation between the number of cash offices at whichpayment can be made, per thousand council taxpayers, and the in-yearcollection rate.

3.48 There may be merit in considering payroll deduction of council tax withrespect to council staff as a condition of service, as part of a culture ofpromoting civic responsibility.

3.49 to3.52

Very few authorities in either Scotland or England offer discount schemesfor lump sum or direct debit payment. Those authorities that do believe thatthe schemes are cost effective. Such schemes can play a part in overallstrategies to improve in-year collection rates. There is resistance to suchschemes in many authorities.

3.53 to3.58

In the year examined, the majority of Scottish authorities allocated arrearspayment to previous years. Interviews revealed that some Scottishauthorities, as part of a debt management strategy, are now asking multi-year debtors if they would like to have arrears payments allocated to currentyear debt. The design of some Scottish councilsÕ computer software did notallow for this allocation; although the research team believe this could beaddressed through computer programmes, and that there is merit inconsidering the allocation of debts to current yearÕs debt, as long as thedebtor was in agreement.

3.59 to3.62

It is the view of the research team that local authorities do not press as hardfor arrears payments as some other categories of creditors; thus debtors maynot prioritise local authority debt.

3.63 to3.65

Interview evidence given by one English authority suggests that the use ofvisiting teams to advise on making arrears payments can significantlyreduce the number of cases going forward for distraint. The survey did notreveal any additional information about the use of such teams, over andabove the finding that sheriff officers had reported instances of acting in thecapacity of pseudo-visiting officers when visiting some debtors. This fact inthe view of the research indicates that at least certain sections of the tax-paying base may benefit from such personal assistance. The research teambelieves that the use of visiting teams should be given consideration. TwoScottish authorities have recently used high profile visits to debtors todiscuss their arrears, with a good measure of success.

3.66 The survey findings suggest that there is no correlation between council taxcollection rates and the ratio of dwellings administered per head of revenuesstaff.

3.71 There is no discernible pattern in the relative merits of either generic orspecialist based work management in so far as success rates for collectionof council tax are concerned.

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CHAPTERÊ4 A COMPARATIVE ANALYSIS OF THE COUNCILTAX LEGISLATION AND PROCESSES FROM ENFORCEMENTSTAGE

Introduction

4.1 This chapter identifies the principal legislative differences in the law governingcouncil tax in Scotland and England from the enforcement stage onwards.

The enforcement process

Liability Orders and Summary Warrants

4.2 In England, the local authority applies to the MagistratesÕ Courts for a summonsrequiring the debtor to appear before the magistrates to show cause as to why the debt has notbeen paid. Upon satisfaction to the Court that the debt is due and payable, the Magistratesissue a Liability Order. If the debtor fails to appear in answer to the summons, theMagistrates can proceed as if the debtor had appeared. Thus, there is no hindrance to theprocess of recovery merely by the debtor failing to appear before the Court. It is the view ofa few English authority respondents that the issue of the summons and the public nature ofthe hearing has a deterrent effect on the debtor.

4.3 In Scotland once a 14 day notice (a final notice) is issued, and following the expiry ofthat number of days without payment by the debtor, the local authority may apply to theSheriff for a Summary Warrant. It should be noted that Scottish authorities have the optionto raise a payment action rather than using the summary warrant procedure (as mentioned inchapter 2 para. 28) but the latter procedure is used in almost all cases. Under summarywarrant, the Sheriff does not summon the debtor to show cause why the debt has not beenpaid and so the debtor has no right to appear before the Sheriff and has no opportunity todefend himself against the issue of the Summary Warrant. This would appear to be a muchfaster system than that in England in which the debtor has to be summoned to appear beforethe Magistrates and a hearing has to take place before a Liability Order can be issued. Themajority of Scottish Revenues Officers interviewed felt that this latter system has theadvantage for collection purposes that the debtor is called publicly to account for non-payment, is individually notified of the court hearing in advance of the session being held andhas the opportunity to defend the issue of the liability order. Although administrativelycumbersome and relatively expensive in relation to an application for summary warrant it hasto be recognised that, in Scotland, Revenues Officers have the option to go for an individualpayment action. The research team believes that Scottish Revenues Officers should giveconsideration to the wider use of a decree in an action for payment in appropriate cases. Theone over-riding advantage of the English system as perceived by many Scottish intervieweesis the advance notification to the debtor by the court that action is about to be taken.

4.4 Whilst the granting of either a Summary Warrant or a Liability Order is a matter ofpublic record, it is not a matter for record against a personÕs credit status in the way that aCounty Court Judgement in England (in respect of all non-statutory debt such as trade debt,rent arrears etc), or a Decree in Scotland is. However, in respect of recovery and enforcementof unpaid council tax in England, the additional deterrent of committal is regarded as

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sufficient by those revenues officers interviewed on this point to counter balance thisdeficiency. It was observed by some of the English revenues officers in the research thatmaking the issue of a liability order a matter for reflection in the credit status of an individualwould be an added pressure upon debtors to avoid these proceedings; although technically,since the Court records are public documents, the credit referencing agencies could find outthis information if they so wished.

4.5 Having obtained a liability order for outstanding debts, the English local authoritiesthen have a range of remedies available to them which are all under their direct control anduse of them is entirely at their discretion. They can either employ an outside body of bailiffsfor the levy and execution of distress, or they can carry out these processes using their owninternal staff.

4.6 This compares with the legal requirement in Scotland for the execution by SheriffOfficers of several of the remedies available to Scottish local authorities following issue ofthe Summary Warrant. Table 19 below sets out the principal differences in execution ofremedies.

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Table 19Principal differences in execution of remedies in Scotland and England

Remedy inEngland and Wales:

Requests forinformation

Attachment ofEarnings

Deductions from I.S.

Attachment ofmembers allowances

No equivalent

Levy of distress

Removal and sale

Charging order

Bankruptcy notice

Committalproceedings

Remedy in Scotland:

Requests forinformation

Earnings arrestment

Deductions from I.S.

No equivalent

Arrestment of bankaccounts

Poinding

Warrant sale

Inhibition

Sequestration notice

No equivalent

Executed in Englandand Wales by:

Local authority

Local authority

Local authority

Local authority

N/A

Local authority &bailiff

Local authority &bailiff

Local authorityapplication to CountyCourt

Local authority on adebt of more than£750.

Local authorityapplication toMagistrates

Executed in Scotlandby:

Local authority

Sheriff Officer

Local authority

N/A

Sheriff Officer

Sheriff Officer

Sheriff Officer

Local authorityapplication to Court ofSession

Local authority on adebt of more than£1,500.

N/A.

4.7 As can be seen from the information above, the local authorities in England haveconsiderably greater direct control of the various remedies. They also have power to switchfrom one to another remedy and back again if required, at their discretion with greateradministrative ease because, if they choose, they need not involve an outside bailiff. Once aSheriff Officer has executed any one of the three diligences a local authority cannot then raisean action for the recovery of a sum that has been executed72. It should be noted that theexecution of a poinding in itself is not execution of the diligence. It would have to beexecution of the full diligence of poinding and sale.

4.8 The Debtors (Scotland) Act 1987 formalised and regularised debt recovery andenforcement law and practices in Scotland. It also provided greater protection for the debtorparticularly in moderating the harsher aspects of debt enforcement and recovery that hadexisted before 1987, such as Warrant Sales being conducted at the debtorÕs home. The sameAct also removed the sanction of committal to prison for non-payment of local taxes.

72 Para. 2(5) of Schedule 8 of the Local Government Finance Act 1992

72

The frequency of Summary Warrant and Liability Order runs

4.9 The charts A4-1 and A4-2 show collection rates for each sample authority with thenumber of Summary Warrant petition and Liability Order summons runs carried out by theauthorities, expressed as a percentage of a maximum number of runs of 10 carried out by thesample group in each country (this being done so that the y axes would relate to percentagesin both instances). The frequency of summary warrant runs/ liability order runs in the samplegroups ranged from 1 to 9 for Scotland, and 3 to 11 for England. The charts show that as thepercentage of runs declines across the tables, the collection rates (given at the top of eachauthorityÕs data bars) do not follow in decline. This indicates that the number of recoveryruns carried out in 1997/98 did not have an appreciable effect on the collection ratesachieved.

73

Note : Sorted by percentage number of runs.

Chart A4-1Actual number of applications for summary warrant expressed as a percentage of a maximum number of 10 -

comparison with percentage collection levels

92.889.7

85.4

93.1

87.1

79.8

94.5 94.2

88.9 88.791.4

87.7

93.8

85.5

93.395.9

89.3 90.8

85.7

75

85.483.2

91.7

80.7

90.5

0

20

40

60

80

100

120

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

Scotland :Number of Councils providing data

Perc

enta

ge

Percentage number of Applications for Summary Warrant Percentage In-year Council Tax Collection Rate at 31/03/98

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Note : Sorted by percentage number of runs.

Chart A4-2Actual number of court summons runs expressed as a percentage of the maximum number of 10 - comparison with

percentage collection levels

93.697.2

93.989.5

96.293.0

96.0 96.093.8

97.4 95.7 97.5

92.4

82.0

98.0 97.894.4

90.7

97.5

0

20

40

60

80

100

120

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19

England and Wales - Number of Councils providing data

Perc

enta

ge

Percentage number of runs Percentage In-year council tax collection rate at 31/03/98

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Attachment of income support

4.10 In those cases where a debtor is in receipt of Income Support, the local authoritymay apply to the Benefits Agency for an attachment of Income Support or JobseekersAllowance. If the application is accepted, the local authority will be able to havedeductions made from the debtorÕs benefit of a prescribed amount by the Benefits Agency.The deductions will then be passed over to the local authority, usually on a monthly basis.If a number of applications for deductions have been made in respect of a debtorÕs IncomeSupport, (either by various creditors or by the local authority in respect of two or moreyears debts), the attachments will be applied up to a maximum amount of deduction fromthe Income Support payment. In this situation any further applications will be treated aspending, and will be dealt with as existing attachment orders are ended, in order of date ofapplication. The following two flowcharts illustrate the processes involved inadministering an application for Income Support in Scotland and England. In essence thetwo sets of processes are the same for both countries. The English set of processes maylook to be more complex than those for Scotland. An important point to be drawn out,however, is that English local authorities have more opportunity to undertake the recoverywork directly, rather than having to use an external agency, and to keep control of all therelated administrative stages.

76

Flowchart 1Typical processes for recovery of council tax through Income Support in Scotland

77

Flowchart 2Typical processes for recovery of Council Tax through Income Support inEngland

78

Frequently changing Income Support status

4.11 The number of cases frequently going on and off Income Support and therefore onand off 100% council tax benefit impacts more on Scottish recovery processes (and thusScottish collection rates) than on the recovery processes of English authorities. The threekey factors are:

• the difference in accruing payment burdens for Scottish and English IncomeSupport claimants;

• the processing of applications for attachments of Income Support, and

• The interface with Sheriff Officers.

The first two factors are dealt with below; the interface with Sheriff Officers is expandedupon later in this chapter (see para. 39).

The difference in accruing payment burdens

4.12 Whilst this research primarily examines the reasons for the differences betweenScotland and England in in-year collection levels for council tax, the fact that water andsewerage charges are collected as part of the council tax bill in Scotland does impingeupon the performance level for Scotland because of the resources that have to be used toadminister the collection of a combined bill and the effect of the calculation by which sumsare deemed payable to the water authorities (see Chapter 2 para. 43).

4.13 Claimants of 100% council tax benefits in Scotland still have to pay the water andsewerage element of the council tax bill. A typical taxpayer in England on Income Supportwith no local tax arrears will not have any council tax liability in respect of the period he isclaiming Income Support and will not figure in local authority recovery cycles. A similartypical taxpayer in Scotland will however continue to figure in the council tax billing runsand recovery cycles. That taxpayer in England, on coming off Income Support, will simplybecome liable for council tax from the time he is off Income Support. The taxpayer inScotland however becomes liable for council tax from the time he is off Income Supportand may have arrears for any balance of water and sewerage charges which have not beenmet by the attachment order. All other things being equal, if both taxpayers then fall intoarrears and go back onto Income Support, the taxpayer in Scotland will already have alarger debt burden accrued than the taxpayer in England. The difference between theirrespective debt burdens would become greater each time they both were to go on and offIncome Support.

4.14 Table 20 shows that Scotland has a higher percentage of residents on IncomeSupport than England and consequently will require administering potentially more arrearsaccounts. It can be seen that Scotland also has a higher percentage of Council Tax BenefitClaimants in receipt of Income Support. The majority of dwellings are connected to mainswater and sewerage and accordingly it is likely that Scotland will require to administermore Attachments of Income Support than would be the case in England because of the

79

existence of Water and Sewerage charges. Overall Scotland also has a higher percentageof households on benefit, 27% against 22 % in England. This has an impact on theadministration of arrears. From Table 6 in Chapter 2, it can be seen that in one Scottishauthority, 7% of the amount of one council's arrears outstanding for Year 1997/98 wasattributable to those on Income Support receiving 100% Council Tax Benefit. The totalnumber of households receiving 100% council tax benefit and in arrears, however, equatedto nearly 13% of the total number of households. Whilst the figures only relate to oneScottish authority, it is reasonable to assume that these figures would be broadlycomparable to those of others. Thirteen per cent is a significant proportion of householdsfor a Scottish authority to pursue for arrears, especially when it is considered that thiscategory of debtor is not an issue for English authorities.

Table 20Percentages of residents on Income Support in Scotland, Wales and England, 2 May

1998Numbers expressed as % of

Number of Claimants 02/05/98Dwellings

Total Claimants

Council Tax Benefit Scotland England Wales S E W S E W% % % % % %

Claimants at 100% 378,000 2,973,000 208,000 17 15 17 64 67 73Other Claimants 212,000 1,480,000 75,000 10 7 6 36 33 27

Total Claimants 590,000 4,453,000 283,000 27 22 23 100 100 100

Note:1.Source of Benefit figures DSS Housing Benefit and Council Tax Benefit Management Information

System - 1 % sample taken on 2/05/98;2. Source for Number of Dwellings from Scottish Office Statistical Returns; DETR

The processing of applications for attachment of Income Support

4.15 The length of time taken to reach Summary Warrant stage in an authority has animpact on the earliest date on which attachment of Income Support may commence,though any bearing that this has on collection rates is linked with other factors as outlinedin the next paragraph. The following flowchart illustrates the shortest time scales overwhich deductions of Income Support were processed in 1997/98, for each of the fastestperforming authority, a typically performing authority and the slowest performingauthority.

80

Flowchart 3Minimum time scales over which deductions of Income Support were processed in1997/98, in respect of the fastest performing authority, an average- performingauthority and the slowest performing authority

Key:ABO represents Attachment of Benefit OrderBA represents Benefits Agency

81

4.16 The above flowchart illustrates that even for the authority taking the most promptenforcement action in 1997/98, even in respect of the fastest processed applications fordeduction from Income Support, it was not able to collect in-year the minimum council taxarrears level. Three authorities fell into the category of slowest performing, unable toprocess any attachment applications within the year.

4.17 It became apparent in interviews with some of the Scottish practitioners that theirauthorities were experiencing significant difficulties in the processing of applications forIncome Support by the Benefits Agency. Factors were the backlog of applications to beprocessed, limited numbers of applications that the Agency would undertake to processover a given time period, the frequency of the allocation of deduction payments to theauthority, and the allocation of deductions to particular yearsÕ arrears. One authorityhighlighted the problem in this way. The earliest date that they could obtain SummaryWarrant in the financial year was in August. If the council knew a person was on IncomeSupport, an application for attachment of their benefit would be sent in September. Ifdeductions began in September, only the amount collected until the end of March wouldinfluence their in-year collection figures. Cases of taxpayers going on and off IncomeSupport and those with non-dependant deductions73 caused further administrative delaysand impeded in-year collection.

4.18 In September 1997/98, the same authority identified 5,000 cases for applications inrespect of bills only containing the water and sewerage charge element of the council taxdemand and 2,000 cases in respect of council tax bills for higher amounts. However, theBenefits Agency informed the authority that it could not cope with this volume ofapplications immediately, and gave a performance target of 100 applications per week. Toquote the respondent:

Ò Even if the authority had managed to obtain Summary Warrants for these cases afew weeks earlier in the year, we would still have run into the DSS brick wall onprocessing applications in terms of upping our in-year [collection] rate.Ó

4.19 Another Scottish respondent described a similar situation in his authority, whereagain a limit of 100 processed applications per week was encountered:

Ò Our first recovery cycle generated 7 or 8 thousand for Summary Warrant, whichin turn generated 2,000 letters of application [for attachment of Income Support].Most of those will relate to the water and sewerage element of the bill only. It took20 weeks just to get some of those cases processed Ð they were not evenparticularly efficient in doing 100 cases per week. It is not even as if we werecollecting that money for ourselves Ð we were doing it for the Water Authority andreceiving £4 per case for it.

ÒAnother problem as I see it relates to poll tax. We had £16 million outstanding atthe end of poll tax. A lot of people with these arrears were not in receipt of Income

73 Deductions made from the income support assessment of the claimant, which reflect deemed contributionsto household costs by non-dependants.

82

Support then, but they are now. The deductions for those arrears will carry on foryears before the debt is cleared. So you will never get any money for this yearÕsdebt through attachment, because this yearÕs debt is at the back of a debt queueÓ.

4.20 Respondents also commented that the allocation of deduction payments to the localauthority in 1997/98 affected collection levels. At that time, it was usual for the authorityto receive deduction payments on a quarterly basis. With applications not being sent untilthe September, and the subsequent processing delay, this meant that there was a very smallwindow of opportunity for the authority to receive payments before the end of the financialyear and thus to be recorded in the collection levels. Payments were now being sent to theauthority on a monthly basis.

4.21 One Scottish authority reported that, in the case of multi-year debtors, they had haddifficulties with the Benefits Agency allocating deductions to the wrong yearsÕ arrears.This necessitated the frequent checking of individual records for errors.

4.22 Four English authorities were subsequently contacted by telephone and asked abouttheir experiences with the Benefits Agency. All reported that they had had no significantproblems, although they had also received quarterly payment of deductions at that time.There were no problems with backlogs, no quotas attached to numbers of applicationsprocessed and turn-round times were reasonable (four to five weeks was quoted by onemajor metropolitan authority, who also held regular liaison meetings with the BenefitAgency staff). These four authorities reported no problems of allocation of deductions toincorrect years. This experience may be expected because of the substantially lowernumber of applications for Attachment of Income Support by virtue of the absence of theeffect of water and sewerage charges and the lesser effect of non-payment of thecommunity charge.

4.23 A small number of Scottish respondents raised the view that they would see meritin provisions which allowed income support claimants to request deductions of council taxfrom their benefit payment, so that such deductions could be remitted direct to the localauthority. One revenues practitioner stated that since the implementation of council tax hisauthority had received a small number of requests from taxpayers on income support forsuch voluntary deductions to be instituted. The revenues officer in question felt frustratedin dealing with these requests that such voluntary deductions could not be made undercurrent legislation. Although this matter may be a reserved matter and thus cannot be dealtwith by the Scottish Parliament, the research team believe that a mechanism for voluntarydeductions from income support for council tax payments, as suggested by Scottishpractitioners, is worthy of further consideration.

Poinding and warrant sale and distress

4.24 In Scotland the action of poinding and warrant sale (which approximates to theEnglish process of levy and execution of distress) is conducted by a Sheriff Officer, who isan officer of court appointed by the Sheriff Principal of each sheriffdom to enforce sheriff

83

court decrees by diligence. Sheriff Officers are both public officers and independentcontractors whose fees are regulated by rules of court. In England the distraint processcan be conducted either by the local authority itself or by a bailiff appointed by the localauthority to levy and execute distress on its behalf. The large majority of English localauthorities prefer to employ firms of bailiffs to act on their behalf rather than take suchaction themselves.

4.25 Differences arise regarding the sums passed to Sheriff Officers and Bailiffs byScottish and English authorities respectively. Charts A5-1 and A5-2 indicate thepercentage of the net amount of council tax passed to Sheriff Officers and Bailiffs in1997/98 compared with the percentage amount remaining with them at 31 March 1998.

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Note: Sorted by percentage of the total amount of net council tax billed passed to the Sheriff Officer for collection.

Chart A5-1 ScotlandPercentage of net amount of 1997/98 council tax billed passed to Sheriff Officers for collection

compared with the % of that amount still outstanding with Sheriff Officers at 31/03/98

0

2

4

6

8

10

12

14

16

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18

Number of Councils providing data

Par

cent

age

% Amount of Net Council Tax passed to Sheriff Officer for Collection% Amount of Net Council Tax with Sheriff Officers at 31/03/98

85

Note: Sorted by percentage of the total amount of net council tax billed passed to the Bailiffs for collection.

Chart A5-2 EnglandPercentage of net amount of 1997/98 Council Tax billed passed to the Bailiff for collection compared to the % of that

amount still outstanding with Bailiffs at 31/03/98

0

1

2

3

4

5

6

7

8

1 2 3 4 5 6 7

Number of Councils providing data

Per

cent

age

Percentage of Net Council Tax passed to Bailiff for collection Percentage of Net Billed Council Tax with the Bailiff at 31/03/98

86

4.26 Charts A5-1 and A5-2 show that although there was a higher percentage of debtpassed to the Sheriff Officers for council tax recovery action in Scotland than there ispassed to bailiffs in England in 1997/98, the percentage of debt outstanding at the end ofthe year in the hands of the Sheriff Officers was much higher than the percentage of thedebt in the hands of the English bailiffs. Of the Scottish sample only three of theseventeen authorities reported that 50% or less of the debt remained with the SheriffOfficers at year-end. This compares with four out of seven authorities reporting the samesituation in England. One reason for this, as already highlighted in chapter 3, Table 11 isthat cases took much longer to reach court action in Scotland (118 days) than in England(67 days); therefore transfers of cases to Sheriff Officers would on average have beenmade later in the financial year. Three other main reasons for this higher residual amountof debt lying with Sheriff Officers are put forward in this section:

• the effect of the Debtors (Scotland) Act 1987;• the political environment in which the enforcement is carried out; and• the communications between the local authorities and the Sheriff Officer firms.

The effect of the Debtors (Scotland) Act 1987

4.27 In the view of most Scottish revenues practitioners, there are wider restrictions inScotland regarding those goods that can be subject to poinding than prevail in Englandwith respect to goods available for distraint (see Annex 1 to this report). Interviews withbailiffs and Directors of nine private sector bailiff firms in England operating on behalf oflocal authority clients, were carried out. Their unanimous view also was that the Scottishlist of exempt articles was generally interpreted as to exclude considerably more itemsfrom poinding than did the English list from the levy of distraint. However, even with thegreater range of goods upon which distress can be levied (as perceived by the Scottishpractitioners and bailiffs interviewed), the actual number of seizures and sales of goods bybailiffs in England and Wales in respect of council tax debt is small. Of the fourauthorities that provided relevant data, two councils that authorised 496 and 13 listings ofgoods for distraint respectively carried out no seizures of goods in 1997/98; one councilwhich listed 10,000 cases of goods for distraint carried through on 200 (or 2% of) cases,and another listing 492 cases of goods for distraint carried through with seizure on onlythree (or 0.6% of) occasions. One firm of private sector bailiffs quoted from recent in-house statistics, stating that that of 110,000 listings recently undertaken by their firm forvarious clients (no split between actions for public and private sector clients beingidentified), only one half of one percent (0.5%) progressed to sale.

4.28 The value of the sanction of poinding and warrant sale is regarded by most of theScottish respondents as being closely linked with the debtorÕs perception of the likelihoodof the action of warrant sale taking place. A commonly expressed view in interview by theScottish respondents was that, prior to the introduction of the Debtors (Scotland) Act 1987,the threat of poinding and warrant sale was significant enough and real enough to

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positively influence collection rates of local taxes. Adler and Wozniak74 in theirExamination of the Impact of Diligence (Summary) in 1981 reported:

"It was quite clear from our interviews, that by the time they had had a poinding,most debtors were very clear about what lay in store for them if they failed to pay.It was, and is, equally clear that these anticipated consequences constituted a verypowerful deterrent for the majority of debtors. Above all else, they appeared to bemost concerned at the prospect of their private problems becoming public and withthe shame and humiliation this would entail. We do not think that those who wereinterviewed at later stages in the process of poinding were any less well informedabout the consequences of continued non-payment at the poinding stage."

4.29 The majority of Scottish revenues officers were of the opinion that the provisionsof the Debtors (Scotland) Act 1987 were so extensive in the restriction of goods availableto be poinded, that few household items of reasonable value would be available in low tomiddle income group households to make a warrant sale realistic. The response by theinterviewees was predominately that the restrictions should be reviewed so as to makepoinding and warrant sale reasonably effective; most of those responding in this way werepessimistic however that such a review would either take place or end in any relaxation ofthe exemptions. One respondent summed up the views expressed: ÒThe pendulum hasswung in favour of the debtors and it seems to have stuck on their sideÓ. Another Scottishrevenues practitioner stated:

ÒThey arenÕt worried about poinding in the slightest because they know weÕll neversell their furniture; the DSA took all that worry away for them.Ó

4.30 Other creditors have expressed similar views regarding the restrictions regardinggoods available for poinding and warrant sale. As noted in a recent report:75

Creditors who believed poinding and sales to be ineffective often focused on thelist of goods exempt under the Act. Although interviewees were generally unawareof the detail of the exemptions, they were aware that the principle was to protectdebtors but believed that the effect had been to render the diligence no longereffective. One interviewee expressed the views of several others:

Ò In the old days you had to leave them a bed and a chair and everything else youcould sell. Nowadays you can only take luxury items and in most cases we end upgetting nothing or £50 worth of stuff for a £2000 debt. In all honesty I reckon thedays of the warrant sale under the Act are just about finished because we can getnext to nothing.Ó

74 Scottish Office, Central Research Unit Papers - Research Report for the Scottish Law Commission No.5198175 Chapter 6, para. 51 of Platts, A (1999), Evaluation of Debtors (Scotland) Act 1987: Study of CommercialCreditors, Scottish Office Central Research Unit.

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4.31 This view of the impact of the Debtors (Scotland) Act 1987 was also supported bya group of Sheriff Officers in an open meeting on 4th November 1998 with revenuesofficers of the Scottish Branch of the Institute of Revenues, Rating and Valuation. OneSheriff Officer in interview for the research expressed a view that was also held by others:

ÒThe use of Warrant Sales would make a difference to collection levels. It wouldcertainly convince some [debtors] to set up arrangements. But the Debtors(Scotland) Act prevents so much being collected that many would still be largelyunaffected by themÓ.

4.32 One Revenues Officer indicated that a Warrant Sale had been carried out in theprevious year, which had been reported in local newspapers. Subsequently a significantnumber of defaulters made a voluntary approach to the Revenues Section to settle theiroutstanding arrears. He put this down to the effect of a warrant sale having been carriedout, supporting the contention that it is the threat of removal of personal goods andpossessions for a Warrant Sale, as perceived by the debtor, that is more effective than theactual event itself. This contention also holds up well in the face of evidence fromEngland and Wales that bailiffs may regularly list goods on an inventory (the equivalent ofa poinding) but rarely remove them for actual sale by public auction (the equivalent of aWarrant Sale).

4.33 Sheriff Officers in interview stressed the importance of the deterrent value ofpoinding goods as opposed to merely using the Sheriff Officers as agents to makearrangements. They linked to this the view that Warrant Sales should be seen as being areal option for use in an area, to underscore the value to the debtor of maintainingarrangements made for payment. Within Scotland, from the information given, those localauthorities with a higher level of poindings and warrant sales, do have a significantlyhigher level of collection overall. Chart A6-1 reflects this. This chart and the comparisonchart A6-2 are based on data obtained from Question 43 of both the Scottish and Englishpostal surveys Ð attached at Annexes 3 and 4. However, it is the view of the research teamthat it is as important to examine attempted poindings to assess the true effect of this actionon collection rates. A firm of Sheriff Officers which acts for several councils madeavailable statistics for the year to the end of August 1999, that showed that of some 41,000visits made with a view to carrying out a poinding, only 1626 poindings were executed; aratio of approximately 25 visits to one poinding. The main reasons for not carrying out thepoinding were settlement of the payment, agreement on a payment arrangement, the settingup of Income Support deductions, or there being no poindable effects sufficient to coverthe debt. Unfortunately there was no further breakdown available to show figures relatingto each of these reasons; the Sheriff Officer supplying the information indicated, however,that a large proportion of the poinding visits did not result in poindings being executedbecause of settlement of the account or payment arrangements being set up and that thethreat of the poinding action was a sufficient threat to generate payment. The lack ofavailable statistical breakdown in itself illustrates the need for Scottish authorities todevelop and actively manage the management information flowing from Sheriff Officers,so that councilsÕ resources can be targeted more effectively.

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4.34 Finally, local authorities should bear in mind that, where a poinding indicates thatthere is insufficient value in the debtor's goods to proceed to sale (or indeed, any diligence)and consequently proves ineffective, this could routinely act as a trigger for the authoritiesto look more closely, with the Sheriff Officer, at the overall personal circumstances of thedebtor. If examination proves that further formal action is unlikely to recover outstandingcouncil tax the authorities would have grounds for writing off the debt.

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Chart A6-1 : ScotlandUse of diligences together with sequestrations and inhibitions

shown with the in-year collection rate

83.280.7

94.2 94.591.4

85.7

93.1 93.389.7

85.4 85.488.7

92.8

0

10

20

30

40

50

60

70

80

90

100

1 2 3 4 5 6 7 8 9 10 11 12 13

Number of Councils supplying information

Per

cent

age

% In-year Collection Rate Earnings Arrestment Action of furthcoming Poinding Poinding and Sale Sequestrations Inhibitions

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Notes : Com/Pend, = committal pending; Paid in Full = after threat of committal; Members = Attachment of Members Allowances; L/Charges means LandCharges

Chart A6-2 : EnglandUse of enforcement powers granted by the liability order together with

insovency and legal charges shown with the in-year collection rate97.5

93.096.0 94.4 93.8 92.4

97.5

82.0

97.4 97.293.6

89.5

93.9

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

100.0

1 2 3 4 5 6 7 8 9 10 11 12 13

Number of Councils supplying information

Perc

enta

ge

% Collect Earnings Seizure Distraint Com/Pend Paid Full Com/Court Members Insolvency L/Ch

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4.35 From Chart A6-2 (which relates to English surveyed authorities) it can be seen that twocouncils have used seizure of goods to a great extent but have different in-year collection rates -one reported that 80% of enforcement cases had been subject to seizure and achieved a 93.8% in-year collection rate while the other reported respectively 47% and 89.5%. Both are large cityareas, the latter having a higher deprivation index. The research data however does not indicateany correlation between the range of enforcement remedies used and the in-year collection rates.

4.36 It is the view of the research team that the issue of the range of goods protected frompoinding and warrant sale deserves re-examination, in view of Scottish revenues practitionersÕconcerns about the impact that it has on their ability to use poinding and warrant sale effectively.

The political environment in which enforcement is carried out

4.37 Sheriff Officers have stated that it is the (unwritten) policy of a number of Scottish localauthorities to discourage warrant sales, and this has an inhibiting effect on their ability to enforcethe recovery of the debt. In support of this contention, they stated that there are some localauthorities that even forbid the use of the word ÔpoindingÕ in correspondence with debtors, andcertainly would not countenance the carrying out of an actual poinding. Furthermore, oneauthority is reported to have publicly declared that it will no longer allow poindings and warrantsales to take place (see para. 51, chapter 2). Since 1989, in the view of many of the Scottishlocal authority respondents, certain categories of debtors (such as council house occupants andindividuals in receipt of Income Support) have learned from experience that their localauthorities would not condone the use of warrant sale in respect of their council tax debts. In theopinion of the Sheriff Officers this political discouragement of warrant sales seriously hampersthem and the local authority staff in carrying out their duties properly and effectively, and that ifcurrent enforcement provisions are to be successful this political discouragement should beremoved. It is not expected by the Sheriff Officers interviewed that the removal of suchdiscouragement would lead to a substantial increase in the number of warrant sales carried out.It is felt however that Sheriff Officers would be free to use the threat of such action to encouragepayment of the debt. In practice, the limited range of household goods that are not exempt frompoinding means that as one revenues officer said "the goods poinded are unlikely to be sufficientto extinguish the debt and accordingly no recommendation for sale would be made". Whileaccepting what is being said in this comment it is a fact that those poinded items do have a valueto the debtor and the threat of removal for sale may just tip the balance in favour of the creditorby the debtor coming to a payment arrangement.

4.38 The Society of Messengers at Arms and Sheriff Officers has undertaken presentations tolocal authority members to apprise them of the aims and objectives of the Society and toreinforce for them the integrity the Sheriff Officers. In their opinion such presentations haveremoved some of the political constraints attached to enforcement that had been formerlyimposed. It was stressed that the Society had only addressed the members of council whendirectly invited to do so. The Society also stated that it saw merit in establishing regular liaisonmeetings with Revenues Officers to share information and views on enforcement issues; aninitial meeting with a representative body of Revenues Officers in the summer of 1998 hadproved to be useful to both sides.

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The communication between Scottish local authorities and external enforcement agents

4.39 The key communications issues are identified in this report as:

• Codes of practice and service level agreements;• The quality of information transferred to Sheriff Officers;• The monitoring of caseloads;• Special payment arrangements;• The way in which information is transferred; and• The time taken to transfer information.

Codes of practice and service level agreements

4.40 Most English local authorities have detailed codes of practice as a part of their contractswith their bailiffs. These codes not only regulate the actions the bailiffs may take, it also directsthem to areas of priority and actions to be taken in certain specified situations such as dealingwith vulnerable or disabled people. This therefore means that bailiffs are generally welldirected and clear in their actions and responsibilities. Nine out of ten of the English authoritiesinterviewed had service level agreements or contracts containing performance levels with theirbailiffs. An example of a code of practice used by a well-established bailiff firm in England inthe absence of any code being supplied by the local authority is attached at Annex 2 to thisreport.

4.41 Only half of the ten Scottish authorities interviewed had any form of Code of Practicewith their Sheriff Officers, and these were generally more basic in their range of specificationsthan the majority of English codes of practice. Of the five who did, one had only just recentlyintroduced one, and another Ôdid not need feel the need to call upon it in the course of workÕ.Service level agreements were not used in the majority of Scottish authorities. It is the view ofthe research team that the introduction of service level agreements is important. Through suchdocumentation, both parties are made fully aware of their obligations to, and the expectations of,the other. Furthermore it could establish responsibilities for actions in various situations, thetreatment of debtors on income support who wish to continue making payment underarrangement to the Sheriff Officers. Such agreements would assist Sheriff Officers by placing anonus on the client authorities to provide information timeously and in agreed formats.

4.42 Sheriff Officers reported that Codes of Practice were uncommon. In their view, wherethey were used, they tended to be too prescriptive, too finely detailed and could even beconsidered insulting to Sheriff Officers as Officers of Court. Sheriff Officers expressed theopinion that service level agreements should be more widely used and would be moreappropriate than the Codes of Practice/ Conduct currently in force. They pointed out that in theiropinion any service level agreements or monitoring should not require the disclosure of financialaffairs of the Sheriff Officer firms as these are matters solely of concern between the firm andthe Courts they serve; Sheriff Officers are appointed by the Courts and they would not be soappointed if there was any doubt as to their financial standing or professional integrity.

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Quality of Data transmitted to Sheriff Officers

4.43 Sheriff Officers also expressed the view that an important difficulty in 1997/98 for firmshad been the quality of information passed over by authorities for enforcement action. In theopinion of one Sheriff Officer who had dealings with over a dozen Scottish councils, around40% of the information passed to his firm was inaccurate, due in the main to the time delaybetween an amount becoming due and the case being passed to the Sheriff Officer. He felt thatthe quality of the data coming through from authorities was now considerably improvedcompared to that sent in 1997/98. A couple of authorities are now working closely with a largeSheriff Officer firm to address this issue. They have identified poor quality data as falling intotwo main areas; that relating to Ôgone awaysÕ and that relating to Ôwithdrawals by clientÕ. In thislatter category fall cases about which some query has risen; for example the liability may bewrong, or the period of billing may be incorrect. The council is working with the Sheriff Officerto identify and rectify the problems, with some success in terms of correctly identifying liablepersons and payment of arrears being sought.

Monitoring of caseloads

4.44 In England the activities and progress of bailiffs is closely monitored by revenues staff,often to the extent of a dedicated officer being employed, whose primary task is to carry out thismonitoring role. This is supported by a professionally qualified revenues consultant who, wheninterviewed, expressed the opinion that it was becoming increasingly common for localauthorities to arrange for appointed individuals to carry out audits within bailiffs firms of thework carried for the local authority and to inspect the related accounts. In this situation theperson, either an auditor or a revenues officer, would be looking to ensure that correctprocedures had been followed, that the authority had been correctly charged for the work done,and that proper accounting had been carried out. A major metropolitan authority in England hastwo bailiff liaison officers. One deals with the council tax accounts, and the other, business rates.The latter also has responsibility for monitoring performance in meeting contractualrequirements, examines turn-round times of cases, and investigates how queries and complaintshave been handled. That officer also takes samples of cases, to examine how cases have beendealt with, and checks charges. The respondent reported that in smaller authorities staff in thedebt recovery team as part of their duties may undertake this liaison role.

4.45 In Scotland, there was in many authorities in 1997/98 a low reported level of monitoringof the progress of the caseload passed to Sheriff Officers. A lack of dialogue regarding theactions to be taken meant that often Sheriff Officers were unaware of the priorities of theirclients regarding the handling of debtors. Similarly, revenues staff are unaware of the prioritygiven by Sheriff Officers to the individual cases that have been passed to them for recovery. Onerevenues officer said of the systems in his authority:

ÒWhen a case goes to the Sheriff Officer we are blind to what he does; whether cases aredone by earnings arrestment, by poinding, by bank arrestment, by letter. All we know iswhether theyÕve collected the money, not how they secured that money. We can ask ofcourse, but all that detail does not sit as a matter of course on our own systems. We caninterpret the information passed back from the Sheriff Officer on the files, but it takes

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resources to do this. Intervention is the key to debt recovery and we must have theinformation to help us target our resources in a much more structured way.Ó

4.46 Sheriff Officers in interview also supported the view that until recently there had beenlittle evidence of monitoring by local authorities of the enforcement of Summary Warrants. Thiswas attributed in the main to the sheer volume of recovery work at the local authorities, politicalconstraints and lack of knowledge of the legislation and practices relating to debt collection. TheSheriff Officers acknowledged that local authorities had faced major problems because of thedisaggregation of the revenues collection function and of ensuing IT problems. They added thatthe lack of monitoring and dialogue had meant that the councils generally have not fullyevaluated the range of services available from Sheriff Officers.

4.47 One interviewed Scottish authority that introduced monitoring arrangements in 1997/98reported that their system was simply to start looking at the cases that had been passed to theirSheriff Officers on an individual basis. As they progressed they uncovered numerous cases inwhich the Sheriff Officer firms used had not charged the authority according to contract or weredouble charging for visits made to debtors, and many debt cases were left ÔsittingÕ in their files.By examining the cases, the local authority stopped further double charging, saw animprovement in turn-round times and ensured that old debt was being actioned. The authoritystressed that no fraud or impropriety on the part of the Sheriff Officer firms was implied; theypointed out instead that they had merely identified aspects of the firmsÕ systems that required tobe tightened up. In the local authorityÕs opinion, their efforts saved the authority tens ofthousands of pounds in administrative charges, but they could not make a direct link to anyincrease in collection rates. They did however feel that their pressing for old debts to be actionedmust have had a positive effect on overall collection rates, and would benefit in-year collectionlevels in the long run. One result of their increased involvement however was stiff resistancefrom one Sheriff Officer firm. The firm resented being monitored by the authority in any way.The authority reported that the Sheriff Officer firm in question created very difficult problems asa result, was still bitter and was Ôstill not over itÕ. Another authority reported:

Ò Our increase in collection rates since reorganisation has to be attributed to our overallstrategy of debt recovery, of which the increased monitoring of the workload going toSheriff Officers plays a big part.Ó

Payment arrangements via the external enforcement agent

4.48 Most English local authorities clearly direct their bailiffs to discourage lengthy instalmentarrangements following distraint action, on the grounds that the tax payer has already hadnumerous opportunities to pay by instalments and has failed to do so, and has even failed tohonour previously accepted instalment agreements. This contrasts with Scotland where SheriffOfficers are frequently instructed to accept extended instalment payments. Prior to the recoveryof community charge in Scotland the practice in most councils was that Sheriff Officers were notdirected to accept instalments. This was a matter entirely for the Sheriff Officer. Under theregime of community charge recovery officers were often directed by their councils to acceptsomething rather than nothing, and this situation has now carried through to council tax. Theresearch team is of the view that there is merit in reviewing the need to direct the Sheriff Officer,

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and to consider embodying broad guidelines in a Code of Practice or similar agreement matterssuch as instalment payments. The Sheriff Officer should then be given freedom to determine theappropriate instalment level in each individual case. Interviews with Sheriff Officers havehighlighted instances in which a Sheriff Officer makes an arrangement for arrears to be paid offat an agreed level, only for him to find that the local authority has requested that the debt betaken back to be administered by the local authority on a much lower instalment basis, withoutnotifying the Sheriff Officer. In the view of the research team, the occurrence of this type ofsituation will be addressed if better communication between the local authority and the SheriffOfficer is established. This reinforces the research teamÕs view that each council shouldestablish a Sheriff Officer liaison officer or team to monitor the recovery of debt (see para.51below).

Payment arrangements via the local authorities

4.49 A number of Scottish authorities reported that they were making some arrangements forpayments directly with debtors. This was done either by taking back cases from the SheriffOfficer, if in the opinion of the authority the debt had not been ÔworkedÕ sufficiently by theSheriff Officer, or by making arrangements with the debtor prior to the case being passed over tothe Sheriff Officer firms. One authority for example reported that in 1998/99 they securedarrangements worth £652,000 in respect of community charge arrears, and £2.3 million inrespect of council tax arrears; most of this was taken back from the Sheriff Officer. In thecurrent year, [1999/00] they had made £93,000 in arrangements following the issue of thereminder. By following up the reminder with telephone calls and letters, they had secured afurther £351,000 in payments. Said the respondent of these sums secured by arrangement in-year:

Ò It is highly likely that the Sheriff Officer would have got the money eventually on afresh warrant; if we can get it so can they. I question however if they would have gotround to it quick enough. WhatÕs more, we did not have to add the 10% cost (though wecould have added it and keep it if we wanted to). More staff would give us greater in-house ability Ð this must be so much quicker and so much more controllable.Ó

4.50 Another respondent expressed views shared by a number of authorities that were startingto take back debt from Sheriff Officer to work themselves:

ÒIn a lot of cases where nothing is done by the Sheriff Officer we take back the debt andmake arrangements. Why have they done nothing? ItÕs down to the way he works.When a fresh warrant is given he works that, regardless of whatÕs outstanding on thesystem.Ó

4.51 The research team put forward the view that whether debts are pursued directly by theauthority or passed to the Sheriff Officers to deal with, there is merit in establishing dedicateddebt recovery teams within revenues sections. The aim of such a team would be to ensure thatthe physical side of recovery is split from the billing process, recovery work commences as soonas possible after reminder and final notice periods are passed and that all debts are workedregularly. As has been identified in some English authority practice, the role of Sheriff Officer

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liaison could lie within the debt recovery team. Scottish Heads of Revenues should considermaking either an individual or indeed a small section responsible for the liaison with SheriffOfficers together with role of monitoring the performance of the Sheriff Officer; dealing on adynamic basis with cases where the debt is likely to prove irrecoverable; developing mangementinformation. Before recommendation for write-off is given, further liaison could be made withthe council's anti-poverty section to ensure that the debtor has claimed all the benefits that areavailable.

4.52 It is the view of the research team, based both on interview with Scottish practitionersand from previous systems implementation experience, that the current software in most Scottishauthorities is not sufficiently developed to allow the council to fully monitor and recoverinstalments made under special arrangements; this means that these require manual input in mostcases.

The mode of information transfer

4.53 Most English local authorities in 1997/98 were able to communicate electronically withtheir bailiffs about debtor case details, and some of the larger authorities have on-line links withthe bailiffs. Typically details of a debtor, in respect of whose goods distraint was to be attempted,would be entered on the local authority computer system and transferred over to the bailiff firmÕscomputer system on a daily basis. Details of enforcement action would be passed back to theauthority in the same fashion. This enabled a monitoring operation by the local authority; it alsogave the bailiffs fast and reliable recourse to data and information from the local authorities.Some authorities, generally smaller ones, had manual transfer of information. If a local authorityobtained individual liability orders, they usually passed the information manually to bailiffs. Ifthe authority obtained a scheduled liability order from the MagistratesÕ Court, listing debtorsÕnames, then generally they would pass this information over electronically to the bailiffs.

4.54 In most Scottish revenues sections there is electronic data transfer between the counciland the Sheriff Officers but effective management information available to the revenues managerhas not been developed to the same extent. One council has said that it is only now obtainingmonthly reports of the number of actions taken in the form of poindings, earnings arrestmentsetc. but this is in summary form only and does not at present allow more detailed audit trails.This has proved evident in many of the returns that the Research Team has received where eitherno management information could be provided or data had been obtained by councils only as aresult of contacting the Sheriff Officers for the information. For this reason (and thecorrespondingly poor return of data by English authorities) it has not proved possible to have awide enough sample with consistent data to allow any comparisons to be drawn between Scottishand English modes of information transfer from the analysis. Sheriff Officers interviewed statedthat many of the larger Sheriff Officer firms have sophisticated IT capability, and did not feelthat the local authorities were fully utilising this. They stated that most firms, be they large orsmall, had some IT capability and better exploitation of it would be of benefit to local authoritiesand Sheriff Officer firms alike.

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Timing of transfer of information

4.55 Sheriff Officers raised concerns regarding the time spans between granting of SummaryWarrants and the passing of the caseload to the Sheriff Officers for execution. They stated thatthe minimum time lapse was generally four to six weeks, although lapses of 18 months were notuncommon, and that the longer time elapses did not give them a realistic opportunity to makeany impact on outstanding debt. One reason for the delay was put down to the decision in somelocal authorities to take action post-issue of Summary Warrant, such as telephone debt collectionactivity, and the issue of letters that advised debtors that Summary Warrant had been grantedagainst them with the addition of 10% costs and affording them the opportunity to settle ratherthan the debt being passed to the Sheriff Officer for enforcement. Furthermore, the SheriffOfficers expressed concern that such long delays could be construed as an abuse of the SummaryWarrant procedures which if continued might bring about calls for radical changes to theenforcement process. The argument was put forward that the current post-Summary Warrantactivities of local authorities might be better undertaken at the pre-Summary Warrant stage i.e.before application was made to Court.

4.56 In two separate interviews Sheriff Officers pointed out the difficulties experienced incommunicating with their clients during the period 1997/98. Some firms had experiencedextensive periods of non-communication from the revenues departments, for up to 18 months insome cases. Staff earmarked for council tax enforcement work had had to be deployed on otherwork during these waiting periods. They acknowledged that there were specific reasons forthese delays (e.g. difficulties in aggregating/ disaggregating systems, IT problems), and in mostcases they reported that post-1997/98 there had been significant improvements. Sheriff Officersalso reported a regular difficulty with some councils which delayed making decisions on takingpoindings forward to warrant sale, to the extent that the 12 month time limit for actioning thesale expired. Sheriff Officers could go back and poind against the debtor once more, but none ofthe goods listed on the original schedule could be entered on any subsequent occasion and so therange of goods available on which to poind on return visits was reduced. One Sheriff Officerdescribed the situation as Ôpolitical stallingÕ, so that they could avoid decisions on warrant sale.

Enforcement in respect of council tax benefits cases

4.57 Sheriff Officers stated in interview that they encountered a small number of cases inwhich council tax benefit or even income support could have been awarded to debtors at a muchearlier date, thus reducing the debt and avoiding the need for recovery action. In their opinionmany of these cases involved persons either too proud to claim state benefits or unable to lookafter their own affairs. They expressed the view that there would be merit in a more co-ordinatedapproach to Income Support and council tax benefit take-up between the Benefits Agency andthe local authorities.

Changes post 1997/98

4.58 Sheriff Officers in interview stated that whilst the research was based on data from theyear 1997/98, it was important to emphasise the changes in outlook by Scottish authorities overthe last couple of years. One firm outlined their dealings with the majority of Scottish

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authorities, and reported that most of these had significantly changed their attitude to the issue ofrates of council tax collection. They were much more likely to want to work out ways ofenhancing their collection rates in conjunction with Sheriff Officers. One typical response wasthat, Òperformance was simply not an issue for some in the past, but it certainly is nowÓ.

Penalties for failure to supply information

4.59 Local authorities in Scotland are provided with legislative powers to establish theemployment details of a debtor. These powers place a debtor against whom a Summary Warrantor decree has been granted under a duty to supply information on request. A civil penalty of £50is available in respect of a failure to supply information. The penalty rises to £200 for eachsubsequent failure. In England, there are similar powers to impose a duty to supply information,including employment details, on a debtor against whom a Liability Order has been made.Failure to supply the information can also give rise to a civil penalty.

4.60 A local authority in England can refer back to the magistrates for an enquiry into apersonÕs means76 for committal proceedings, when other actions have been exhausted. Where adebtor fails to provide information to the council then this is referred back to the Magistrateswhere the debtor shall be guilty of an offence77 and liable on summary conviction to a fine ofbetween £500 and £1000.

4.61 Similar provisions78 re summary conviction, already exist in Scotland, but are onlyavailable for the Assessor where a person fails to supply information (fine of up to £500) toassist him to carry out his functions in relation to the banding of dwellings for council taxpurposes. Where information supplied is knowingly false the person may be liable on summaryconviction to a term of imprisonment not exceeding 3 months and/ or a fine not exceeding£1000. Consideration may like to be given to the reason why such powers are available to theAssessor to assist him in his duties, while Councils are not given these powers to assist them incarrying out their functions.

4.62 The survey sample and interviews did not reveal any use of the power to impose a civilpenalty in either Scotland or England during 1997/98, probably because they proved ineffectualunder community charge. The view was expressed by a couple of Scottish respondents that thereseemed little point to pursue a civil penalty as it simply added to levels of debt for an individual,especially when there is little prospect of recovering the primary debt, and did not providecompulsion to provide the relevant information.

Earnings arrestments/attachment of earnings

4.63 In England an attachment of earnings order places a duty on the debtor to notify theauthority in writing on each occasion that he leaves an employment or becomes employed or re-

76 Para. 4 of Schedule 4 of the Local Government Finance Act 199277 Para 18 of Schedule 4 of the Local Government Finance Act 199278 Section 90 of the Local Government Finance Act 1992

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employed. He must include information as to earnings and expected earnings, variousdeductions, the name and address of his employer and work identity number. The debtor will beguilty of an offence if he fails to notify the local authority (with a fine of up to £500) or makes afalse statement (up to £1000). The local authority will then serve notice on the employerrequiring regular payments to be transferred directly from the debtorÕs wages or salary until thedebtor leaves the employment or the debt is cleared.

4.64 In Scotland a Sheriff Officer will also serve notice on an employer for regular paymentsto be made from a debtors wages or salary, until the debtor leaves the employment or the debt iscleared. When a debtor leaves an employment, he is not under any duty to inform the SheriffOfficer or the local authority of details of any new employment. In interview, Sheriff Officersstated Earnings Arrestments were the most potent methods for enforcing payments, but to befully effective they needed greater powers to obtain employment details of debtors. The researchteam considers that there is merit in requiring this information to be supplied, as in England; butadditionally requiring the provision of any other information about the debtors financialcircumstances which the council deems to be necessary. Roughly half of the Scottish revenuesrespondents also believed that collection rates could be improved if the process of makingearnings arrestments was passed over to the authority to administer directly, instead of lying withthe Sheriff Officer as part of his duty to do diligence. The research team can find no compellingreason for such a fundamental change. Instead, it feels that a maximisation of the existingeffectiveness of the Sheriff Officer in enforcing council tax debt is required, and could bebrought about by:

• a change to a more compelling requirement on the debtor to supply information regardingemployment details, and other financial information as might be prescribed;

• clear written policies on collection being provided to the Sheriff Officer including detailson the precedence to be given to the various diligences and whether there are anyrestrictions by the authority on the use of poinding and warrant sale; and

• a greater direction and management control of the arrears cases transferred betweencouncils and Sheriff Officer firms.

4.65 Several Scottish revenues practitioners also suggested that access to Inland Revenue Taxrecords would be of considerable assistance in tracing debtorsÕ employment details. Thissuggestion of access to Inland Revenue records is not new; in 1991 both the Institute ofRevenues, Rating and Valuation national body and its Scottish Branch called for access to theserecords for enforcement purposes79, and this was a measure which was consulted on by theScottish Office/COSLA80. The research team considers that such a major change would beunnecessary if adequate powers were given to the local authority/Sheriff Officer to requireemployment and financial details from debtors as suggested above.

79 Submissions in response to the Department of the Environment consultation paper, ÔA New Tax for LocalGovernmentÕ; 199180 It Pays to Collect Ð A Consultative Document by the Joint Scottish Office. COSLA Working Group on CouncilTax Collection.

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4.66 A couple of Scottish authorities reported political resistance to the use of earningsarrestments, as with the use of Warrant Sale, but had no publicly stated policy against its use.One interviewee stated:

ÒCouncillors think IÕm awful for pursuing a wages arrestment. IÕve just been throughnine failed arrangements to pay with one debtor, and on seeking a wages arrestment afterall these times, IÕm suddenly the bad boy.Ó

4.67 It is the view of the research team that an annual uprating (in line with inflation) shouldbe carried out regarding the maximum wage deductions that can be made for earningsarrestment. It should be noted however that this collective view is not based on any responses byinterviewees, but is regarded as a pragmatic measure that could be introduced relatively easily.

Arrestment of bank accounts

4.68 Sheriff Officers are able to make arrestment of a debtorÕs bank accounts. This power(which has no equivalent power under English legislation) is considered to be a potentially usefultool by Scottish Revenues Officers, but only in cases where the debtor has an account, the banksco-operate and release details of a debtorÕs account, and there is sufficient funds in an account.There has been difficulty in operating these arrestments in the past, according to practitioners. Afew Scottish local authority revenues officers commented that for this enforcement method to betruly effective, there had to be a greater compulsion on the banks to provide details of whether ornot an account had actually been arrested. The experience of applying for an arrestment hasbeen likened to a Òfishing expeditionÓ, in that the arrestment order is sought and made withoutany clear knowledge as to whether the body concerned (often a Bank) does hold propertybelonging to the debtor. Furthermore it was pointed out by both revenues officers and SheriffOfficers that the process might by utilised more if there was an easier process in place than thecurrent furthcoming process to ensure the release of monies from arrested accounts. Revenuesofficers commented however that banks were understandably reluctant in dealing with blanketrequests for account details relating to lists of debtors; they attributed this to the fact thatarrestments went against the banks promotion of their accounts as safe repositories of money,and that, as far as they were aware, arrestments had to be actioned manually. The research teambelieves that consideration should be given to putting some onus on the banks to assist theSheriff Officer by providing details to assist in the arrestment of bank accounts.

Attachment of membersÕ allowances

4.69 English authorities are empowered to make attachment of membersÕ allowances inrespect of council tax arrears. This power is rarely invoked, and had not been used by any of theEnglish sample group. No opinions were expressed at interview about this power, and thus noconclusions are drawn in this report in respect of it.

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Letters of inhibition and charging orders

4.70 In interviews both Scottish and English revenues officers offered few comments aboutthe use of letters of inhibition81 (in respect of Scotland) or charging orders82 (in England). Ingeneral the power was regarded as a rarely used method of enforcement, due mainly to the cost(quoted as £300 to £400 per case, according to one Sheriff Officer) and time scale involved, butwhich was useful nonetheless in appropriate cases. One English authority reported that theyused charging orders infrequently and in compassionate cases where arrears were owed byterminally ill taxpayers, so that the debts were pursued in as understanding a manner as possible.

Sequestration and bankruptcy notices

4.71 In Scotland, a local authority may petition for sequestration proceedings against a debtoronce the level of debt exceeds £1500. In England, authorities can petition for bankruptcyproceedings once the level of debt exceeds £750. Some Scottish revenues officers in interviewexpressed the opinion that the power would be more readily used by them if the minimum levelof debt was lowered to £750, and would enable them in many cases to start proceedings inrelation to a single yearÕs debt. The research team believes that the feasibility of this proposalshould be further examined. One Sheriff Officer was of the opinion that sequestration was onlyof use in relation to self-employed taxpayers, as they had the most to lose by such enforcementaction being carried out. Survey data reveals that in Scotland sequestration proceedings werecommenced in just over 400 cases in 1997/98, and they were carried out in five authority areasonly. In the English sample however, only one case of commencement of bankruptcyproceedings was reported. The Scottish respondentsÕ suggestions for lowering the minimumdebt level for sequestration may appear to be at odds with the low use of the procedure in theEnglish sample. English authorities, however, may simply be exercising a preference to chooseother effective remedies from the ÔbasketÕ of powers available to them, such as the ability topursue committal and the ability to levy distress. The Scottish respondentsÕ perspective was thatthe change to sequestration as suggested would give greater scope for use of that measure, whichwas viewed as important, given the lack of will to use poinding and warrant sale within manycouncils.

4.72 Table 21 gives an insight into one council's experience over a period of five years whereit has used the threat of sequestration. The information does not allow a further breakdown toisolate payments in respect of community charge and council tax. From the table, one can seethat only 98 sequestrations have been carried out in full out of 667 cases over 5 years.

81 It should be noted that the Scottish Law Commission in its Report on Diligence on the Dependence (SLC No 164of March 1998) has recommended that granting letters of inhibition should be within the jurisdiction competence ofthe sheriff.82 A method of enforcement usually made against land or property but also against stocks, shares, money in courtand certain other forms of security. It seeks to place the authority in the same position as a mortgagee of land; forexample, debts will be paid out of the proceeds of selling the property. If payment is required before the defendantchooses to dispose of the asset, a separate action must be taken to enforce the sale.

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Table 21One Scottish council's analysis of the results of threatening sequestration over a

five year periodCouncil

StageNo. ofCases

CommunityCharge Tax Rates Total Debt Cash Paid Balance

Arrangements 105 99,805.15 392,774.69 0.00 492,579.84 255,072.21 237,507.63Arrestments 32 30,400.63 121,975.17 0.00 152,375.80 78,670.87 73,704.93Closed 134 133,884.88 286,804.79 12,882.02 433,571.69 165,915.14 267,655.95IncomeSupport

19 22,255.51 34,636.77 0.00 56,892.28 20,052.24 36,840.04

At Legal Dept. 13 9,667.25 50,566.31 0.00 60,233.56 7,576.73 52,656.83Paid in Full 201 249,691.82 409,646.97 3,515.00 662,853.79 662,883.79 -30.00Pending 65 43,193.73 312,389.70 17,677.82 373,261.25 116,655.62 256,605.63Sequestrated 98 102,205.42 199,874.11 45,048.40 347,127.93 75,434.57 271,693.36

667 691,104.39 1,808,668.51 79,123.24 2,578,896.14 1,382,261.17 1,196,634.37

Notes: Arrangements to pay; Earnings Arrestments; Income Support Attachments; Closed - no further action; AtCouncil's Legal Dept.; Paid in Full; Pending Sequestration; Actually sequestrated.

Committal in England

4.73 Much has been made of the power of English and Welsh local authorities to seekcommittal to prison of debtors who ultimately fail to make payment. Many Scottish practitionersregarded it as a powerful tool in enforcing council tax collection.

4.74 On the application for the issue of a warrant of commitment, the justices must makeinquiry in the defendantÕs presence as to whether his failure to make payment was due to wilfulrefusal or culpable neglect. For the purpose of enabling this inquiry to be made (in thedefendantÕs presence, and at which time an inquiry is made as to his means), a justice of thepeace or justiceÕs clerk may issue a summons requiring the person to appear before the court. Ifhe does not appear in obedience to the summons, a justice of the peace may issue a warrant forhis arrest, or, without issuing a summons, issue in the first instance a warrant for his arrest. Thewarrant of arrest may be executed anywhere in England and Wales by any person to whom it isdirected or by any constable acting within his police area.

4.75 If the court makes a finding that the failure to make payment was due to wilful refusal orculpable neglect, it can:

a. issue a warrant of commitment for the debtor to be imprisoned for a period notexceeding 3 months;

b. fix a term of imprisonment and postpone the issue of the warrant until such timeand on such conditions as the court thinks fit;

c. refuse to issue a warrant or to fix a term of imprisonment.

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4.76 In carrying out the inquiry into means, the magistrates must give the defendant a properopportunity to put his case and, if the circumstances require, the court should not refuse theassistance of a ÒfriendÓ or deny cross-examination of the billing authority witness.

4.77 Even if the magistrates establish that there has been wilful refusal or culpable neglect,they still have discretion and can refuse to issue a warrant of commitment. Case law hasestablished that commitment orders Òshould only be made if there is no other way to induce the(debtor) to payÓ.83 If magistrates conclude that that there is no prospect of payment being made,then a warrant of commitment will not be made, since commitment could not compel payment.In circumstances such as these, the magistrates have the power to remit either the whole of thedebt outstanding or any part of it.

4.78 Commitment is a remedy of last resort; Òthe sole purpose of issuing a warrant ofcommitment is to compel the debtor to pay where he has the means to do soÓ84

4.79 Most of the English authorities surveyed indicated that in cases of prolonged non-payment, it was communicated to the debtor that committal action would be a possibility open tothe authority. Some informed the debtor of this option very early in the process of obtaining aliability order; some did so only after other remedies had been tried. Only a few of theauthorities could provide any statistics regarding the various points in the committal process.Table 22 below shows information relating to committal in the year 1997/98. It should be notedthat service of a committal notice does not automatically mean that a debtor is committed;virtually all committal notices are issued as suspended, to give the debtor an opportunity to payon an arrangement. Only the authorities listed eighth and tenth (last) in the table achievedcollection rates over the national average in 1997/98.

83 R v Oundle and Thrapston JJ and Delaney ex parte East Northamptonshire District Council (1980).84 R v Faversham and Sittingbourne MagistratesÕ court ex parte Ursell (1992)

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Table 22Survey information relating to committals in 1997/98 in England

No. ofcouncil tax

dwellings inauthority

area

No. of cases wheredebtor was advised

that committalaction was possible

No. ofcases

where acommittalnotice was

served

No. Of committalnotices served as a

% of the no. ofcases informed ofpossible committal

action

No. of caseswhere whole

prisonsentenceserved

No of caseswhere a part

sentencewas served

Averagelength of

prisonsentenceimposed(days)

101,356 2,400 0 N/A 0 0 0

38,801 13 0 N/A 0 0 0

101,016 2,000 0 N/A 0 0 0

90,795 5,050 0 N/A 0 0 0

105,506 2,500 7 0.28 0 1 18

404,421 3,712 452 12.2 17 10 42

226,694 4,512 115 2.5 4 3 23

39,970 _ 2 N/A _ _ 10

101,068 468 2 0.43 0 1 28

44,121 1,196 15 1.25 _ _ 28

4.80 It can be seen that for all of the authorities responding, only a small percentage of totalbills issued resulted in a debtor being notified that committal action was a possible step if non-payment continued; 5.5% in relation to one authority, and less than 3% for the remainder. Fourof the authorities communicated with debtors that committal action may be pursued, but did notultimately seek service of a committal summons on the debtor. Of these four, two authoritiesindicated that the act of informing the debtor that service of a committal notice was possible wasan effective measure in securing payment. The remaining two authorities indicated that theaction was moderately effective. Of the remaining six authorities three regarded the action ofadvising debtors of possible committal action as an effective measure for securing payment.Three authorities rated it as only moderately effective. Additionally, one authority, whichexpressed an opinion on this matter, but did not supply any committal statistics and was nottherefore included in the above table, rated the action of ÔthreateningÕ committal as Ônot veryeffectiveÕ.

4.81 In practice, only very few people are ever subjected to this sanction and of those againstwhom committal orders are made, only a very small proportion actually serve any time in prison.Rarely, in the opinion of most English revenues practitioners interviewed, does any debtor servethe whole of their sentence as payment of the sum due immediately secures their release and inany case, magistrates are reluctant to make committal orders except in cases of outright wilfulrefusal to pay the debt.

4.82 In all but one response, the number of committal notices served was less than 3% of thetotal number of cases where the possibility of committal action was advised. Only one authorityreported actual committal cases in double figures. The fact that only a very small percentage ofÔthreatsÕ of committal were translated into cases of committal notices being served, may supportthe generally held opinion by English revenues practitioners interviewed that committal as a

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threat is an effective enforcement tool. A commonly held view was expressed by one Englishrevenues officer:

ÒPractitioners know Ôin their waterÕ that it [committal] is working; but they do not seekcommittal, because in terms of achieving payment it is a failure. It is the threat ofcommittal which produces payment at the last moment Ð even hard-line debtors willproduce the cashÓ

4.83 The same person went on to say:

Ò One London Borough I visited recently used to be very active in seeking committal, butthe revenues officer there can hardly remember when they last sought the measure. Butthey still exercise the threat, and they believe that a lot of arrangements are runningsuccessfully because of that threatÓ

4.84 One Council (with an in-year collection rate of 98.5%) states in its Annual Report for1997/98:

ÒThe ultimate step in the recovery of Council Tax is an application to the Magistrates tocommit the taxpayer to prison. As we want to avoid this wherever possible, we alwaysattempt every alternative means of recovering the debt before this action is takenÉ ÒWecontinue to utilise our Ôlast resortÕ of committal to prison in appropriate cases, and thisyear has seen the referral of 404 new cases. In the vast majority of cases, committal toprison is suspended provided regular payments are maintained. Last year, no taxpayersactually served prison sentencesÓ.

4.85 Again, the value of this particular remedy is mostly in the threat rather than in its use.There is little doubt, in the opinion of both the Head of Revenues for the authority quoted aboveand English interviewees in general, that the suggestion to a debtor that they could be taken toCourt and an order sought for their committal to prison, does have a salutary effect andencourages payment without the actual need to resort to this particular type of Court action.

Imprisonment Ð an historical perspective of Scotland

4.86 Prior to the implementation of the Debtors (Scotland) Act 1987, powers for imprisonmentfor non-payment of rates was contained in the S.247 (5) of the 1947 Act. Thereafter the powerwas lost but it is interesting to recite the original power :

S.247 (Original 1947 Act)85

"(5) Where goods or effects sufficient for the payment of the rate cannot be found to bepoinded, it shall be lawful for the sheriff, subject to the provisions of section five of theCivil Imprisonment (Scotland) Act, 1882, by warrant to commit the defaulter to prison,there to be kept without bail until payment is made or security for payment is given."

85 S.247(5) of the Local Government Scotland Act 1947

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4.87 It is also worth noting the commentary made by C. S. Page86 a leading expert in this field:

ÒImprisonment can be regarded as the last resort in the case of arrears of rates, and theprocess is used sparingly, but it does offer a powerful ultimate sanction which strengthensthe whole recovery procedure."

4.88 The research team were unable to find evidence of use of the power to imprisonimmediately prior to its removal by Schedule 4 of the Debtors (Scotland) Act 1987. However atleast one authority did issue notices informing debtors of this possible course of action; theRevenues Officer provided evidence that this information did have a marked effect on thepayment rate among debtors so notified.

4.89 The research team put forward the view that the role of committal as one of a range ofenforcement options may be worthy of further examination.

Other enforcement methods suggested in interview

Suspension of the right to buy council houses

4.90 Several Scottish revenues officers put forward the view in interview that the right to buycouncil houses under the Tenants Rights Etc. (Scotland) Act 1980 should be suspended in caseswhere the tenant has outstanding community charge/council tax arrears in respect of theproperty. This measure was also consulted on by the Scottish Office/ COSLA87. Englishrespondents expressed no views on this issue. The research team is aware of one Englishauthority (not part of the sample group) that for a time operated a policy under which councilhouse sales were suspended if a council tax debt was outstanding, viewing this stance as prudentfinancial management. The authority however later discontinued this policy as it came undercriticism and there was no legal provision on which to base it.

Penalty of eviction for council tenants not paying council tax

4.91 The view was put forward by a small number of Sheriff Officers that the biggest problemin terms of council tax debt that cannot be enforced lies with debtors in public sector housing.He stated, Òmany wonÕt pay council tax voluntarily but they will pay their rent, because if theydonÕt they know they run the threat of being evictedÓ. He thought that it was anomalous that theauthority had the power of eviction for rent debt relating to occupation of a council property,whilst council tax debt to the council accrued by reason of occupation of the same property couldnot be pursued satisfactorily. He felt that there was great merit in examining whether changes intenancy agreements could be made so that in future any council tax debt in respect of a counciltenancy could carry the penalty of eviction. When the research team during informal discussionsraised this issue with revenues practitioners, most agreed that the proposal had merit, and somelinked any introduction of the measure as meeting the principles of Ôjoined up governmentÕ.

86 Local Finance in Scotland: C.S.Page published by Hodge & Co. Glasgow - now out of print87 It Pays to collect Ð A Consultative Document by the Joint Scottish Office/ COSLA Working Group on CouncilTax Collection.

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Interaction of community charge debt with council tax enforcement

4.92 From a comparison of figures88 for the years 1996/97 and 1997/98, every £1 reported byScottish councils to the Scottish Office as being spent on community charge recovery hasresulted on average in £5 on community charge being paid. One revenues practitioner agreedthat this figure is Ônot too far from realityÕ in his authority, but only applied to certain categoriesof ÔworkableÕ debt. For example, it may reflect the costs related to a tier of relatively easilytraceable debt, but Òit would not hold true for the deeper layers of debt which to all intents andpurposes are never going to be recoveredÓ.

4.93 It is not possible based on data available to analyse with accuracy how many non-payersof council tax also owe community charge arrears. One revenues officer interviewed was of theopinion that the majority of council tax debtors in his authority owed some community chargedebt to the authority, but that there was very little reliable information available to assist inestablishing the necessary liability trails, and hence to support his view. Another authority statedthat between 30% and 40% of adults had been identified as having community charge arrearsand that most of these were now council taxpayers. The suggestion has been put forward byseveral Scottish revenues practitioners that, subject to the taxpayerÕs approval, any communitycharge debt now recovered (some of the debts being up to ten years old) should be credited to thecurrent year. This would have the effect of improving the in-year collection performance. OneRevenues Officer provided information regarding sums received in respect of Income Supportdeductions, which related to Community Charge arrears from people with council tax arrears. Ifthe deductions had been applied to the year 1997/98 they would have resulted in his in-yearcollection performance being increase by 0.2%.

4.94 Furthermore if the local authority started writing off community charge debt, butcontinued to collect community charge arrears as they were identified, and credited them to thecurrent year, there would be a refocusing of resources towards in-year collection, andopportunities to persuade bad payers to move to regular monthly payment commitments. Recentinformation89 obtained from Scottish practitioners reveals that all Scottish authorities except onehad collected up to their level of provision for bad debt in respect of community charge. Withinthat provision many authorities had not written off substantial amounts of uncollectable debt.Several practitioners in interview were of the opinion that if all diligences have been exhaustedin pursuing community charge debt (and in many cases this will simply mean that a poinding hasrevealed that there are insufficient assets to extinguish the debt), then that debt should be writtenoff as good accounting practice using the provisions which they already carry for bad or doubtfuldebt.

Effectiveness of enforcement processes

4.95 The results of the questionnaires conducted with local authorities in England and Walesand in Scotland brought forth opinions as to the effectiveness of various forms of recovery andenforcement action, as summarised in Table 23 and 24. Although this cannot be quantified

88 Scottish Executive Local Government Finance Statistics Unit89 Reported at June 1999 meeting of Institute of Revenues, Rating and Valuation Scottish Branch.

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from formal data, it is nonetheless useful to include a short section at this point setting out theseviews. Generally, Scottish and English respondents both regarded deductions from incomesupport and earnings arrestments as very effective or effective measures, to roughly the sameextent; and both groups had similar attitudes to the effectiveness of using requests forinformation (viewed mainly as not very effective). Scottish respondents expressing an opiniongenerally regarded poinding as more effective than the English respondents did the distraint ofgoods without seizure; the opinions on warrant sale and seizure of goods through distress showedthat English respondents thought it marginally more effective. Scottish respondents showed ahigher regard for the effectiveness of procedures leading to sequestrations than did Englishrespondents for insolvency proceedings (see also para. 71 in this chapter). Given that Scottishauthorities used sequestration measures very infrequently, the comparatively high threshold levelfor beginning sequestration proceedings in Scotland (see Table 21), and the difficulties reportedin some authorities regarding the use of poinding and warrant sale, the responses may indicatethat Scottish respondents have answered these questions on the basis of the potentialeffectiveness of the actions, rather than their actual effectiveness.

Table 23Opinions regarding effectiveness of recovery and enforcement actions - Scotland

Very Not Very NoEffective Effective Effective Ineffective Opinion Total

Methods of Enforcement % % % % % %Deductions from IncomeSupport/JSA

7 63 13 0 17 100

Requests for Information 0 17 40 17 27 100Poinding 13 30 27 7 23 100Poinding and Warrant Sale 10 17 17 3 53 100Earnings Arrestments. 43 30 0 0 27 100Arrestment and Action ofFurthcoming

13 30 23 0 33 100

Procedures l ead ing toInsolvency/Sequestrations.

7 17 20 3 53 100

Inhibitions: 13 17 13 3 53 100Special Arrangements to pay 7 40 13 3 37 100

Note : 30 Councils made comment.

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Table 24Opinions regarding effectiveness of recovery and enforcement actions - England

Very Not Very NoEffective Effective Effective Ineffective Opinion Total

Methods of Enforcement % % % % % %Deductions from IncomeSupport/JSA

15 50 5 0 30 100

Requests for Information 0 15 40 10 35 100Distraint without seizure ofgoods

0 35 5 0 60 100

Distraint with seizure of goods 10 25 10 0 55 100Earnings Arrestments. 50 20 0 0 30 100Attachment of MembersAllowances

10 5 0 0 85 100

Procedures l ead ing toInsolvency/Sequestrations

0 0 15 10 75 100

Legal Charges 0 5 15 0 80 100Cases where debtor advisedcommittal was pending

0 25 25 5 45 100

Cases where committal orderwere made by the court

5 25 5 5 60 100

Special Arrangements to pay 0 35 10 0 55 100

Note : 20 Councils made comment.

Summary

4.96 The purpose of this chapter has been to examine the principal legislative differences inthe law governing council tax in Scotland and England from the enforcement stage. The mainfindings of the chapter are summarised as follows:

Summary 3Showing main points raised in Chapter 4

Para. Summary Point4.2 and4.3

Some English authority respondents are of the view that the issue of thesummons and the public nature of the hearing has a deterrent effect on thedebtor. The majority of Scottish revenues officers interviewed felt thatthere were advantages in the English system of summoning the debtor tocourt and notification of court action prior to an order being granted, interms of impact on in-year collection rates. Scottish councils have theflexibility to do this, by obtaining a separate decree in an action for paymentinstead of Summary Warrant. Although administratively cumbersome andrelatively expensive in relation to an application for Summary Warrant, theresearch team feels that Scottish revenues officers should give considerationto the wider use of actions for payment in appropriate cases.

4.7 English local authorities have greater direct control of the variousenforcement remedies than those in Scotland because they do not have touse a Sheriff Officer, and can switch between remedies more easily.

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Para. Summary Point4.9 Analysis of the data indicates that the number of recovery runs carried out

in 1997/98 did not have an appreciable effect on the collection ratesachieved.

4.11 The number of cases going on and off Income Support impacts more onScottish recovery processes than those in England; this is due to thedifference in accruing tax burdens, the processing of applications forattachment of Income Support, and the interface with Sheriff Officers.

4.13 A typical taxpayer in England on Income Support with no local tax arrearswill not have any council tax liability in respect of the period he is claimingIncome Support and will not figure in local authority recovery cycles. Asimilar typical taxpayer in Scotland will however continue to figure in thecouncil tax billing runs and recovery cycles because of their liability forwater and sewerage charges.

4.14 Scotland has a higher percentage of residents on Income Support thanEngland and consequently will require administering potentially morearrears accounts. It can be seen that Scotland also has a higher percentage ofCouncil Tax Benefit Claimants in receipt of Income Support. The majorityof dwellings are connected to mains water and sewerage and accordingly itis likely that Scotland will require to administer more Attachments ofIncome Support than would be the case in England because of the existenceof Water and Sewerage charges.

4.15 to4.22

The length of time taken to reach Summary Warrant stage in an authorityhas an impact on the earliest date on which attachment of Income Supportmay commence. Some Scottish practitioners reported that their authoritieswere experiencing significant difficulties in the processing of applicationsfor Income Support by the Benefits Agency. Factors were the backlogs ofapplications to be processed, low limits of numbers of applications that theAgency would undertake to process over a given time period, the frequencyof the allocation of deduction payments to the authority, and the allocationof deductions to particular yearsÕ arrears. The small sample of Englishauthorities did not report significant problems in these repects.

4.23 The research team believe that a mechanism for voluntary deductions fromincome support for council tax payments, as suggested by Scottishpractitioners, is worthy of further consideration

4.26 There was a higher percentage of debt passed to Sheriff Officers for counciltax recovery action in Scotland than passed to bailiffs in England in1997/98. The percentage of debt outstanding at year-end in the hands of theSheriff Officers was however much higher than the percentage of the debtin the hands of the English bailiffs. This is attributed to the fact that casestook much longer to reach court action in Scotland, the effect of the Debtors(Scotland) Act 1987, the prevailing political environment andcommunications between the local authorities and the Sheriff Officers.

4.27 In the view of most Scottish revenues practitioners, there are widerrestrictions in Scotland regarding those goods that can be subject topoinding than prevail in England with respect to goods available for

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Para. Summary Pointdistraint.

4.28 to4.30

The value of the sanction of poinding and warrant sale is regarded by mostof the Scottish respondents as being closely linked with the debtorÕsperception of the likelihood of the action of warrant sale taking place. MostScottish revenues officer felt that the provisions of the Debtors (Scotland)Act 1987 were so extensive in the restriction of goods available to bepoinded, that few household items of reasonable value would be availablein low to middle income group households to make a warrant sale realistic.Other creditors have expressed similar views.

4.32 to4.34

It is contended that it is the threat of removal of personal goods for aWarrant Sale that is more effective than the actual event itself. WarrantSales, when seen as being a real option for use in an area, underscore thevalue to the debtor of maintaining arrangements made for payment.Statistics on poinding provided by Sheriff Officers suggest that the realeffect of this action in securing payment is greater than previously assumed.Poinding is also a tool for the local authority to prove that a debtor hasinsufficient assets to meet the council tax bill, and as such it provides theauthority with a firm base for writing off the debt where all other diligenceshave been exhausted.

4.36 It is the view of the research team that the issue of the range of goodsprotected from poinding and warrant sale deserves re-examination, in viewof Scottish revenues practitionersÕ concerns about the impact that it has ontheir ability to use poinding and warrant sale effectively.

4.37 The (unwritten) policy of a number of Scottish local authorities todiscourage warrant sales has an inhibiting effect on the ability to enforce therecovery of the debt. One authority is reported to have publicly declaredthat it will no longer allow poindings and warrant sales to take place. In theopinion of the Sheriff Officers this political discouragement of WarrantSales seriously hampers them and the local authority staff from carrying outtheir duties properly and effectively, and that if current enforcementprovisions are to be successful this political discouragement should beremoved. It is not expected by the Sheriff Officers interviewed that theremoval of such discouragement would lead to a substantial increase in thenumber of warrant sales carried out. It is felt however that Sheriff Officerswould be free to use the threat of such action to encourage payment of thedebt.The Society of Messengers at Arms and Sheriff Officers stated that it sawmerit in establishing regular liaison meetings with Revenues Officers toshare information and views on enforcement issues.

4.39 The key issues regarding communications between Scottish local authoritiesand Sheriff Officers relate to: Codes of practice and service levelagreements; The quality of information transferred; The monitoring ofcaseloads; Special payment arrangements; The way in which information istransferred; and The time taken to transfer information. All impinge on thein-year collection rate.

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Para. Summary Point4.40 Service level agreements should be more widely used and would be more

appropriate than the Codes of Practice/ Conduct currently in force. It isimportant to recognise that such agreements place responsibilities on boththe Sheriff Officer and the local authority.

4.40 Most English local authorities have detailed codes of practice as a part oftheir contracts with their bailiffs. These codes not only regulate the actionsthe bailiffs may take, it also directs them to areas of priority and actions tobe taken in certain specified situations such as dealing with vulnerable ordisabled people.

4.41 Only half of the ten Scottish authorities interviewed had any form of Codeof Practice with their Sheriff Officers, and these were generally more basicin their range of specifications than the majority of English codes ofpractice. Service level agreements were not used in the majority of Scottishauthorities. It is the view of the research team that the introduction ofservice level agreements is important. Through such documentation, bothparties are made fully aware of their obligations to, and the expectations of,the other.

4.42 Sheriff Officers reported that Codes of Practice were uncommon. In theirview, where they were used, they tended to be too prescriptive, too finelydetailed and could even be considered insulting to Sheriff Officers asOfficers of Court. Sheriff Officers expressed the opinion that service levelagreements should be more widely used and would be more appropriatethan the Codes of Practice/ Conduct currently in force.

4.43 Sheriff Officers identified that the quality of information coming throughfrom councils in the study year had been of poor quality; it had improvedhowever in subsequent years. A couple of authorities are now workingclosely with a large Sheriff Officer firm to address this issue. They haveidentified poor quality data as falling into two main areas; that relating toÔgone awaysÕ and that relating to Ôwithdrawals by clientÕ. In this lattercategory fall cases about which some query has risen; for example theliability may be wrong, or the period of billing may be incorrect. Thecouncil is working with the Sheriff Officer to identify and rectify theproblems, with some success.

4.44 to4.46

Until recently there has been little evidence of monitoring by localauthorities of the caseload passed to Sheriff Officers. Generally Englishlocal authorities take a much more proactive role in the monitoring ofcaseload passed to bailiffs.

4.47 Monitoring arrangements introduced by one authority had producedconsiderable savings. It could not be linked directly with an increase incollection rates, but was felt to have a positive effect on overall collectionrates. Such monitoring of the work of the Sheriff Officer, an officer ofcourt, has caused some difficulties and met stiff resistance at least one firm.

4.48 Many Scottish authorities direct their Sheriff Officers to accept whateverarrears payment that is offered, or extended instalment payments. It issuggested by the research team that broad guidelines on this should be

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Para. Summary Pointcontained in a Code of Practice or similar document; and that the SheriffOfficer is then left to determine the merits of arrangements in each case.Better communication is required between the council and the SheriffOfficer to prevent conflicting payment arrangements being agreed with adebtor.

4.49 A number of Scottish authorities reported that they were making somearrangements for payments directly with debtors. This was done either bytaking back cases from the Sheriff Officer, if in the opinion of the authoritythe debt had not been ÔworkedÕ sufficiently by the Sheriff Officer, or bymaking arrangements with the debtor prior to the case being passed over tothe Sheriff Officer firms.

4.51 The research team put forward the view that whether debts are pursueddirectly by the authority or passed to the Sheriff Officers to deal with, thereis merit in establishing debt recovery teams within revenues sections. Sucha team would be to ensure that the physical side of recovery is split from thebilling process, recovery work commences as soon as possible afterreminder and final notice periods are passed and that all debts are workedregularly. As has been identified in some English authority practice, therole of Sheriff Officer liaison could lie within the debt recovery team;dealing on a dynamic basis with cases where the debt is likely to proveirrecoverable; developing management information.

4.52 It is the view of the research team that the current software in most Scottishauthorities is not sufficiently developed to allow the council to fully monitorand recover instalments made under special arrangements, and that theprocess requires manual input in most cases.

4.53and4.54

In most Scottish revenues sections there is electronic data transfer betweenthe council and the Sheriff Officers but effective management informationavailable to the revenues manager has not been developed to the sameextent.

4.55and4.56

The long time lapses between the granting of Summary Warrants and thepassing of the caseload to the Sheriff Officer did not give the firms arealistic opportunity to make any impact on outstanding debt. Localauthority action post-issue of the Summary Warrant was identified bySheriff Officers as a factor. Sheriff Officers also reported a regulardifficulty of suspected Ôpolitical stallingÕ, with some councils not makingdecisions on taking poindings forward to warrant sale, to the extent that the12 month time limit for actioning the sale expired. Sheriff Officers couldgo back and poind against the debtor once more, but none of the goodslisted on the original schedule could be entered on any subsequent occasionand so the range of goods available on which to poind on return visits wasreduced. One Sheriff Officer described the situation as Ôpolitical stallingÕ,so that they could avoid decisions on warrant sale

4.57 There is merit in working towards a more coordinated approach between theBenefits Agency and the local authorities, and in considering clarification ofthe law relating to retrospective benefits awards.

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Para. Summary Point4.58 Sheriff Officers in interview stated that whilst the research was based on

data from the year 1997/98, it was important to emphasise the changes inoutlook by Scottish authorities over the last couple of years. They weremuch more likely to want to work out ways of enhancing their collectionrates in conjunction with Sheriff Officers.

4.61 It is suggested that the powers available to the Assessor to assist him ingathering information in exercise of his duties, could be similarly madeavailable to the council to assist in council tax revenues collection.

4.64 When a debtor in Scotland leaves an employment, he is not under any dutyto inform the Sheriff Officer or the local authority of details of any newemployment. Such a duty should be considered along with an additionalrequirement to supply any other financial information deemed to benecessary by the council. In the research teamÕs view, it would negate callsby some Scottish revenue practitioners to administer earnings arrestmentsdirectly. Several practitioners have similarly called for access to InlandRevenue tax records in order to assist in tracing debtorsÕ employmentdetails. The research team believes that the introduction of powersrequiring the debtor to provide the authority or Sheriff Officer withemployment and financial details would make this measure difficult tojustify.

4.65 Several of Scottish revenues practitioners also suggested that access toInland Revenue Tax records would be of considerable assistance in tracingdebtorsÕ employment details. The research team considers that such a majorchange would be unnecessary if adequate powers were given to the localauthority/ Sheriff Officer to require employment and financial details fromdebtors.

4.67 The view of the research team is that an annual uprating (in line withinflation) should be carried out regarding the maximum wage deductionsthat can be made for earnings arrestment. It should be noted however thatthis collective view is not based on any responses by interviewees

4.68 It is suggested that there should be greater compulsion on banks in Scotlandto provide details of whether an account is subject to an arrestment order. Amore streamlined process for releasing the funds ought to be considered.

4.71 Some Scottish revenues officers interviewed expressed the opinion that thepower to sequestrate would be more readily used by them if the minimumlevel of debt was lowered £1500 to £750, and would enable them in manycases to start proceedings in relation to a single yearÕs debt. The researchteam believes that this proposal should be considered.

4.77 In England,case law has established that committal orders Òshould only bemade if there is no other way to induce the (debtor) to payÓ.90 Ifmagistrates conclude that that there is no prospect of payment being made,then a warrant of commitment will not be made, since commitment couldnot compel payment. In circumstances such as these, the magistrates have

90 R v Oundle and Thrapston JJ and Delaney ex parte East Northamptonshire District Council (1980).

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Para. Summary Pointthe power to remit either the whole of the debt outstanding or any part of it.

4.82 In England, only a very small percentage of ÔthreatsÕ of committal weretranslated into cases of committal notice being served. The threat ofcommittal produces payment of arrears.

4.89 The research team put forward the view that the role of committal as one ofa range of enforcement options may be worthy of further examination.

4.90 It is suggested that consideration should be given to limiting the right to buycouncil houses under the Tenants Rights Etc. (Scotland) Act 1980 for thosewho have council tax arrears.

4.91 The research team believes that there may be merit in examining whetherchanges in tenancy agreements could be made so that in future any counciltax debt in respect of a council tenancy could carry the penalty of eviction.

4.93and4.94

Any community charge debt now recovered (some of the debts being up toten years old) should be credited to the current year. The research teamwould support this approach.If all diligences have been exhausted in pursuing community charge debt(and in many cases this will simply mean that a poinding has revealed thatthere are insufficient assets to extinguish the debt), then that debt should bewritten off as good accounting practice using the provisions which theyalready carry for bad or doubtful debt.

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CHAPTERÊ5 A COMPARATIVE ANALYSIS OF THE USE OFINFORMATION TECHNOLOGY (IT) AND INFORMATION SYSTEMS(IS) IN COUNCIL TAX IN SCOTLAND AND ENGLAND.

Introduction

5.1 This chapter examines the use of Information Technology and Information Systems in thecouncil tax processes in Scotland and England.

5.2 The extensive use of IT and IS is essential if the complex legislation and processesassociated with a local taxation collection, recovery and enforcement system are to be properlyadministered and efficiently executed.

5.3 The pace of development in the IT/IS fields has more than matched the expanding needsand requirements of the users. As an example, the facilities of document imaging and workflowhave enabled the management of data and documents through the widespread centralisation ofbilling, collection and recovery of council tax and of housing and council tax benefitsadministration, whilst allowing enquiry and assessment facilities to operate in a de-centralisedstructure. The development of these IT/IS facilities has enhanced the potential for local provisionof these services with greater reliability of, and access to, up to date information at remotelocations. The workflow and document management facilities also considerably enhanced theadministration and management of these functions, which can produce major economies andefficiencies.

5.4 In 1997/8, the vast majority of English local authorities had stable computer systems,operating to English legislative requirements. Many Scottish local authorities were either in theprocess of converting to or using newly installed systems that had been adapted from Englishsystems in order to meet the principal needs of Scottish local authorities and were undergoingreview and consolidation.

Reorganisation

5.5 Reorganisation led to the dissemination of IT facilities amongst unitary authorities and toinevitable learning curves for the new authorities. On break up of the former RegionalCouncils, the IS/IT facilities were transferred to the major successor Unitary Authority who insome cases continued to supply the council tax and residual community charge systems to theother, new, unitary authorities. Not always though were the existing systems ideally placed foragency service and problems quickly became apparent, so that each of the new unitaryauthorities began to examine the potential for installation of their own systems.

5.6 The difficult IS/IT position was further exacerbated by the need to integrate the housingbenefits systems from the former district councils and the council tax benefits systems from theformer regional councils. Additionally there was the need for inexperienced staff to learn,rapidly, the demands and limits of the existing, unfamiliar, systems.

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5.7 In some instances following reorganisation, the former Regional Council computerservice provider continued to provide that service to unitary authorities, using either in-housesoftware or externally provided software, in the hands of the major successor unitary authority.In other instances the unitary authority has sought to provide the service itself from the existingfacilities of one or more of the former district councils. In other instances, the software wasprovided by a software house and the service provided by either the in-house service provider orby the former Regional Council service.

5.8 Added to these variations in service provision was the issue of the use of a mixture ofhousing and council tax benefit systems, some inherited from the former Regional Councils andsome from the former district councils. Tables later in this chapter illustrate the range andmultiplicity of systems used by the unitary authorities to supply systems to their users (therevenues and benefits administrations) and the many permutations between revenues andbenefits systems.

5.9 The wider the range of software suppliers, the greater the complexities associated notonly with supply of an efficient and effective IT service by the service provider, but also in usingand exploiting the systems to best effect by the users.

5.10 The problems associated with reorganisation and the preparation for disaggregation offunctions following reorganisation were regarded by many Scottish respondents in interview asinhibiting the development of IT/IS facilities during the period 1997/98.

The impact of IT/ IS on council tax functions

5.11 One research team member, having formerly been a software developer with a majorcomputer supplier to the public sector points out that, from practical experience gained indeveloping both community charge and council tax systems, the recovery and enforcementprocesses are the most complex parts of the revenues computer systems. Because of theircomplexity, they are generally last to be properly compiled and installed. Lack of reliablesoftware for recovery and enforcement processes reduces confidence of users in the reliability ofavailable data; some practitioners suggested that because of this lack of confidence, rather longerand more complex manual processes had to be implemented in the short term. Some Scottishauthorities did not have any major problems in these respects, but those which were affectedexperienced difficulties in operating the recovery and enforcement cycles. Three authorities didnot submit applications for Summary Warrants at all within 1997/98 due to computer problems,and other Scottish respondents reported significant difficulties with their systems that pushedback recovery and enforcement timescales:

Ò Our IT facilities have had a dramatic impact on our collection performance Ð our firstreminders could not go out until September 1997 and Summary Warrants were notapplied for until early 1998Ó.

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Ò We suffered a 10% loss in the year of IT conversion [1997]. Recovery was on holdfrom October 1997 to August 1998; we had no computer processing for three months[October 1997 to January 1998]Ó.

5.12 It is interesting to compare these responses with those made by two Welsh authorities.These councils solely undertook aggregation of functions due to reorganisation (see chapter 2paragraph 11), whereas most Scottish authorities also faced disaggregation of functions (onlyone English authority faced aggregation, and none faced disaggregation). Whilst the two Welshauthorities only faced some of the difficulties that reorganisation presented Scottish authorities,they both commented that ensuing IT problems had marked effects on council tax collection:

Ò IT has had a huge impact. Three IT systems had to be incorporated on reorganisationand months of processing work were lost in the chaosÓ. [This authority achieved acollection rate in 1997/98 almost 3% below the Welsh average figure].

Ò An IT system move (combined with an office move), shortly after a few reminders weresent out, led to significant delays. We are still catching up on the lost revenues itcausedÓ. [This authority achieved a collection rate in 1997/98 4.5% below the Welshaverage figure].

5.13 One other Welsh authority revenues officer, who rang to apologise for not being able toreturn the questionnaire for the survey, said that a difficult IT changeover meant that hisauthority was [at that time in 1999] without any processing capability and were unable to accessany information stored on computer, and would be for some time to come; this mirrors thesituation faced by several Scottish councils.

5.14 IT systems also impacted significantly in Scotland with respect to the ease with whichsome authorities could process special payment arrangements (which are discussed in greaterdetail in chapter 4 paras. 48-50), because the software specifications meant that thesearrangements required manual processing. As one authority described:

ÒWe had over £1 million in arrangement money promised last year [1998/99]; for manyin long-term arrears it is the best way to get them to pay. But arrangements are resourceintensive for us because we have to check each case manually on a regular basis to see ifthe arrangement is being kept up by the debtor. That is because the computer system willnot deal with special arrangements for cases once a summary warrant has been granted.We are trying to change this. WeÕve written a specification for the Software Companyand they hope to develop the software to deal with this situation within a year.Ó

In-house and external suppliers

5.15 In Scotland, the proportion of local authorities using in-house systems compared with theuse of systems supplied by software houses is much greater than in England and Wales. Fromthe samples taken in the survey, and from information supplied in the questionnaires, only three

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English or Welsh local authorities used in-house systems for council tax compared with 14Scottish local authorities using in-house systems for that function.

5.16 This is most significant, however, only if taken in the context of provision by softwarehouses of suitable systems to meet the requirements of Scottish Law and council tax collectionpractices and procedures. Interviews with two Scottish authorities revealed that in thepractitionersÕ opinions, two software companies had serious shortcomings in their product, interms of being able to address the needs of Scottish councils. Another reported that whilst theirprovider provided a core package, there were many additional important items that had yet to beincorporated into the system. Four respondents were of the opinion that software houses wereslow to realise the requirement for council tax systems specific to Scottish needs, and thosesystems that were provided were by and large adaptations of the systems provided specifically tomeet the legal and administrative requirements of English local authorities. Their Inadequacieswere in some instances still creating problems for their users in Scotland in 1997/98:

ÒThe ability of this Council to effect any recovery processes during 1997/98 was entirelyhampered by the inability of the software supplier to deliver clearly specified workingsoftware on time. This had a serious impact on the CouncilÕs statutory PI [performanceindicator] on Council Tax collection for 1997/98Ó.

ÒWe are still waiting for contracted enhancements to our system. We need upgrades tothe collection facilities to allow more variety of payment methods. We have plans for adebt management system to be able to collect multiple debt via direct debit.Ó

ÒOur software does not provide effective management of the Income Support caseload[attachment of benefit]; it does not provide a link with Sheriff Officers; it does not allowsufficient instalment management because we cannot make instalment adjustmentssubsequent to Warrant action being taken; it does not allow targeting of particular cases,for example, debtors who have paid previously by earnings arrestment; it does not allowus to identify whether someone who is in debt paid previously by direct debit; it does notallow us to identify bank account details of a previous payer who is now in debt; and itdoes not allow flexible report writing.Ó

5.17 The following comment reveals the Ôflip-sideÕ to frustrations felt by one authority withtheir externally supplied council tax revenues system:

ÒWe got burnt with developing our community charge system in-house, so there was noway weÕd go that route again. For all the problems of breaking in an external package,itÕs no where near as bad as going it alone from the start.Ó

5.18 Despite the view expressed above, it is worth noting the comment made by Kneen andTravers91 in relation to the implementation stages of council tax:

91 Page 31 of ÒImplementing Council TaxÓ by Pat Kneen and Tony Travers sponsored jointly by the JosephRowntree Foundation and the Local Government Chronicle Ð published by LGC Communications 1994.

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ÒIt would appear that those who were dependant upon external suppliers had a moredifficult time, partly because of the orientation of the software houses to the dominantEnglish market. There was no software available which was designed specifically tomeet Scottish requirements and the Scottish users had to make do with often imperfectadaptations of English software.

5.19 Interviewees using in-house packages were generally less expansive about aspects oftheir software packages. Analysis of the survey data could not identify any trend in collectionrates regarding the use of in-house developed packages or externally supplied packages. Sevenof the fourteen authorities using in-house systems had in-year collection rates below the Scottishaverage, and seven above. All four authorities using one particular supplier had collection ratesabove the national average, as did two councils using a different supplier, and one authorityusing another software provider. Authorities using other software suppliers achieved a range ofcollection rates above and below the national average.

Embracing new information technology

5.20 The findings from the sample groups suggest that Scottish local authorities have beenslower than their English and Welsh counterparts in embracing the new technologies ofdocument imaging, document management, workflow etc. From the information supplied by30 Scottish and 20 English and Welsh councils the following table gives the relative number ofcouncils using each of these technologies:

Table 25Use of different types of document systems within survey groups in Scotland and England

in 1997/98England Scotland

Facility Out of 20Councils

Out of 30Councils

Document Imaging Systems 8 1Document Management Systems 4 2

Workflow Systems. 4 1

It is clear however from the interviews that Scottish local authorities are rapidly reversing thissituation and since 1997, several Scottish local authorities have undertaken feasibility studies foracquisition of new facilities including the latest document and workflow systems and some havebegun installation and implementation of their new systems.

Progress since reorganisation

5.21 However, even given these problems, there has been considerable action and it has beenpossible to draw up specifications of requirements and to make considerable progress with thesoftware houses over provision of systems specific to Scottish law and practice requirements.

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5.22 In interview, a few of the Scottish revenues officers were of the opinion that there hadbeen substantial improvements made to the IT/IS provision both by internal suppliers and bysoftware houses since the baseline research year of 1997/98. The improvements centre on theprovision of system enhancements and upgrades.

5.23 The result of this considerable activity has been that some of the software suppliers areworking closely with their potential or actual customers on the new software which, in mostinstances, will enable the users to exploit the facilities now available in information systems andfacilities. Several users have recently begun procurement exercises in relation to documentimage systems incorporating document management and workflow.

5.24 The activity has not, however, been confined to external software suppliers, as someunitary authorities are now re-examining their in-house systems to determine whether or not theymeet modern requirements of their users with a view to rewriting those systems as necessary orare seeking to purchase systems being developed and supplied by external software houses.

Comparative analysis of use of IT/IS

5.25 The following tables set out the extent of the differences in the use and exploitation ofIT/IS services and facilities between Scotland and England and Wales:

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Table 26Use of IT/IS services in Scotland and England

CategoryScotland:

% of 30 councils withincategory

England: % of 20 councils within

categoryComputer HardwareUnix based system 40 25Mainframe based system 60 75

100 100

Computer Service ProviderIn-house service provider 43 75External service provider 57 25

100 100

Benefits Software2 types of software used 30 NilDifferent from Billing software 33 15

Council Tax SoftwareInherited Software 90 NilNew Benefits & Council Tax 20 10Installing combined benefits 17 10Installing new software 13 10Migrated to new software 10 10Migrating from start of year 3 Nil

Software FunctionalitySaid to be fully functional 3 5Said not to be fully functional for :-Housing Benefit 13 NilCouncil Tax 7 NilAll Benefits & Council Tax 7 5

Using Tele- CollectionIn-house call centre 30 15External Call centre 13 5

5.26 The next two tables set out the percentages of local authorities in Scotland and inEngland and Wales using systems from the various suppliers of software for council tax, housingand council tax benefits administration.

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Table 27Percentage of 30 Scottish local authorities using the listed software providers in 1997/98:

Software HouseCouncil

TaxHousingBenefit

CouncilTax

Benefit% % %

Academy 3 7 3BCT 3 3BSL 13BullFirst Software. 13 10 13IBS 7 3 7ICL 13 7 13Inheri ted f romregion

7 17

In-house 47 33 54MDIS 3SaffronSanderson 7 7 7

Table 28Percentage of 20 English local authorities using the following software providers 1997/98:

Software HouseCouncil

TaxHousingBenefit

CouncilTax

Benefit% % %

Academy 7 13 13BCTBSLBullFirst Software 7 7 7IBS 3ICL 33 27 27Inheri ted f rompredecessor localauthority.

7 7 7

In-house. 3 3 7MDIS 7 7 7Others 33 36 36SaffronSanderson

5.27 From analysis of the data contained in Table 26, it can be seen that there has been ahigher level of stability of hardware and software usage in England. Twice as many sampleauthorities in Scotland were installing new benefits and council tax software in 1997/98 as in theEnglish sample. All of the Scottish sample were running two types of benefits software (whichin the view of the research team can give rise to interface difficulties), as compared with none ofthe English sample. The benefits software used differed from the brand of billing software used

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in twice as many of the Scottish sample as in the English; the use of different systems againsuggesting to the research team a greater scope for interface problems. Thirteen percent ofScottish authorities reported that their housing benefit systems were not fully functional,compared with no English sample authorities. It is the research teamÕs view that this hasprovided the benefit to local authorities of enabling them to exploit those systems to fulladvantage and to exploit opportunities presented by advances in IT and IS technology.

5.28 It can also be seen that a high proportion (40%) of Scottish authorities operate Unixbased operating systems, which is the system offered by a number of suppliers. It is the view ofthe research team from past experience of such systems that they require specific report writingskills to ensure that meaningful management reports are generated. It is important thatappropriate training is provided to appropriate revenues staff to enable the production of goodquality reports. Whilst respondents did not report specific problems relating to this issue, theresearch team is of the opinion that the difficulties experienced by several authorities ingenerating information for the research survey returns indicates that the relevant report writingexpertise may be limited.

5.29 Tables 27 and 28 indicate that a very high proportion of Scottish councils use in-housesystems, while very few of the English councils do so. The overall proportion of Englishauthorities using in-house systems is probably a little higher than the sample reveals, but stillsignificantly lower than for Scotland.

5.30 Now that Scottish local authorities are operating in a more settled environment post re-organisation, it is anticipated by the research team that they will be able to reap the benefits ofbedded-in systems, of systems enhancements and new advances in IT and IS development.

Summary

5.31 Overall, Scottish local authorities have faced major issues over IT and IS provisionduring the post-reorganisational period. In particular they have faced a lack of provision ofScottish specific software by some of the software houses and the failure of some in-housesystems to cope with the change from Community Charge to Council Tax. In addition therehave been major changes to the administration of housing and council tax benefits through theaggregation of systems since the abolition of the regional and district councils which have beenimpossible to encompass because the local authorities who administered these benefitspreviously did so separately. It is the conclusion of the research team that computer problemshave contributed to lower collection rates in Scotland in the study year of 1997/98; it is notpossible to estimate any actual percentage impact on collection rates due to these problems. OneScottish respondent gave a personal estimate that software problems in 1997/98 had probablydecreased collection rates by one half of one per cent, but this is no more than a guess.5.32 This situation must be contrasted with that prevailing in England and Wales over thesame period during which the English and Welsh local authorities enjoyed stability in systemshardware and software provision, stability in administration of housing and council tax benefitsand (comparatively) little in the way of disruption to administrative responsibilities for any of

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these functions during the reorganisation of local authorities in England and Wales Ð certainlynothing to compare with the disruption in Scotland.

5.33 Many Scottish authorities are working towards introducing all or some of the followingenhancements to their software systems, according to the specific requirements of their systems.It is the view of the research team that once in place such enhancements will provide revenuesofficers with the more responsive systems needed to achieve higher council tax collection rates:

• Effective management of the income support caseload;• A fast and efficient link with Sheriff Officer records;• Enhanced instalment management, allowing instalment adjustments and special

arrangements to be made, subsequent to Summary Warrant being granted;• Enhanced targeting of debt by given variables, such as identifying debtors who have

paid previously by earnings arrestment or direct debit; and• Provision of flexible report writing.

5.34 It is the view of the research team that those authorities operating Unix based systemsshould ensure that sufficient training is given to revenues staff on the generation of reports, sothat high quality management reports are obtained. From discussion about computer systemswith Scottish revenue practitioners it was clear that a significant number of systems did notprovide staff with an easy to use means of obtaining summary management information on theprogress of billing, payments [and enforcement] for different groups of council tax payer. Somesystems require a high level of technical skill in specifying and carrying out analyses. It isimportant that revenues staff receive sufficient training on the generation of reports.

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CHAPTER 6 CONCLUSIONS AND CONSIDERATIONS

Introduction

6.1 This chapter brings together the key findings of the research project to identify reasonswhy council tax in-year collection rates in Scotland are lower than in England. The precedingchapters detail the differences in Scotland and England both in terms of practices and proceduresand legislative backgrounds. In this chapter the research team would like consideration to begiven to broad areas of change which may bring about improvements in in-year collection ratesin Scotland. It puts forward views on the key factors that affected council tax in-year collectionrates in 1997/98. It should be noted that other important detailed points for considerationconcerning possible changes in the Scottish council tax systems are detailed in summaries at theend of chapters 3 and 4 of this report; and for the convenience of the reader, the relevant partsof these summaries are consolidated and shown towards the end of this chapter. This chapteralso provides a SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis of thecouncil tax system in Scotland, and the main paradigms within which the system operates areexamined.

General observations

Accuracy and control of information

6.2 The research team was aware from the early stages of the project that the timing of thedata gathering exercise caused difficulties for authorities in Scotland and England, andanticipated the gaps in data returns that this timing caused. It also became apparent to the teamduring the course of the research, however, that some Scottish authorities were either unable tosupply some information, or attached caveats regarding its accuracy; information was notobtainable from routine management information as was the case in English authorities. A keyreason for this was the computer difficulties during 1997/98 as highlighted in chapter 5 andelsewhere, which either prevented the information being gathered or made the data soquestionable as to be of little value for research purposes. The research team also identifiedhowever that Scottish authorities relied heavily on certain information being made available fromthe Sheriff Officer firms they used, with few if any apparent ways readily open to the authority tocheck the accuracy of the information supplied, or to obtain more detailed information. Thepossible inaccuracy of some of the Scottish data, particularly that relating to enforcement, istherefore flagged as a general point. It is also important to flag that, in the research teamÕs view,many Scottish authorities effectively relinquished any management control of the debt passed tothe Sheriff Officer, in a way that would not have been countenanced by English authorities whenpassing debt to an external enforcement agency. The issue of management information is furtheraddressed in the SWOT analysis in this chapter.

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Comparisons in the in-year collection rates

6.3 Comparisons in the Scottish and English in-year collection rates are made with referenceto the Accounts Commission and Audit CommissionÕs figures for receipts as a percentage of netcollectable debt, as expressed as a national average. It should be noted that within those figuressome English authorities had worse in-year collection levels than roughly comparable Scottishauthorities, and a few had approximately the same in-year collection rates. Such instances wereinfrequent, but show that the in-year collection rates achieved in Scotland and England are not aspolarised as the global in-year collection rate figures suggest.

Why is the council tax in-year collection rate in Scotland lower than in England?

6.4 In the research teamÕs view, the answer to this lies in the fact that there are differences inthe environments in which the council tax systems operate, as well as differences in the counciltax processes themselves. To an extent a distinction between environment and process is anarbitrary one, but the concept provides a useful starting point from which to draw conclusionsfrom the findings.

The environment in which the Scottish system operates

6.5 The following table identifies the key factors relating to the differing environments inwhich council tax is operated in Scotland and England, which, in the view of the research team,contributed significantly to lower in-year collection rates in Scotland as compared to England, in1997/98.

Table 29Main environmental factors contributing to lower in-year collection rates in Scotland

compared to England in 1997/98Factor Comment

The legacy of communitycharge debt.

Scotland carries a community charge debt equivalent to that for England, buthas a population base of approximately one tenth that of England. Much ofthese arrears would not exist if benefit entitlement had been identified at theappropriate time, but the split of housing and council tax benefitsadministration between district and regional authorities, and the resistance ofsome district councils to community charge, hampered the awarding of thebenefit. A proportion of council tax payers on low incomes are still payingoff these arrears and are not able to maintain council tax instalments at thesame time. Particularly with regard to those in tenanted properties, debtorswould have been subject to enforcement earlier had Scotland been given thesame timescale as England to chase arrears after one month's instalment hadnot been paid.

The impact of the Debtors(Scotland) Act 1987

Restrictions on the range of goods that may be subject to poinding andWarrant Sale in Scotland are regarded by Scottish practitioners to favour thedebtor rather than the creditor. The same practitioners also hold that bailifffirms levying distress are not as restricted in the range of goods they maydistrain upon for council tax debt. This, coupled with the political oppositionto warrant sales in areas where debtors were aware that councils would notagree to the carrying out of the sale, weakened the bite of this diligence.

Political resistance to Some revenue officers are inhibited from considering poinding and/ or

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Factor CommentPoinding and Warrant Sales Warrant Sale as an enforcement option, either in toto or in respect of certain

categories of debtor, due to member resistance.Higher council tax bills inScotland including waterand sewerage charges.

Whilst the impact of higher bottom line bills, as a result of the inclusion ofwater and sewerage charges, on in-year collection rates has not beenquantifiable in this report, it is the research teamÕs opinion that the higherbottom-line bill level in Scotland could lead to higher levels of arrears.Scottish bills contain water and sewerage charges whereas in England aseparate bill is issued to households in England by private water companies.This means that an English household can more easily "juggle" the paymentof the two bills in a manner which best suits their income. Scottishhouseholds facing a combined bill may be unable to meet the wholeinstalment and may therefore choose not to make any payment. This wouldbe of particular issue in relation to taxpayers regularly going on and offcouncil tax benefits, in respect of whom arrears can quickly build up in-year.Data on unpaid water and sewerage charges in England indicates that in1997/98 presummons notices were issued in relation to 17.6% of domesticaccounts, summonses were subsequently issued regarding 1.5% of accounts,and court judgements were obtained in respect of 0.94% of cases.

Public inurement/ resistanceto paying community chargeand Scotland not being ableto recover arrears until 3months instalments wereunpaid.

Widespread resistance to and non-payment of community charge was greaterin Scotland than in England. Many taxpayers broke the habit of makingregular payments of local tax to the council during community charge andthis change in habit impacts now on council tax. Scottish taxpayers accruedsignificant levels of community charge debt, and unlike English councils,which could pursue the debt after one missed instalment, Scottish authoritieswere prevented by statute from pursuing these arrears until after threeinstalments were missed. Linked to this, the abolition of the collection ofjoint rent and local tax payments affected Scottish authorities more thanEnglish ones due to the higher proportion of public sector housing.

The impact of re-organisation

Re-organisation gave rise to more complex council billing, recovery andenforcement and benefit issues in Scotland than in England, due to thecreation of new councils from the former regional and district councils.Many staff in revenues and IT sections either took the opportunity to retireor were deployed on to other projects. Employee expertise which had beenbuilt up in the 12 former authorities became dispersed within 32 of the newcouncils.

The impact of Water andSewerage charges

Scottish authorities are required to collect water and sewerage charges onbehalf of the water authorities, as a separately identified element in thecouncil tax bill. There is no rebate available in respect of these charges, thusthose on Income Support in Scotland who would otherwise be liable forcouncil tax are still required to pay the water and sewerage charge elementof their council tax bill. It should be noted that prior to re-organisation on1/4/96 sewerage was part of council tax and therefore was subject to thebenefit scheme. A high proportion of council tax arrears cases in Scotlandrelates solely to this charge and whilst they may generate a low proportion ofarrears, the caseload itself impacts heavily on the administrative resources ofcouncil tax arrears.

Processes in Scotland

6.6 The following table identifies the key factors relating to the differing council processesoperated in Scotland and England, which, in the view of the research team, contribute to lowerin-year collection rates in Scotland, as compared to England, in 1997/98.

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Table 30Main legislative and processing factors contributing to lower in-year collection rates in

Scotland compared to England in 1997/98Factor Comment

Difference in earliestinstalment date.

There is a difference of one month between the earliest possible instalmentdemand dates in Scotland and England. Billing and recovery cycles inScotland run over a maximum of eleven months in a given financial year, asopposed to twelve months in England.

Difference in remindernotice requirements

Scottish authorities are required to issue two reminder notices. This isthought to have a prime effect on the difference in the number of days takenfrom issue of bill to issue of final notice in model authorities in Scotland andEngland: 70 days and 42 days respectively. Although the data does notreveal a direct impact on collection rates, Scottish revenues respondentsidentify that the removal of this requirement would assist them in pursuingarrears earlier in the financial year.

Differences in actioningenforcement.

The only enforcement method, apart from sequestration and inhibition,which are not true recovery methods in themselves, actioned directly by aScottish authority is deductions from Income Support (and even the speed ofthat action depends upon the resource of an external body the BenefitAgency). All diligences in Scotland are done by the Sheriff Officer.English authorities can carry out more aspects of the enforcement process ifthey so choose, so have direct administrative control over these processes.

Differences in the control ofenforcement activities ofexternal agents

English authorities generally have codes of practice with their bailiff firmssetting out clearly what the councilÕs enforcement wishes are, whereasScottish councils do not, partly because of the status of Sheriff Officers asappointed officers of court. English authorities generally have service levelagreements with their bailiffs in place and they monitor the caseload passedto bailiffs more closely than Scottish authorities, through comprehensivemanagement reports and frequent dialogue. Some of the large councils inEngland have direct links to the Bailiff's computer system.

Differences in the stabilityof systems

Scottish authorities have had to implement a wider range of changes inrevenues computer systems than English authorities. These changes havetaken some time to bed in and have impacted on billing, in-year collectionand recovery processes. Authorities in England undergoing computersystem change have reported similar major difficulties with revenuesprocessing and a resulting decrease in council tax in-year collection levels.

T h e p r o c e s s i n g o fdeductions from IncomeSupport

A higher proportion of council tax accounts in Scotland require deductionsfrom Income Support to be processed than in England, due in some part tothe water and sewerage element of the Scottish bill attracting no benefit.Significant delays in the processing of these applications have beenexperienced and impact on the ability to commence and/ or completecollection of arrears in-year.

6.7 Several Scottish revenue officers during interviews expressed the opinion that a keydifficulty lay in the handing over of enforcement work to Sheriff Officers. They felt that thelocal authorities should be given the responsibility for administering earnings arrestments,instead of the Sheriff Officer as part of his duty to do diligence. The research team can find nocompelling reason for such a fundamental change. Instead, it feels that a maximisation of theexisting effectiveness of the Sheriff Officer in enforcing council tax debt is required, and couldbe brought about by:

• a change to a more compelling requirement on the debtor to supply information;

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• clear written policies on collection being provided to the Sheriff Officer includingdetails on the precedence to be given to the various diligences and whether there areany restrictions by the authority on the use of poinding and warrant sale; and

• a greater direction and management control of the arrears cases transferred betweencouncils and Sheriff Officer firms.

What improvements in in-year collection rates are to be aimed for?

6.8 Having used EnglandÕs council tax in-year collection rates as a basis for comparisonthroughout this report, it is reasonable to assume that the objective would be to raise Scottish in-year collection rates to a position equivalent to the English levels i.e. a move from a current in-year collection rate of 87.3% to 95.5%. Some of the difficulties that have impacted upon in-yearcollection rates in Scotland have been identified within this report as arising from the bedding inof various earlier changes that either directly or indirectly impacted upon the revenues functione.g. reorganisation introduction of new information technology. Marginal but steadily risingincreases in council tax in-year collection rates would be anticipated by the research team if, allother things being equal, Scottish authorities were allowed a period of consolidation to let thesechanges settle in. Likewise, the introduction of innovative methods in billing and recovery, ashas been seen in a number of councils, will also improve collection rates marginally.Encouragement therefore should be given to councils to seek to adopt enhancements to existingprocesses that will improve collection rates. It is the view of the research team however that asettled period after re-organisation and improvements within the existing environmental andlegislative framework will not, on its own, bring about collection rates comparable with those inEngland in a satisfactory time scale. It is important to acknowledge that if an in-year collectionrate equivalent to that achieved in England is to be a goal over the short to medium term,significant and immediate changes in both environment and process issues, as identified above,must be considered. If the increase in in-year collection rate is to be achieved over the longertime period, changes could be instituted more incrementally. The research team offer no view onthe optimum time scale over which any consolidation could take place; but that decision wouldbe a key factor in determining the extent of the improvements to the in-year collection rate whichfeasibly might be considered. The best value process being introduced within revenues functionsshould in itself assist local authorities in developing best practice and will be a driving force inachieving higher rates of collection. It is important to recognise that local authorities are at verydifferent stages in the bedding in of revenues processes and will thus achieve improvements atsignificantly different rates.

What would be the impact of change on the council tax system?

6.9 The question of introducing changes in the council tax system in order to bring aboutimprovements in the council tax in-year collection rates in Scotland can be viewed holistically.The research team offer their own analysis of the strengths, weaknesses, opportunities andthreats of the current system based on the 8 M paradigms: manpower, management of the tax,management information, material, methods, marketing, machinery and money.

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Table 31SWOT analysis of changes to council tax system based on views of the research team

Strengths Weaknesses Opportunities ThreatsMANPOWER The Scottish revenue

p r o f e s s i o n h a sdemonstrated in the past itsability to match Englishcollection rates underdomestic rates92.

Re-organisation has spreadp r o f e s s i o n a l a n dadministrative expertise atall levels thinly.

By investing in training, todevelop working practices thatprovide high quality customerservices and focus clearly on thekey functional areas. Toarrange tasks so that the issue ofreminders, the monitoring ofSheriff Officer caseload and thephysical side of recovery aresplit, and work is passedthrough the sections on a steadyrolling basis.

The funding for adequatestaff resources to achievehigher in-year collectionrates may not be available

MANAGEMENT The move to combinedbenefits administrationc rea t e s s t r eaml inedprocessing and offers abetter service to customers.

There is no clear correlationin the study between howbenefits are administered,and in-year collection rates

There is no correlationbetween the time it takes tobring arrears to court and thein-year collection rate.

A high level of local tax billarrears impacts on theadministrative resources

Provide a greater scope forfraud prevention over and abovefraud detection. Acts as asource of information todetermine the liable person forcouncil tax. To improveaccuracy and turn-round ofbenefits assessments

To strive to optimally time eachstage of the council tax processso that there is a strongcorrelation between the time ittakes to bring arrears to courtand the in-year collection rate.

Chance to provide powers towrite off uncollectable debt.

Where benef i t s a rec o m b i n e d a n d n o ta d m i n i s t e r e d w i t h i nrevenues, e.g. administeredwithin housing sections,council tax benefit may notbe given equal priority withhousing benefit.

92 Account Commission's Report on Collection of Rates.

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Strengths Weaknesses Opportunities Threats

Clarify the interpretation ofregulations in respect of thosecases in which benefits shouldhave been awarded in pastyears.

MANAGEMENTINFORMATION

Continued developmentand settling in of ITsystems will have impacton enforcement.

Use of external agenciesfor enforcement may freeup resources.

The development may notgo as smoothly as might beanticipated.For all but the large councilsin-house development is notan option, either on cost orbecause of the lack of skillsand experience, Othercouncils will require topersuade software houseswho may be reluctant toinvest resources to improvesystems where the marketfor their product isrestricted.

To develop standard and ad hocreports to provide bothsummary and de ta i l edmanagement information onsuccess of initiatives. Train staffto use report writing softwareprovided by the softwaresupplier.

In-house written reportsneed to be written bydedicated staff who haveboth the skills and wideexperience. This will be anadditional cost to berecognised.

If management informationsystems are not developedsufficiently, the authoritywill not be able tomeaningfully measure theeffectiveness of its policies.

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Strengths Weaknesses Opportunities ThreatsMATERIAL The quality of data passed to

Sheriff Officers is not veryaccurate.

The administration ofIncome Support casesimpacts on arrears

Improve the quality of theinformation being passed toSheriff Officers.

Ensure more resource isavailable to Benefit Agencyoffices at peak workload timesregarding the processing ofdeductions from income supportfor council tax.

METHODS Information technology notsufficiently developed togive adequate control ofpayment arrangements

Potential to use other paymentmethods e.g. credit card, switchcard.

Potential to use other externalenforcement mechanisms e.g.call centres, visiting teams.

Set codes of practice andp e r f o r m a n c e i n d i c a t o r sendorsed by each council

Possible adverse reactionfrom some Sheriff Officerfirms

MARKETING Promotion of direct debittake-up and link withf l e x i b l e i n s t a l m e n tarrangements

Information technology notsufficiently developed toallow multiple paymentdates by direct debit.

Improve Political attitudes andinvolvement in the recovery andenforcement process

Possible support in ScottishParliament for abolition ofWarrant Sales without anyalternative measures beingintroduced.

MACHINERY Joint billing of council tax andrent

Long term benefits lost ifstock is transferred toHou s in g As soc i a t i o ncontrol.

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Strengths Weaknesses Opportunities Threats MONEY Central government has already

shown willingness to addressthe improvement of in-yearcollection levels, by fundingaddi t ional resource forcommunity charge and counciltax collection for one year.

Councils have a desire toreduce costs, particularly inthe light of best value but atthe same time may require toincrease its costs to achievehigher collection ratesmaybe at the expense ofother service provision.

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Table 32 Showing more detailed areas in which changes to council tax system could be

consideredParas. Chapter 22.1 Consider allowing Scottish authorities the power to set an earliest

instalment due date of 1st April, as in England.2.16 to2.22

Allocation of central funds for comprehensive training of council tax staffwould assist Scottish authorities make up lost ground due to the impact ofreorganisation.

Paras. Chapter 33.23 The research suggests that the issue of reminder notices and final notices

separately achieved no significantly higher collection rates than the issue ofcombined reminders and final notices. Nevertheless, the research teamwould support the view of many Scottish practitioners that the use of suchcombined documents may help in commencing recovery earlier in the year.

3.24 to3.30

The legislation relating to Houses in Multiple occupation does not provideeffective recovery of council tax from these property types or indeed forthose properties with a high turnover in short-term tenancies.

3.34 The research team considers that there is no merit in introducing in Scotlanda weekly or fortnightly statutory billing scheme as is available in England.

3.35 to3.38

There may be merit in considering joint billing of council tax with rent, ifthe rent is collected as part of the council tax system, as long as systemsafeguards were in place to prevent cross subsidisation. Joint billingprobably would not be feasible upon the transfer of housing stock tohousing associations.

3.39 to3.42

The use of provisions to allow instalment payments not in accordance withthe statutory scheme has greatest merit if linked with the direct debitpayment method.

3.43 to3.45

The percentages of council taxpayers paying by direct debit in Scotland andEngland in 1998 are 36% and 48% respectively. Analysis suggests that lowtake-up in direct debit reflects in low in-year collection rates; a highpercentage take-up of payment by direct debit is a worthwhile objective,though low take-up in some areas is likely to be linked to low prosperity.

3.48 There may be merit in considering payroll deduction of council tax withrespect to council staff as a condition of service, as part of promoting aculture of civic responsibility.

3.49 to3.52

Very few authorities in either Scotland or England offer discount schemesfor lump sum or direct debit payment. Those authorities which do believethat the schemes are cost effective. Such schemes can play a part in overallstrategies to improve in-year collection rates. There is resistance to such

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Paras. Chapter 3schemes in many authorities because it favours those best able to pay.

3.53 to3.58

In the year examined, the majority of Scottish authorities allocated arrearspayment to previous years. Interviews revealed that some Scottishauthorities, as part of a debt management strategy, are now asking multi-year debtors if they would like to have arrears payments allocated to currentyear debt. The design of some Scottish councilsÕ computer software doesnot allow for this allocation, thought the research team do not feel that theproblem is insurmountable.

3.63 to3.65

Interview evidence given by one English authority suggests that the use ofvisiting teams to advise on making arrears payments can significantlyreduce the number of cases going forward for distraint. However thiscannot be directly supported by any survey data.

Para Chapter 44.2 and4.3

Some English authority respondents are of the view that the issue of thesummons, the public nature of the hearing, and the full legal process has adeterrent effect on the debtor. The majority of Scottish revenues officersinterviewed felt that there were advantages in the English system ofsummoning the debtor to court and notification of court action prior to anorder being granted, in terms of impact on in-year collection rates. Scottishcouncils have the flexibility to do this, by using a separate decree in anaction for payment instead of Summary Warrant. This action however canbe much slower, administratively more complex and more expensive thanSummary Warrant but should be considered for use in apprpriate cases..

4.7 English local authorities have greater direct control of the variousenforcement remedies than those in Scotland where a Sheriff Officer mustbe used to execute a diligence, and can switch between remedies moreeasily.

4.11 The number of cases going on and off Income Support impacts more onScottish recovery processes than those in England; this is due to thedifference in accruing tax burdens, the processing of applications forattachment of Income Support, and the interface with Sheriff Officers.

4.23 The research team believe that a mechanism for voluntary deductions fromincome support for council tax payments, as suggested by Scottishpractitioners, is worthy of further consideration.

4.26 There was a higher percentage of debt passed to the Sheriff Officers forcouncil tax recovery action in Scotland than there was passed to bailiffs inEngland in 1997/98. The percentage of debt outstanding at the end of theyear in the hands of the Sheriff Officers was however much higher than thepercentage of the debt in the hands of the English bailiffs. This is attributedto the effect of the Debtors (Scotland) Act 1987, the prevailing political

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Para Chapter 4environment and the communications between the local authorities and theSheriff Officers.

4.28 to4.30

The value of the sanction of poinding and warrant sale is regarded by mostof the Scottish respondents as being closely linked with the debtorÕsperception of the likelihood of the action of warrant sale taking place. MostScottish revenues officers felt that the provisions of the Debtors (Scotland)Act 1987 were so extensive in the restriction of goods available to bepoinded, that few household items of reasonable value would be availablein low to middle income group households to make a warrant sale realistic.

4.32 to4.34

It is contended that it is the threat of removal of personal goods for aWarrant Sale that is more effective than the actual event itself. WarrantSales, when seen as being a real option for use in an area, underscore thevalue to the debtor of maintaining arrangements made for payment.Statistics on poinding provided by Sheriff Officers suggest that the realeffect of this action in securing payment is greater than previously assumed.Poinding is a tool for the local authority to prove that a debtor hasinsufficient assets to meet the council tax bill, and as such it provides theauthority with a firm base for writing off the debt where all other diligenceshave been exhausted.

4.36 It is the view of the research team that the issue of the range of goodsprotected from poinding and warrant sale deserves re-examination, in viewof Scottish revenues practitionersÕ concerns about the impact that it has ontheir ability to use poinding and warrant sale effectively.

4.37 The (unwritten) policy of a number of Scottish local authorities todiscourage warrant sales inhibits the ability to enforce the recovery of thedebt.

4.39 The key issues regarding communications between Scottish local authoritiesand Sheriff Officers relate to : Codes of practice and service levelagreements; The quality of information transferred; The monitoring ofcaseloads; Special payment arrangements; The way in which information istransferred; and The time taken to transfer information. All impinge on thein-year collection rate.

4.41 Service level agreements should be more widely used and would be moreappropriate than the Codes of Practice/ Conduct currently in force.

4.44 to4.46

Until recently there has been little evidence of monitoring by localauthorities of the enforcement of Summary Warrants.

4.47 Monitoring arrangements introduced by one authority has producedconsiderable savings. It could not be linked directly with an increase incollection rates, but was felt to have a positive effect on overall collectionrates.

4.48 Many Scottish authorities direct their Sheriff Officers to accept whatever

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Para Chapter 4arrears payment that is offered, or extended instalment payments. It issuggested that broad guidelines on this should be contained in a Code ofPractice or similar document; and that the Sheriff Officer is then left todetermine the merits of arrangements in each case. Better communication isrequired between the council and the Sheriff Officer to prevent conflictingpayment arrangements being agreed with a debtor.

4.52 It is the view of the research team that the current software in mostauthorities is not sufficiently developed to allow the council to fully monitorand recover instalments made under special arrangements, and that theprocess requires manual input in most cases.

4.53and4.54

In most Scottish revenues sections there is electronic data transfer betweenthe council and the Sheriff Officers but effective management informationavailable to the revenues manager has not been developed to the sameextent.

4.55and4.56

The longer time lapses between the granting of Summary Warrants and thepassing of the caseload to the Sheriff Officer was said not to give the firmsa realistic opportunity to make any impact on outstanding debt. Localauthority action post-issue of the Summary Warrant was identified bySheriff Officers as a factor.

4.57 There is merit in working towards a more co-ordinated approach betweenthe Benefits Agency and the local authorities, and in consideringclarification of the law relating to retrospective benefits claims.

4.61 It is suggested that the powers available in Scotland to the Assessor to assisthim in gathering information in exercise of his duties, could be similarlymade available to the council to assist in council tax revenues collection.

4.64 When a debtor in Scotland leaves an employer, he is not under any duty toinform the Sheriff Officer or the local authority of details of any newemployment. Such a duty should be considered and would negate the needas perceived by some revenue officers for access to Inland Revenue taxrecords to trace a debtorsÕ employment details.

4.68 It is suggested that there should be greater compulsion on banks in Scotlandto provide details of whether an account is subject to an arrestment order. Amore streamlined process for releasing the funds ought to be considered.

4.71 Some Scottish revenues officer interviewed expressed the opinion that thepower to sequestrate would be more readily used by them if the minimumlevel of debt was lowered to £750 as is the case in England, and wouldenable them in many cases to start proceedings in relation to a single yearÕsdebt.

4.82 In England, only a very small percentage of ÔthreatsÕ of committal weretranslated into cases of committal notices being served. The threat of

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Para Chapter 4committal produces payment of arrears in many cases.

4.90 It is suggested that consideration should be given to limiting the right to buycouncil houses under the Tenants Rights Etc. (Scotland) Act 1980 for thosewho have council tax and or community charge arrears.

4.91 In the view of the research team there may be merit in examining whetherchanges in tenancy agreements could be made so that in future any counciltax debt in respect of a council tenancy could carry the penalty of eviction.

4.93and4.94

Any community charge debt now recovered (some of the debts being up toten years old) should be credited to the current year where no currentpayments are being made..If all diligences have been exhausted in pursuing community charge debt(and in many cases this will simply mean that a poinding has revealed thatthere are insufficient assets to extinguish the debt), then that debt should bewritten off as good accounting practice using the provisions which council'salready carry for bad or doubtful debt.

Final remarks

6.10 Perhaps the final comments are best given by a Scottish press journalist incommenting on the support that Scottish authorities deserve in their efforts to collect localtaxes93:

Ò Many people have genuine reasons for falling behind with Council Tax. In manycases, it is an onerous bill on a small income, especially when other calls on the kittyare too great. But it is debatable that all £37 million of the North-east poll tax andCouncil Tax debt is due to hardship.

Too many are either defaulting deliberately, happy to let law-abiding taxpayersstump-up for them, or have skewed priorities and regard video-recorders, lotterytickets and satellite television as essentials of life in the 1990s. These people shouldbe pursued by local authorities and made to pay their dues. Many who do scrapetogether the money and who have a greater sense of community responsibility wouldlove to have video-recorders and sundry other modern entertainments, but knowwhich bills have to come first.

Provided the mechanism exists to sort cases of genuine hardship from the indolentand indifferent, councils, which are due £900 million throughout Scotland, deservenothing but support and encouragement in squeezing every last penny.Ó

93 Aberdeen Press and Journal, 27 November 1998.

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GLOSSARY OF TERMS

Attachment of EarningsIn England and Wales where a magistrates' court has made a liability order against a thedebtor the creditor concerned may make an order (an attachment of earnings order) to securethe payment of any outstanding sum which is or forms part of the amount in respect of whichthe liability order was made; such an order shall be expressed to be directed to a person whohas the debtor in his employment, and shall operate as an instruction to such a person to makedeductions from the debtor's earnings and to pay the amounts deducted to the authority; thedebtor shall from time to time notify the authority concerned, in a prescribed manner andwithin a prescribed period, of each occasion when he leaves any employment or becomesemployed or re-employed, and shall include in such a notification a statement of his earningsand expected earnings from the employment concerned and of such other matters as may beprescribed.

ArrestmentArrestment in Scotland (as distinct from earning arrestment) is the diligence used againstmoveable property of the debtor that is not in his possession. In addition to the debtor andcreditor, it involves a third party who owes a debt to the debtor and who is known as theÒarresteeÓ. By arresting in the hands of the arrestee, the creditor prevents him from makingpayment or returning property to the debtor. The action of arresting in the hands of thearrestee is incomplete (or inchoate) diligence and to secure title to the arrested funds orgoods, the creditor needs to raise an action of furthcoming (see below) although in practice, amore informal arrangement is made among the parties concerned.

Action of furthcomingIn order to complete the diligence and secure title, in Scotland, to arrested funds or goods, thecreditor must raise an action of furthcoming in the sheriff court where the arrestee or debtor isresident; or the arrested property is situated. The procedure involves the creditor petitioningthe court requesting decree that the arrested funds or goods be released to him in satisfactionof his debt, expenses of the arrestment and expenses of the furthcoming. In practice, actionsof furthcoming are avoided where the debtor gives written authority to the arrestee to releasethe arrested funds or goods to the arresting creditor.

Billing authorityIn England and Wales, a local authority empowered to set and collect council taxes, andmanage the Collection Fund, on behalf of itself and local authorities in its area. In England,shire and metropolitan districts, the Council of the Isles of Scilly, the Isle of Wight unitaryauthority, London Boroughs and the City of London are billing authorities. The sameauthorities were charging authorities under the community charge system.

Charging OrderIn England and Wales this is a method of enforcement usually made against land or propertybut also against stocks, shares, money in court and certain other forms of security. It seeks toplace the authority in the same position as a mortgagee of land; for example, debts will bepaid out of the proceeds of selling the property. If payment is required before the defendantchooses to dispose of the asset, a separate action must be taken to enforce the sale.

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Committal to PrisonWhere a Billing Authority has sought to levy an amount against an individual by distressunder the liability order, and it appears to the person making distress that he was unable (forwhatever reason) to find any or sufficient goods of the debtor on which to levy the amount,the Authority may apply to the MagistratesÕ Court for the issue of a warrant of commitment

Community chargeA personal local charge (or charges) which in Scotland was set by the former regional orislands councils and district councils, to meet the cost of providing services after taking intoaccount government grants and income. In England and Wales, the charging authority andprecepting authorities set the charges to collect sufficient revenue to meet their demands onthe collection fund. The charge was introduced in place of the domestic rates on 1 April 1989and was replaced by the council tax on 1 April 1993. In England and Wales, the charges werebrought in a year later.

Community Charge Benefit (rebate)People with low income were helped to meet their remaining community charge liabilitythrough a rebate of up to 80% of the charge under the provisions of the community chargebenefit scheme. Community charge benefit replaced rate rebates on 1 April 1989 (1990 inEngland and Wales and was itself replaced by Council Tax Benefit on the introduction of thenew tax in 1993.

Council TaxA local property tax (which replaced the community charge on 1 April 1993) based on thevalue of the property and the number of residents. In Scotland the regional and islandscouncils levied and collected the tax set by them and the district councils within their areauntil 1 April 1996 when re-organisation took place. The local Assessor assesses the propertiesin each district area and assigns each property to one of eight valuation bands; A to H. Thetax is set on the bases of the number of Band D equivalent properties. Tax levels fordwellings in other bands are set relative to the Band D baseline. In England and Walescouncil tax is set by the charging authority and the precepting authority in order to collectsufficient revenue to meet their demand on the Collection Fund while the banding ofdwellings is carried out by the Inland Revenue Valuation Office Agency.

Council Tax Benefit (rebate)Financial help given by a council to council taxpayers to help them meet their council taxbill. Such help is based on need and takes into account income, family circumstances and theamount of the council tax. Central government finances 95% of the cost of these benefits.Most local authorities operate 'local schemes' whereby they finance allowances in excess ofthe standard UK scheme.

DebtorFor the purpose of this survey, in Scotland, the person whose name appears on the annex tothe application to the Sheriff for Summary Warrant or is the person whose name appears onthe summons as the defender in a debt action.

DefenderThe person against whom an action is raised.

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DecreeThe judgement or order of a court.

DiligenceThe procedures (such as poindings and warrant sales and arrestments) by which debt decreesare enforced in Scotland.

DistressIn England and Wales where a liability order has been made, the Billing Authority whichapplied for the liability order may levy the appropriate amount by distress and sale of goodsof the debtor against whom the order was made. The appropriate amount for levy shall be theaggregate of an amount equal to any outstanding sum covered by the liability order, and asum in respect of charges in connection with distress.

Earnings ArrestmentThe diligence whereby a creditor in Scotland may secure funds from wages belonging to thedebtor which is in the hands of a third party the debtor's employer). On the creditor'sinstructions the sheriff officer serves a schedule of arrestment on the employer which requiresthe employer to withhold a part of the debtor's wages on the next pay day.

Generic WorkingA term applied to staff who as a result of training are capable of dealing with a wide range ofenquiries on council tax as opposed to those staff who specialise in one particular facet ofadministration for example dealing with liability to council tax.

Heritable propertyLegal term for property consisting of land or buildings as contrasted with moveable property.Equivalent to the English term 'real property'.

Housing benefit (rebate)Financial help given to local authority or private tenants whose income falls below prescribedamounts. Central Government finances approximately 95% of the cost of rebates awarded totenants. Some local authorities operate 'local schemes' whereby they finance allowances inexcess of the standard payments.

InhibitionInhibition prevents the owner of heritable property in Scotland from conveying (passing withvalid title) any of that property to any other person. In itself inhibition is an incompletediligence its effect being merely prohibitory and preventative. In relation to Council Tax, it isa prerequisite of obtaining Letters of Inhibition that a sheriff court decree has been granted;inhibition cannot proceed on the strength of a summary warrant (Commissioners of Customs& Excise [Applicants] 1992). Inhibition is effected through the Court of Session by thecreditor presenting a Bill for Letters of Inhibition together with the decree granted in theaction for payment. A copy of the Letters is served on the debtor and the execution isregistered in the Register of Inhibitions and Adjudications. Inhibition lasts for 5 years fromregistration. The inhibition applies to all heritable property owned by the debtor, not just thatin respect of which the Council Tax is due. Adjudication is the appropriate diligence to attachthe heritable property of the debtor. Again, a sheriff court decree in an action for payment isrequired. Actions for adjudication must be raised in the Court of Session. When granted theadjudication is recorded in the Register of Sasines.

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Liability OrderIn England and Wales if the Magistrates' Court is satisfied that the sum in question hasbecome payable by the debtor and it has not been paid, then it is required to make a liabilityorder in respect of an amount equal to the aggregate of the sum payable and the costsreasonably incurred by the applicant in obtaining the order. The making of the liability orderagainst the debtor provides the Billing Authority with the power to obtain the monies byapplying any of the remedies conferred by the order.

Magistrates' CourtIn England and Wales the MagistratesÕ Court will be composed of lay justices of the peacefor a Commission Area within which the Billing Authority lies. Subject to any otherenactment authorising a stipendiary magistrate or other person to act by himself, aMagistratesÕ Court may not hear a summons, entertain an application for a warrant or hold aninquiry as to means except where composed of at least two justices

Means EnquiryOn the application for the issue of a warrant of commitment, the justices must make inquiryin the defendantÕs presence as to whether his failure to make payment was due to willfulrefusal or culpable neglect. If the Court makes such a finding it can issue a warrant ofcommitment) for the debtor to be imprisoned for a period not exceeding 3 months; fix a termof imprisonment and postpone the issue of the warrant until such time and on such conditionsas the Court shall think fit; refuse to issue a warrant or to fix a term of imprisonment.

Poinding (pronounced 'pinding')In Scotland the stage in the diligence of poinding and warrant sale whereby the moveablegoods of a debtor are secured to the creditor and brought within the protection and control ofthe court until they can be realised at a warrant sale. The sheriff officer inventories and valuessufficient of the debtor's goods to cover the debt plus expenses. A legal document (called apoinding schedule) is delivered to the debtor (or other person having possession of the goods)specifying the poinded goods, which thereafter must not be removed or disposed of by thedebtor.

SequestrationA creditor in Scotland is entitled to apply to the Court under the Bankruptcy (Scotland) Act1985, for the sequestration of a debtor's assets, provided that the debt exceeds £1,500 (£750in England and Wales). Sequestration is the process whereby all a debtor's assets, bothmovable and heritable, are seized by the court and placed in trust.

Sheriff CourtThe only local court in Scotland having civil (as well as criminal) jurisdiction. The judge iscalled the sheriff.

Sheriff OfficerIn Scotland, an Officer appointed by the sheriff principal of each sheriffdom to enforcesheriff court decrees by diligence. Sheriff officers are both public officers and independentcontractors whose fees are regulated by rules of court.

Summary warrantIn Scotland, a warrant for diligence to recover rates or taxes granted by the sheriff, not in adebt action, but on application, by a local authority for recovery of council tax, or the

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collector for the Inland Revenue or Customs and Excise, containing a certificate of arrears. Inthe case of council tax, the certificate states that the collector has given each council taxdefaulter concerned a notice requiring payment of the unpaid amount within a period of 14days, that the period has expired, and that the amount is still due and unpaid.

Warrant saleIn Scotland a sale by public auction in which poinded goods belonging to the debtor arerealised and the debt satisfied in whole or part out of the proceeds of sale. The sheriff officer(subject to certain statutory time limits) arranges the time, place and public notice of the sale.

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BIBLIOGRAPHY

StatutesThe Local Government Scotland Act 1947;The Representation of the People Act 1983 as amended by Schedule 13(130) of the LocalGovernment (Scotland) Act 1994;The Debtors (Scotland) Act 1987, London: HMSO;The Abolition of Domestic Rates Etc. (Scotland) Act 1987;The Local Government Finance Act 1988;The Act of Sederunt (Proceedings in the Sheriff Court under the Debtors (Scotland) Act1987) 1988 as amended;The Local Government Finance Act 1992;The Local Government etc (Scotland) Act 1994.

CasesPeter v Anderson (1814);ClaytonÕs Case: Devaynes v Noble 1816;Roberts v. Hopwood 1925 A.C. 578;Albermarle Supply Co Ltd v Hind and Co. (1928);Stepney Corporation v Osofsky (1937);R v Miskin Lower Justices (1953);R. v Newcastle-under-Lyme Justices ex parte Massey (1993).

PublicationsImplementing The Council Tax by Pat Kneen and Tony Travers sponsored by both the JosephRowntree Foundation and Local Government Chronicle - published by LGCCommunications 1994;Council Tax: Your Guide: Farrington, F. and Lee, M. (1993) London, IRRV Services Ltd.;Local Finance in Scotland: C.S.Page published by Hodge & Co. Glasgow - now out of print;Implementing the Council Tax by Pat Kneen and Tony Travers - LGC Communication 1994;The Legal System of Scotland: Manson -Smith, D. (1995) Edinburgh, HMSO;The Debtors (Scotland) Act 1987: Nichols, D., (1987) Edinburgh, W. Green and Son;The Commercial Law in Scotland -W.D.Esslemont -William Hodge & Co. Ltd;The Community Charge in Scotland - Peter John- Joseph Rowntree Foundation 1991;Credit and Debt - PSI Report -Richard Berthoud and Elaine Kempson -- Joseph RowntreeFoundation 1992.

ReportsAccounts Commission for Scotland (1997) Council tax collection: Edinburgh;Audit Commission's Annual Council Tax Collection figures for 1998/99;Research Report for the Scottish Law Commission - Scottish Office, Central Research UnitPapers - No.5 1981;Evaluation of the Debtors (Scotland) Act 1987: Study of Debtors, Whyte, D (1999), ScottishOffice Central Research Unit;

Evaluation of Debtors (Scotland) Act 1987: Study of commercial Creditors, Platts, A (1999),Scottish Office Central Research Unit;Evaluation of the Debtors (Scotland) Act 1987 - Executive Summary -The Scottish OfficeCentral Research Unit -1999;

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Direct Payments from Income Support, Mannion, R., Hutton, S. and Sainsbury, R. (1994)Department of Social Security Research Report No.33, London: HMSO;Managing Housing Benefit- Accounts Commission Report 1993;It Pays to Collect - A Consultative Document by the Joint Scottish Office/Cosla WorkingGroup on Council Tax Collection;Response by The Scottish Branch of the Institute of Revenues, Rating and Valuation to "ItPays To Collect" Consultative Paper.

Regulations and OrdersSocial Security: The Community Charge Benefits (Transitional) Order 1989;Social Security: The Council Tax Benefit (Transitional) Order 1992;Submissions in response to the Department of the Environment consultation paper, ÔA NewTax for Local GovernmentÕ- 1991;The Council Tax (Administration and Enforcement) (Scotland) Regulations 1992;The Council Tax (Administration and Enforcement) Regulations 1992 as amended;The Council Tax (Liability of Owners) (Scotland) Regulations 1992 as amended by TheCouncil Tax (Liability of Owners) (Scotland) Amendment Regulations 1993;The Council Tax (Liability of Owners) Regulations 1992 No. 551 as amended by SI 1993No. 151;The Local Authorities (Calculation of Council Tax Base) Regulations 1992 as amended;The Water Services Charges (Billing and Collection) (Scotland) Order 1997 No. 362 (S.27);The Water Services Charges (Billing and Collection) (Scotland) Order 1997 SI No 362 (s27).

SourcesBenefit figures DSS Housing Benefit and Council Tax Benefit Management InformationSystem - 1% sample taken on 2/05/98;Hansard H.C. Vol.III, col.1067;Reported at June 1999 meeting of Institute of Revenues, Rating and Valuation ScottishBranch;IRRV Scottish Revenues Forum Meeting in June 1999;Scottish Office Annual Returns of Council Tax;Scottish Office Finance Statistics for March 1998;Scottish Office Grant Aided Expenditure 1999Ð00 Report;Scottish Office Statistical Unit;Scottish Water and Sewerage Customers Council;Source for Number of Dwellings from Scottish Office Statistical Returns; DETR;Source for Number of Dwellings from Scottish Office Statistical Returns; DETR; WelshOffice.Source of Benefit figures DSS Housing Benefit and Council Tax Benefit ManagementInformation System - 1 % sample taken on 2/05/98;Welsh Local Government Financial Statistics;DETR Local Government Finance Statistics Unit.

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ANNEX 1 ARTICLES EXEMPT FROM POINDING AND WARRANTSALE IN SCOTLAND, AND ARTICLES EXEMPT FROM DISTRAINTIN ENGLAND

Articles exempt from poinding and warrant sale in Scotland

1. The following articles owned by the debtor are specifically exempt from poinding andwarrant sale wherever they are located:

a. Clothing reasonably required for use by the debtor and any member of hishousehold.

b. Implements, tools of trade, books or other equipment reasonably required bythe debtor or any member of his household for the practice of their trade orprofession. This only applies to such goods up to a value of £500.

c. Medical aids or equipment reasonably required for the use of the debtor or anymember of his household.

d. Books or other educational articles reasonably required by the debtor or anymember of his household for educational or training purposes. This appliesto such goods up to a value of £500.00.

e. Toys for the use of any child who is a member of the debtors household.f. Articles reasonably required for the care or upbringing of a child who is a

member of the debtors household.

2. The following articles owned by the debtor are specifically exempt from poinding andwarrant sale if they are at the time of poinding located in a dwelling house and are reasonablyrequired for the use of the debtor and any member of his household:

a. Beds or bedding.b. Household linen.c. Chairs or settees.d. Tables.e. Food.f. Lights or light fittings.g. Heating appliances.h. Curtains.j. Floor coverings.k. Furniture or equipment or utensils used for cooking, storing or eating food.l. Refrigerators.m. Articles used for cleaning, mending or pressing clothes.n. Articles used for cleaning the dwelling house.o. Articles used for storing:

i. clothing, bedding or household linen.ii. Articles used for cleaning the dwelling house.iii. Utensils used for cooking or eating food.

p. Articles used for safety in the dwelling house andq. Tools used for maintenance or repair of the dwelling house or of thehousehold articles.

NB. There is no item ÔiÕ in the above list.

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Any person being the debtor or the owner of any goods subjected to a poinding, may within14 days seek to have any item excluded from the poinding as being properly included in theabove lists.

Articles exempt from distraint in England

3. Only the goods and chattels of the person named in the liability order can bedistrained upon94. Where a liability order has been made against two or more joint taxpayers,then a distress may be made against one or more of them95

4. Certain goods are protected from distress for council tax96. These are any goods ofthe defaulter of the following description:-

a. Such tools, books, vehicles and other items of equipment as are necessary tothe debtor for use personally by him in his employment, business or vocation;

b. Such clothing, bedding, furniture, household equipment and provisions as arenecessary for satisfying the basic domestic needs of the debtor and his family.

94 Reg. 45(1) SI1992/613.95 Reg. 54 (5) amended by SI 1994/505.96 Reg 45 (1A), SI 1992/613, inserted by SI 1993/773.

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ANNEX 2 EXAMPLE OF THE MINIMUM CODE OF PRACTICE TOWHICH A MAJOR FIRM OF BAILIFFS WILL WORK TO IN THEABSENCE OF ONE BEING PROVIDED BY AN ENGLISH COUNCIL

Bailiff code of practice

XXXXXXXX understands that the primary concern of its clients' is the manner in which athird party, working on their behalf represents them. With this in mind, XXXXXXXX hasdeveloped the following Code of Practice to provide its clients with an assurance that theirinstructions will be carried out in a uniform and professional manner.

XXXXXXXX also works in full accordance with the Certificated Bailiffs Association's(CBA) Code of Practice and any relevant legislation pertaining to its activities. The followingCode of Practice is flexible, to take into account any future requirements of ZZZZZZZZZZZZZZZ Council.

General conduct

All XXXXXXXX bailiffs are fully certificated and copies of certificates issued by theCounty Court are available for perusal by the Council if required.

XXXXXXXX can also confirm that it does not sub-contract any of its business activities.

The following principles are incorporated in our Bailiff training programme. Our bailiff teamare aware that they must carry out their duties in accordance with the following:

All bailiffs will:-

1. Comply with the instructions of the Council at all times. Any query over theinterpretation of instructions will be referred to the Council's staff for clarification.

2. Comply with any instruction given by the Council's staff other than those that thebailiff considers, may prejudice the rights of the debtor or bailiffs under the law.

3. Conduct all their activities in full compliance with the Data Protection Act 1984, andtake into account all guidance issued by the Data Protection Registrar.

4. Observe the provisions of the Race Relation Act 1976, and the Sex Discrimination1986 and any other appropriate legislation. We will also observe any written statement ofvalues that the Council upholds, such as anti-discrimination or disability awareness policies.

5. Levy distress in a firm but understanding manner, ensuring that all cases are handledwith fairness and in line with relevant legislation.

6. Give consideration to any mitigating circumstances, such as:

• serious illness/long term sickness

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• mental impairment• learning difficulties• physical difficulties• severe financial difficulties including recent unemployment• debtors of pensionable age• pregnancy• bereavement.

and seek the Council's advice before proceeding.

Guidelines

1. XXXXXXXX bailiffs observe a business dress code and they will behave in aprofessional and courteous manner at all times.

2. The bailiff will be circumspect and discreet when attempting to contact the debtor andnot disclose the nature of his/her business or purposes of his/her investigations to any thirdparties unless otherwise instructed by the debtor.

3. On visiting a debtor, the bailiff will introduce himself/herself as a certificated bailifffrom XXXXXXXX acting on behalf of the Council and produce his/her companyidentification. He/she will also carry authorisation supplied by the Council and will show thisto debtors in all cases.

4. The bailiff will explain clearly the reason for his/her visit in private if possible and ifnecessary the powers of a bailiff.

5. The bailiff will undertake visits to enforce liability Orders or Distress between thehours of 8.00am to 8.00pm Monday to Saturday. If there are exceptional circumstancesnecessitating visits outside these hours, we will contact the Council before proceeding withany action.

6. All documentation left with the debtor or at their property will be on pre-printedstationery. Any documents left at the property in the absence of the debtor will be in a sealedenvelope showing the debtor's name and address.

7. All documentation will be written in clear and unambiguous English and will includeall appropriate reference numbers, telephone numbers, addresses and the name of the bailiffwho visited the debtor's property.

8. Copies of standard documentation used in the recovery process will be forwarded tothe Council, before commencement of any future contract for their approval.

9. The bailiff will not enter the debtor's premises if it appears that the only peoplepresent are young people under the age of 18. A bailiff will only involve the elderly if theirname is on the Liability Order and they appear to be in good health.

10. The bailiff will be patient with debtors whose first language is not English, and ifnecessary seek advice from the Council about the possible interpretation services available.

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11. In cases where a bailiff is requested to produce responses in writing, he/she will do soat the earliest opportunity.

12. In the unlikely event of any breach of the peace, or incident that may lead to acomplaint, the bailiff will inform the Council at once.

Goods exempt from distress

XXXXXXXX works in full compliance with all current legislation, which prohibits theremoval of the following goods:

• Money (unless contained in a bag or tin)• Perishable goods (fresh food items etc)• Fixtures• Goods delivered to a person by way of trade• Things in actual and personal use• Things in the custody of the law• Clothes, bedding and tools of the trade to the value of £ 150.00• Goods subject to hire purchase• Goods in the mail

Council Tax cases

In accordance with the Council Tax (Administration and Enforcement AmendmentRegulations 1993), no person making a distress shall seize any goods of the debtors of thefollowing description:-

• Such tools, vehicles and other items of equipment as are necessary to the debtor foruse personally by him in his employment, business or vocation.

• Such clothing, bedding, furniture, household equipment and provisions as arenecessary for satisfying the 'basic domestic need' of the debtor and his family.

Community Charge cases

In accordance with the Council Tax regulations and with the Community Charges(Administration and Enforcement Amendment Regulations 1993).

Business rates cases

The Non Domestic Rating (Collection and Enforcement Amendment and MiscellaneousProvision Regulations 1993) exempts such clothing, bedding, furniture, household equipmentand provisions as necessary for satisfying the 'basic domestic need' of the debtor and hisfamily'.

'Basic Domestic Need' is defined as follows:

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Clothes reasonably required for the debtor's familyBed and bedding reasonably required by the debtor's familyHousehold linen reasonably required by the debtor's familyCleaning equipmentA table, and a chair for each member of the debtor's familyFoodToys of a childMedical aids and equipment (e.g. wheelchairs, walking aids etc)Items for the care of children (e.g. prams, pushchairs etc)Heating appliances, except where free standing unless they provide the only form ofheating.Cookers or microwave ovens unless there is an alternative appliance for cookingWashing machine where there are children, sick or disabled people in the debtor'sfamilyRefrigerators where this would leave an individual with no means of keeping foodcoldAny items bought with social fund grants.

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Annex 3

Postal questionnaire issued to Scottish Local Authorities

155

Scottish Office / Convention of Scottish Local Authorities WorkingGroup on Council Tax Collection: Research Study.

When answering the questions on this survey please note that the informationrequested relates to the year 1997/1998.Your answers should therefore be based on data that relates to the period ON orBEFORE March 31st 1998.

The questionnaire is broken down into 4 sections, which follow a natural order, and your helpin completing it is very much appreciated. If you have a query about any of the questionsplease contact Moira Hepworth on 0171 831 3505.

Please give the name of someone in your authority we can contact to discuss anyanswers given in the questionnaire.

NameÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉ.

AuthorityÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉ

PositionÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉ..

TelÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉ

E-mailÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉ

Please post the questionnaire back before 22nd March 1999 in the prepaid envelope toMoira Hepworth, Head of Policy and Research at: The Institute of Revenues, Rating andValuation, 41 Doughty Street, London WC1N 2LF.

© Copyright IRRV 1999

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Section 1 Ð Background Information

Q1. Name of Authority. ___________________________________________

Q2. How many staff were employed in the Revenues Division ? ÉÉÉÉ. Please provide the number of full-time equivalent (f.t.e) staff.

Q3. What numbers of staff (f.t.e) were involved in the following areas?

A) Administration & Recovery of Council Tax ÉÉÉÉ..

B) Council Tax Benefits ÉÉÉÉ..

Q4. If you used staff generically, in what context were they used? Please tick appropriate boxes

A) Front Ð line Staff q B) Billing and Benefits qC) All Aspects q

Q5. Was the administration of Housing Benefit and Council Tax Benefit combined ? Please tick one box

Yes q No q

Q5a. Did the Revenues Division administer this? Please tick one box

Yes q No q

Q6. Was any aspect of this service decentralised ?Please tick one box

Yes q go to Q7 _ No q go to Q8

Q7. Which aspects ? Please tick one or more boxes.

A) Council Tax q B) Council Tax Benefit qC) Other q Please specifyÉÉ ÉÉÉÉÉÉÉÉÉ.q

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Q8. Was there a dedicated team for the recovery of debt ?

Yes q No q

Q9. How many staff (f.t.e.) were involved in Council Tax debt recovery? ÉÉÉÉÉÉÉ

Q10. Did you have any dedicated visiting / inspection services within your department ?Please tick one box.

Yes q go to Q11 No q go to Q12

Q11. How many visiting officers (f.t.e.) did you have for benefits? ..ÉÉÉ

Q11a. How many inspectors (f.t.e.) did you have for Council tax voids/ exempts ? ÉÉÉ.

Q12. Did you have teams of multi purpose visiting/inspection officers (e.g. Housing) ?

Yes q go to Q13 No q go to Q14

Q13. How were they organised ?ÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉ

ÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉ

Q13a. What was their range of functions ?ÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉ

ÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉ

Q13b. What percentage of their time was spent on inspections for Council Tax voids / exempts ? ÉÉÉÉÉÉÉ..%

Q14. What was the percentage provision made for bad debts on Council Tax? (i.e. The allowance made for irrecoverable sums because the debt proves un-collectable)? É.ÉÉÉÉÉÉ..%

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Section 2 Ð Information Technology

Q15. Which operating system did your IT service provider use ? Please tick one box.

A) Mainframe q B) Unix q

Q16. Who was your IT Service provider ?

A) In House q B) Other q SpecifyÉÉÉÉÉÉÉÉ

Q17. Which software did you use for 1997/98 ? Please write one score for each box.

1= First Software 6 = MDIS2= ICL 7 = IBS3= Saffron 8 = In-house4= Sanderson 9 = Other5= Academy

A) For Council Tax q B) For Housing Benefits q If Other which ? ÉÉÉÉÉÉÉÉÉÉÉ. If Other which ? ÉÉÉÉÉÉÉ

C) For Council Tax Benefits q If Other which ? ÉÉÉÉÉÉÉÉÉÉÉ..

Q18. How long have you been using this software ? Please write in the date you started using the software (mm/yy).

For Council Tax ÉÉÉÉÉÉÉÉÉÉ... For Housing BenefitsÉÉÉÉÉÉÉÉÉÉ.

For Council Tax Benefits ÉÉÉÉÉÉÉÉÉÉ..

Q19. Did you produce your initial annual bills from this software ? Please tick one box

Yes q No q

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Q20. Did the software provide full functionality during 1997/98 ? Please tick one box for each.

For Council Tax Yes q No qFor Council Tax Benefits Yes q No qFor Housing Benefits Yes q No q

Q21. What facilities were not used / unavailable?

ÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉ

Q22. Did you migrate to your current system during 1997/98 ?

Yes q go to Q23 No q go to Q24

Q23. What were the start and completion dates for any systems migration?

Council Tax Start dateÉÉÉÉÉÉÉ. Completion dateÉÉÉÉÉÉÉÉ...

Council Tax Benefits Start dateÉÉÉÉÉÉÉ. Completion dateÉÉÉÉÉÉÉÉ..

Housing Benefits Start dateÉÉÉÉÉÉÉ. Completion dateÉÉÉÉÉÉÉÉ.

Q24. Did you use any of the following in Revenues and Benefits? Please tick one or more boxes.

A) Document Image Processing q qB) Document Management q qC) Workflow q qD) Telephone debt collection (In House) q qE) Telephone debt collection (External) q q

Q24a. Please tick any which have been in use for over 1 year.

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Section 3 Ð Billing

Q25. What was the total annual net amount of Council Tax billed including Water andsewerage charges, summary warrant surcharges for 1997/98 as at 31st March 1998 (ie net ofrelief's, exemptions, benefits, discounts and transitional relief)

£ÉÉ.ÉÉÉÉ

Q26. Please break down the figure above into the following :

a) Value of Summary warrant charges for 1997/98 as at 31.3.98 £É..ÉÉÉÉÉ

b) Value of water and sewerage charges for 1997/98 as at 31.3.98 £ÉÉ.ÉÉÉÉ.

c) Balance attributable to Council Tax for charges for 1997/98 £ÉÉÉÉÉÉ...

Q27. What percentage of Council tax for the fiscal year 1997/98 was collected by March 31st 1998 ? Please write the percentage to one decimal point ÉÉÉÉÉÉÉÉÉÉÉÉ...

Q27a. What percentage of Council Tax for the fiscal year 1997/98 was collected by March 31st 1998 for each of these groups?

Council tenants ÉÉÉÉÉÉÉÉ OthersÉÉÉÉÉÉÉÉÉ

Q28. What policy or practice did you adopt in allocating payments where arrears of previous years council tax/community charge was outstanding ? Please tick one box.

Current Year first q Previous Years first q

Q29. Did you offer discounts for payment by any of the following ?Please tick one or more boxes and specify at c) if appropriate.

A) Lump sum payments q ÉÉÉÉÉÉÉÉÉ%

B) Direct debit q ÉÉÉÉÉÉÉÉÉ%

C) Other ÉÉÉÉÉÉÉÉÉÉÉÉÉ... qÉÉÉÉÉÉÉÉÉ..%.

Q29a. What was the take up for each of these as a percentage of the total number of bills?

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Q30. Which methods of payment did you offer your tax payers? Please tick one or more boxes

A) Direct Debit q ÉÉÉÉÉÉÉÉÉ%

B) Standing Orders q ÉÉÉÉÉÉÉÉÉ%

C) Credit Cards/ Debit Cards q ÉÉÉÉÉÉÉÉÉ%

D) Central Cash Office q ÉÉÉÉÉÉÉÉÉ%

E) Area / District Cash offices q ÉÉÉÉÉÉÉÉÉ%

F) Agency Cash Facilities

(e.g. Post Office) q ÉÉÉÉÉÉÉÉÉ%

G) Deductions from Payroll/Pensions q ÉÉÉÉÉÉÉÉÉ%

H) Other ÉÉÉÉÉÉÉÉÉ q ÉÉÉÉ.ÉÉÉÉ... %

Q31. What was the take up for each of these in terms of thepercentage of the total number of bills?

Q32. At how many council offices could payments be made ? ÉÉÉÉÉ

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Section 4 Ð Recovery

Q33. What were the dates set for your first monthly instalments for 1997/98 ? Please write one date for each method.

Direct debitÉÉÉÉÉÉÉ.ÉÉ. OthersÉÉÉÉÉÉÉÉÉÉÉÉÉ

Q34. Thinking about the recovery process up to the issue by the Sheriff Court of theSummary warrant in 1997/98. Please answer the following:

A) On what date did you issue the first 7 day notices ÉÉÉÉÉÉÉÉ..

B) How many 7 day notice runs were there in the year ÉÉÉÉÉÉÉÉ..

C) How many 7 day notices were sent in the year? ÉÉÉÉÉÉÉÉ..

D) If payments were not brought up to date on the issue of a first 7 day notice, was a furthernotice issued requiring full payment of the yearÕs charge prior to the issue of a final notice.

Please tick one box

Yes q No q

Q35. Did you issue a single arrears run for the whole of your area? Please tick one box

Yes q No q

If No, Why ? ÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉ..

Q36. How many final notice runs were there in the year? ÉÉÉÉ.

Q37. How many final notices were sent in the year? ÉÉÉÉ

Q38. How many petitions did you make to the Sheriff for ÉÉÉÉ. Summary warrants issued in the year ?

Q38a. How many cases were contained in the Summary warrants issued in the year? ÉÉÉ...

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Q39. Did you petition separately for : Please tick one box

A) Non Benefit cases Yes q No q B) Benefit cases Yes q No q C) Income support cases Yesq No q

Q40. In how many cases were decrees issued in the year ? Please enter number ÉÉÉÉÉÉ..

Q41. What was the total amount of arrears for applications for attachment of IncomeSupport / Job Seekers Allowance during the year ? Please enter amount £ÉÉÉÉÉÉ

Q42. What was the total amount of uncollected arrears with the Sheriff Officer at 31st march 1998 ? Please enter amount £ÉÉÉÉÉÉÉ.

Q43. Thinking about methods of recovery post Summary warrant please indicate the numberof times the following actions were used in 1997/98?

A) Deductions from Income Support / Job Seekers allowance É..ÉÉ. ÉÉÉ.

B) Requests for information ( after the issue É..ÉÉ. ÉÉÉ. of the summary warrant e.g. employment details)

C) Poinding ÉÉ..É. ÉÉÉ.

D) Poinding and warrant sale ÉÉ..É. ÉÉÉ.

E) Earnings arrestments ÉÉ..É. ÉÉÉ.

F) Arrestment and action of furthcoming ÉÉ..É. ÉÉÉ.

G) Procedures leading to Insolvency / sequestration's ÉÉ..É. ÉÉÉ.

H) Inhibitions ÉÉ..É. ÉÉÉ.

I) Special arrangements to pay at any point in the process ÉÉ..É. ÉÉÉ.

Please specify at which points: ÉÉÉÉÉÉÉÉÉÉÉÉÉÉ..

ÉÉÉÉÉÉÉÉÉÉÉÉÉÉ..Q44. Now rank the above list in terms of their effectiveness using the scale below.

1= Very effective 4= Ineffective 2= Effective 5= No opinion 3= Not very effective

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Q45. What was the average number of elapsed days between each of the following : Please write in the number of calendar days for each.

A) The due date for payment of the instalment and the issue of the 7 day notice. ÉÉÉ.

B) The end of the 14 days from the date of issue of the 7 day notice and the issue of the final reminder. ÉÉÉ.

C) The end of the 14 days from the date of issue of the final reminder and the date of granting a summary warrant. ÉÉÉ.

D) The date of granting the summary warrant and the date passed to the Sheriff officer for collection. ÉÉÉ.

Q46. Did you issue a ÒCouncil Tax plus costsÓ letter to council tax payers following issue of a Summary warrant ? Please tick one box

Yes q go to 46a No q go to Q47

Q.46a. In what circumstances did you issue this letter ?

Q46b. How many such letters were sent in 1997/98 ? ÉÉÉ.

Q46c. How many days grace were given for payment? ÉÉÉ.

Q46d. Did the letter include a request for information such as employment details etc ?

Yes q No qQ46e. As a result of the letters, how many special arrangements to pay were made ? ÉÉÉ.

Q46f. Where there was failure to provide employment details etc were civil penalties charged ? Please tick one box

Yes q No q

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Q47. How many cases went through the following processes in 1997/98 ?

A) Cases referred to the Sheriff Officer for action ÉÉÉ.

B) Cases where poinding was actioned ÉÉÉ.

C) Cases where poinding and sale was actioned ÉÉÉ.

D) Cases returned by the Sheriff Officer as Òinsufficient assetsÓ ÉÉÉ.

Q48. Are Sheriff officers authorised to make further special arrangements? Please tick one box

Yes q No qQ49. Are any cases of unpaid council tax passed to any other agency for action such as a debt collection agency ?

Please tick one box

Yes q go to Q49a No q go to Q50

Q49a. Give details

ÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉ

ÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉ

166

Q50. To what extent do members of your Council involve themselves in the use of the following actions ? Please write in one score for each using the scale below.

1= To a great extent 4= Not at all2= To a fair extent 5= DonÕt know3= To some extent

A) Deductions from Income Support / Job Seekers Allowance qB) Earnings arrestments qC) Arrestment qD) Action of furthcoming qE) Poinding qF) Poinding and sale qG) Insolvency/ sequestration qH) Use of debt collection agencies qI) Inhibitions q

Q51. How many firms of Sheriff officers did you use ? ÉÉÉ.

Thank you for taking the time to complete this questionnaire, the informationyou have given will be used to identify trends in the different processes used inScotland. It will not be used in any way that singles out your authority.The information you have provided will be treated as strictly confidential.

Please post the questionnaire back before 22nd March 1999 in the prepaid envelope toMoira Hepworth, Head of Policy and Research at: The Institute of Revenues, Rating andValuation, 41 Doughty Street, London WC1N 2LF.

167

Annex 4

Postal questionnaire issued to English Local Authorities

IRRV Council tax survey version 4.3.99168

Scottish Office / Convention of Scottish Local Authorities WorkingGroup on Council Tax Collection: Research Study.

When answering the questions on this survey please note that the informationrequested relates to the year 1997/1998. Your answers should therefore be based ondata that relates to the period ON or BEFORE March 31st 1998.

The questionnaire is broken down into 4 sections, which follow a natural order, and your helpin completing it is very much appreciated. If you have a query about any of the questionsplease contact Moira Hepworth on 0171 831 3505.

Please give the name of someone in your authority we can contact to discuss anyanswers given in the questionnaire.

NameÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉ.

AuthorityÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉ

PositionÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉ..

TelÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉ

E-mailÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉ

Please post the questionnaire back before 22nd March 1999 in the prepaid envelope toMoira Hepworth, Head of Policy and Research at: The Institute of Revenues, Rating andValuation, 41 Doughty Street, London WC1N 2LF.

© Copyright IRRV 1999

IRRV Council tax survey version 4.3.99169

Section 1 Ð Background Information

Q1. Name of Authority. ___________________________________________

Q2. How many staff were employed in the Revenues Division? ÉÉÉÉÉ..É... Please provide the number of full-time equivalent (f.t.e.) staff.

Q3. What numbers of staff (f.t.e.) were involved in the following areas?

A) Administration & Recovery of Council Tax ÉÉÉ.É.ÉÉ.. B) Council Tax Benefits ÉÉÉ...ÉÉÉ..

Q4. If you used staff generically, in what context were they used? Please tick appropriate boxes

A) Front Ð line Staff q B) Billing and Benefits qC) All Aspects q

Q5. Was the administration of Housing Benefit and Council Tax Benefit combined ? Please ti ck one box

Yes q No q

Q5a. Is housing benefit administered by the Revenues Division? Please tick one box

Yes q No q

Q6. Was any aspect of this service decentralised ?Please tick one box

Yes q go to Q7 No q go to Q8

Q7. Which aspects ? Please tick one or more boxes.

A) Council Tax q B) Council Tax Benefit qC) Other q Please specify ÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉ.É.

Q8. Was there a dedicated team for the recovery of debt ?

Yes q go to Q8a No q go to Q9

Q8a. At what stage did they take over responsibility for recovery?

ÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉ

IRRV Council tax survey version 4.3.99170

Q9. How many staff (f.t.e.) were involved in Council Tax debt recovery? ÉÉÉÉÉ

Q10. Did you have any dedicated visiting / inspection services within your department ? Please tick one box.

Yes q go to Q11 No q go to Q12

Q11. How many visiting officers (f.t.e.) did you have for benefits? ÉÉÉÉÉ

Q11a..How many inspectors (f.t.e.) did you have for unoccupied dwellings (existing & newly built) ? ÉÉÉÉÉ

Q12. Did you have teams of multi-purpose visiting/inspection officers (e.g. Housing) ?

Yes q go to Q13 No q go to Q14

Q13. How were they organised ?ÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉ.

Q13a. What was their range of functions ?ÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉ.

Q13b. What percentage of their time was spent on inspections of unoccupied dwellings for Council Tax ? (An estimate is acceptable where actual figures

are not available) Please indicate if figure is: Estimate / Actual ÉÉÉÉÉÉÉÉÉÉ..%

Q14. What was the percentage provision made for bad debts on Council Tax? (I.e. The allowance made for irrecoverable sums because the debt proves un-collectable)?

Q14a. How much in cash terms was actually written off ? £ÉÉÉÉÉ.

Q14b. What percentage of collectable council tax does this represent ? ÉÉÉÉÉ..%

IRRV Council tax survey version 4.3.99171

Section 2 Ð Information Technology

Q15. Which operating system did your IT service provider use ? Please tick one box.

A) Mainframe q B) Unix q

Q16. Who was your IT Service provider ?

A) In House q B) Other q Please specify ÉÉ.ÉÉÉÉÉÉÉÉ

Q17. Which software did you use for 1997/98 ? Please write one number from the list below in each box.

1= First Software 6 = MDIS2= ICL 7 = IBS3= Saffron 8 = In-house4= Sanderson 9 = Other5= Academy

A) For Council Tax q B) For Housing Benefits q If Other which ? ÉÉÉÉÉÉÉÉÉÉÉ. If Other which ? ÉÉÉÉÉÉÉÉ.

C) For Council Tax Benefits _ If Other which ? ÉÉÉÉÉÉÉÉÉÉÉ..

Q18. How long have you been using this software ? Please write in the date you started using the software (mm/yy).

For Council Tax ÉÉÉÉÉÉÉÉÉÉ... For Housing BenefitsÉÉÉÉÉÉÉÉÉÉ.

For Council Tax Benefits ÉÉÉÉÉÉÉÉÉÉ..

Q19. Did you produce your initial annual bills from this software ? Please tick one box

Yes q No q

IRRV Council tax survey version 4.3.99172

Q20. Did the software provide full functionality during 1997/98 ? Please tick one box for each.

For Council Tax Yes q No qFor Council Tax Benefits Yes q No qFor Housing Benefits Yes q No q

Q21. What facilities were not used / unavailable?

ÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉ

ÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉ

Q22. Did you migrate to your current system during 1997/98 ?

Yes q go to Q23 No q go to Q24

Q23. What were the start and completion dates for any systems migration?

Council Tax Start dateÉÉÉÉÉÉÉ. Completion dateÉÉÉÉÉÉÉÉ...

Council Tax Benefits Start dateÉÉÉÉÉÉÉ. Completion dateÉÉÉÉ.ÉÉÉÉÉ

Housing Benefits Start dateÉÉÉÉÉÉÉ. Completion dateÉÉÉÉÉÉÉÉ.

Q24. Did you use any of the following in Revenues and Benefits?Use the first set of boxes to indicate if these systems are used and the second set of boxes toindicate if they have been in operation for more than 1 year Please tick one or more boxes.

A) Document Image Processing q qB) Document Management q qC) Workflow q qD) Telephone debt collection (In House) q qE) Telephone debt collection (External) q q

Q24a. Please tick any which have been in use for over 1 year.

IRRV Council tax survey version 4.3.99173

Section 3 Ð Billing

Q25. What was the total annual net amount of Council Tax billed including Court costs for1997/98 as at 31st March 1998 (ie net of relief's, exemptions, benefits, discounts andtransitional relief)

£É..ÉÉÉÉÉÉ

Q26. Please break down the figure above into the following :

Value of Court costs for 1997/98 as at 31 st March 98 £ÉÉÉÉÉÉÉÉ

Balance attributable to Council Tax for charges for 1997/98 £ ÉÉÉÉÉÉÉ...

Q27. What percentage of Council tax for the financial year 1997/98 was collected by March 31st 1998 ? Write the percentage to one decimal point ÉÉÉÉÉÉÉÉÉÉÉÉ...

Q27a. What percentage of Council Tax for the financial year 1997/98 was collected by March 31st 1998 for each of these groups?

Council tenants ÉÉÉÉÉÉÉÉ OthersÉÉÉÉÉÉÉÉÉ

Q28. What policy or practice did you adopt in allocating payments where arrears of previous years council tax/community charge was outstanding ? Please tick one box.

Current Year first qCurrent Year first, if payment is the exact amount of the current yearÕs monthly instalment qPrevious Year first q

Q29. Did you offer discounts for payment by any of the following ? Please tick one or more boxes and specify at c) if appropriate.

A) Lump sum payments q ÉÉÉÉÉÉÉÉÉ%

B) Direct debit q ÉÉÉÉÉÉÉÉÉ%

C) Other ÉÉÉÉÉÉÉÉÉÉÉÉÉ... q ÉÉÉÉÉÉÉÉÉ..%.

Q29a. What was the take up for each of these in terms of the percentage of the total number of bills?

IRRV Council tax survey version 4.3.99174

Q30. Which methods of payment did you offer your tax payers? Please tick one or more boxes

A) Direct Debit q ÉÉÉÉÉÉÉÉÉ%

B) Standing Orders q ÉÉÉÉÉÉÉÉÉ%

C) Credit Cards/ Debit Cards q ÉÉÉÉÉÉÉÉÉ%

D) Central Cash Office q ÉÉÉÉÉÉÉÉÉ%

E) Area / District Cash offices q ÉÉÉÉÉÉÉÉÉ%

F) Agency Cash Facilities q ÉÉÉÉÉÉÉÉÉ%

(e.g. Post Office) qG) Deductions from Payroll/Pensions q ÉÉÉÉÉÉÉÉÉ%

H) Other ÉÉÉÉÉÉÉÉÉ q ÉÉÉÉ.ÉÉÉÉ... %

Q31. What was the take up for each of these in terms of thepercentage of the total number of bills?

Q32. At how many council offices could payments be made ? ÉÉÉÉÉ

IRRV Council tax survey version 4.3.99175

Section 4 Ð Recovery

Q33. What were the dates set for your first monthly instalments for 1997/98 ? Please write one date for each method.

Direct debitÉÉÉÉÉÉÉ.ÉÉ. OthersÉÉÉÉÉÉÉÉÉÉÉÉÉ

Q34. Thinking about the recovery process up to the issue of a liability Order in 1997/98: - Please answer the following:

A) On what date did you issue the first reminder notices ÉÉÉÉÉÉÉÉ..

B) How many reminder notice runs were there in the year É..ÉÉÉÉÉÉÉ..

C) How many reminder notices were sent in the year? É..ÉÉÉÉÉÉ

D) If payments were not brought up to date on the issue of a first reminder notice, was afurther

notice issued requiring full payment of the yearÕs charge prior to the issue of a final notice? Please tick one box

Yes q No q

Q35. Did you issue single reminder/summons runs (meaning a batch run on the computer system) covering the whole of your area? Please tick one box

Yes q No q Please state reason ?

ÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉ..

Q36. How many reminder runs were there in the year? ÉÉÉÉ.

Q37. How many summons runs were there in the year? ÉÉ..ÉÉ

Q38. How many summonses were issued by the Magistrates during 1997/98? ÉÉ.ÉÉ.

IRRV Council tax survey version 4.3.99176

Q39. Did you summon separately for : Please tick one box

A) Non Benefit cases Yes q No q ÉÉÉ. Estimate / Actual

B) Benefit cases Yes q No q ÉÉÉ. Estimate / Actual

C) Income support cases Yes q No q ÉÉÉ. Estimate / Actual

Q39a. Now state the number of summons made for each of the above ( If you cannot provide actual numbers an estimate will be sufficient, please indicate if you have given actual or estimated figures)

Q40. How many Liability Orders were issued in 1997/98? ÉÉÉÉÉÉ..

Q41. What was the total amount of arrears for applications for attachment of Income Support / Job Seekers Allowance during the year? Please enter amount £ÉÉÉÉÉÉ

Q42. What was the total amount of uncollected arrears for 1997/98 that was passed to your bailiffs within that year? Please enter amount £ÉÉÉÉÉÉÉ.

Q42a. What was the total amount of uncollected arrears for 1997/98 remaining with your bailiffs as at 31st March 1998? Please enter amount £ÉÉÉÉÉÉÉ.

IRRV Council tax survey version 4.3.99177

Q43. Thinking about methods of recovery post Liability Order please indicate the number oftimes the following actions were used in 1997/98?

A) Deductions from Income Support / Job Seekers allowance ÉÉÉ. ÉÉÉ.

B) Requests for information ÉÉÉÉ. ÉÉÉ.

C) Distraints without seizure of goods ÉÉÉÉ. ÉÉÉ.

D) Distraints with seizure of goods ÉÉÉÉ. ÉÉÉ.

E) Attachment of earnings ÉÉÉÉ. ÉÉÉ.

F) Attachment of Members allowances ÉÉÉÉ. ÉÉÉ.

G) Procedures leading to Insolvency ÉÉÉÉ. ÉÉ

H) Legal Charges ÉÉÉÉ. ÉÉÉ.

I) Cases where debtor was advised committal action is pendingÉÉÉÉ. ÉÉÉ.

J) Cases where debt was paid in full ÉÉÉÉ. ÉÉÉ.

K) Cases where committal orders were made by the court ÉÉÉÉ. ÉÉÉ.

I) Special arrangements to pay at any point in the process ÉÉÉÉ. ÉÉÉ.

Please specify at which points: ÉÉÉÉ.ÉÉÉÉÉÉÉÉÉÉÉÉÉÉ..

ÉÉÉÉ.ÉÉÉÉÉÉÉÉÉÉÉÉÉÉ..

Q44. Now rank the above list in terms of their effectiveness using the scale below.

1= Very effective 4= Ineffective 2= Effective 5= No opinion 3= Not very effective

Q45. Thinking about the cases where the court made committal orders please answer the following :

A) Average length of prison sentence ÉÉÉÉ.

B) Number of cases where whole sentence was served ÉÉÉÉ.

C) Cases where only part sentence was served ÉÉ.ÉÉ.

Q46. In the case of part sentence served what was the time actually served ? Please tick one box.

A) 1-2 days q B) 3-5 days q C) over 5 days q

IRRV Council tax survey version 4.3.99178

Q47. What was the average number of elapsed days between each of the following : Please write in the number of calendar days for each.

A) The due date for payment of the instalment and the issue of the reminder notice. ÉÉÉ.

B) The end of the 14 days from the date of issue of the 7 day notice and the issue of the final reminder. ÉÉÉ.

C) The end of the 14 days from the date of issue of the reminder notice and the issue of a final notice (if any) ÉÉÉ.

D) The date of issue of the summons and the date of hearing in the magistrates court. ÉÉÉ.

E) The date of granting the Liability Order and the date passed to the bailiff ÉÉÉ.

Q48. Did you issue a 7 day letter to Council tax payers following issue of a liability order ? Please tick one box

Yes q go to 48a No q go to Q49

Q.48a. In what circumstances did you issue this letter ?ÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉ

Q48b. How many letters were sent in 1997/98 ? ÉÉÉ.

Q48c. How many days grace were given for payment? ÉÉÉ.

Q48d. Did the letter include a request for information such as employment details etc ?

Yes q No qQ48e. As a result of the letters, how many special arrangements to pay were made ? ÉÉÉ.

Q48f. Where there was failure to provide employment details etc were civil penalties charged ? Please tick one box

Yes q No q

IRRV Council tax survey version 4.3.99179

Q49. How many cases went through the following processes in 1997/98 ?

A) Cases referred to the bailiff for action ÉÉÉ.

B) Cases where distraint was actioned ÉÉÉ.

C) Cases where goods were seized and sold ÉÉÉ.

D) Cases returned by the bailiff as ÒNulla BonnaÓ ÉÉÉ.

Q50. Are Bailiffs authorised to make further special arrangements? Please tick one box

Yes q No q

Q51. Are any cases of unpaid council tax passed to any other agency for action such as a debt collection agency ? Please tick one box

Yes q go to Q51a No q go to Q52

Q51a. Give details

ÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉ

ÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉ

ÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉÉ

IRRV Council tax survey version 4.3.99180

Q52. To what extent do members of your Council involve themselves in the use of the following actions ? Please write in one score for each using the scale below.

1= To a great extent 4= Not at all2= To a fair extent 5= DonÕt know3= To some extent

A) Deductions from Income Support / Job Seekers Allowance qB) Attachment of earnings qC) Distraint with seizure of goods qD) Distraint without seizure of goods qE) Legal charges qF) Committal qG) Insolvency qH) Use of debt collection agencies qI) Attachment of Members allowances q

Q53. How many firms of bailiffs did you use ? ÉÉÉ.

Thank you for taking the time to complete this questionnaire. The information you havegiven will be used to identify trends in the different processes used in England andWales. It will not be used in any way that singles out your authority. The informationyou have provided will be treated as strictly confidential.

Please post the questionnaire back before 22nd March 1999 in the prepaid envelope toMoira Hepworth, Head of Policy and Research at: The Institute of Revenues, Rating andValuation, 41 Doughty Street, London WC1N 2LF.

181

ANNEXÊ5 SAMPLE INTERVIEW SCHEDULE: HEAD OF REVENUES

1. Open with assurances that their responses will be confidential and that no person orlocal authority will be identified in the report with any particular comments.

2. Having completed the questionnaire, is there anything that you particularly would liketo amplify?

3. For Scottish local authorities only.

3.1. Have you seen the Accounts Commission report on Collection of Council Taxin Scotland and the paper ÔIt Pays to CollectÕ prepared by the joint ScottishOffice/CoSLA Working Group?

3.1.1. If yes, do you find them sound resumes of the position in Scotland?

3.1.2. Also if yes, do you consider the associated Performance Indicatorsused to compile the report and ÔIt Pays to CollectÕ, to be valid?

3.1.3. Again if yes, Do you consider the proposals contained within thedocument, go far enough to offer the powers that you need?

3.2. If no, what additional powers do you consider necessary and why?

3.2.1. Do you consider your existing powers to collect and recover counciltax, to be adequate or less than adequate?

3.2.2. If Yes, Are you given the necessary freedom by your council and orChief Finance Officer to use them to the full?

3.3. Do you consider that if the limit of £1,500 before insolvency proceedings canbe considered were reduced to the same level as in England i.e. £750, would thepower be more readily usable by you?

3.3.1. Would you like to give a personal view on the value of insolvencypowers to council tax debt recovery and the way in which you would considerthat legal powers need amending or re-writing to make those powers ofgreatest value in the recovery process?

3.4. What are your views on the value to your local authority of the suggestedpowers for joint billing of rent and council tax I the case of council tenants Ð havingin mind that your council may dispose of its housing stock to a Housing Association?

4. Collection Powers operated in England/Wales

4.1. How familiar are you with the powers for recovery and collection of counciltax in England and Wales?

182

4.1.1. If well familiarised, which of the powers not available in Scotland butwhich are ÔenjoyedÕ by your colleagues in England and Wales, do youconsider would be most valuable to you?

5. Now back to all local authorities:

5.1. What level of importance does your Council/Director of finance place uponcollection and recovery of council tax Ð

5.1.1. we could use a scale of (say) 1.10.

5.2. Is there an anti payment culture generally prevailing in your local authorityÕsarea?

5.2.1. Alternatively, are there pockets of resistance anywhere in your area?Can you name the areas/districts?

5.2.2. If Yes, How do you target those areas?

5.2.3. If yes, what impact would you say it has on your collectionperformance? Please give an estimate in terms of percentage of debtors.

6. Information Technology

6.1. To what extent do you consider that the performance of your IT facilities hasimpacted upon your collection performance? Can you give an answer in terms ofdays/weeks delays?

6.2. Do you or your local authority have any plans to extend the range of ITfacilities that you currently employ.

6.2.1. If Yes, why?

7. Relationships with the Court

7.1. How would you describe your relationship with the staff at your localMagistrates/ County/Sheriff Court?

7.2. Can you suggest any ways in which they could assist you in your efforts toimprove collection rates?

8. Information Exchange

8.1. What level of exchange of information on council tax payers moving out ofyour area, exists between you and your neighbouring local authorities?

8.1.1. If there is a formal agreement and process, how effective is it?

8.1.2. Have you encountered any resistance by neighbouring local authorities(for instance on data protection grounds) to such exchanges?

183

8.1.3. If yes, what have been their general objections?

8.2. Do you have good information exchanges with other sections and departmentsof your local authority e.g. Benefits, Housing, Planning etc?

8.2.1. If yes, how valuable on a scale of 1 Ð 10 is that facility?

8.3. Do you have any information exchange agreements (formal or informal) withexternal agencies? If yes, with whom?

8.3.1. If yes, how valuable on a scale of 1 Ð 10 are those agreements.

9. English/Welsh local authorities:

9.1. Which action from issue of a summons for non-payment onwards, do youconsider produces the greatest response in terms of payment of the debt?

9.2. What impact do you consider that the power of committal for non-payment ofcouncil tax has upon the general level of collection in your local authority?

9.2.1. Do you consider that this power is widely known and understood byyour general body of council tax payers?

9.2.2. Do you consider that the threat of committal is more effective than theactual use of the power?

9.3. It has been proposed at various times, that the powers of distress and/or ofcommittal for non-payment of local taxes should be abolished and replaced with afrom of Community Service Order. What impact do you consider such a move ormoves would have on collection rates?

9.3.1. Re-examining the above question, what impact do you consider therewould be if the powers of distraint were to be severely limited to only non-household goods?

9.4. Do you have a formal code of conduct agreed with your bailiffs?

9.4.1. If you do have a formal code, can we have a copy?

9.4.2. If no, can we be given broad details of the contents?

9.5. Do you consider that the threat of the use of bailiffs is more effective than theactual use of bailiffs?

9.5.1. Do you get good reports from your bailiffs on cases they have beenunable to collect?

9.5.2. Do you have good communications with your bailiffs e.g. by interfacewith their IT facilities?

184

9.6. Do you consider that it is more effective to use internal bailiffs or an externalfirm or firms?

9.7. What, if any, additional powers do you consider would enhance your abilitiesto raise still further your collection rates for council tax?

10. What is your personal view of:

10.1. The quality of the staff you have available to you?

10.2. Your IT service? And

10.3. The unavoidable ÔbaggageÕ with which you are lumbered e.g. inherited debtsuch as that inherited by Scottish Unitaries; political policies and interference; baddebts from the Community Charge which impact on council tax debts; and anyothers?

10.4. Does you local authority have a Corporate Debt Policy and/or an Anti-PovertyStrategy?

10.5. If yes to either, what impact does it have on your collection processes?

10.6. What is your backlog of mail?

10.7. Do all your staff have their own terminal (VDU)?

185

ANNEX 6 RESEARCH METHODS

1. The study has employed a variety of research methods. It was necessary to quantifythe different council tax processes in Scottish and English authorities as much as possible.To this end a postal survey of a sample of local authorities was conducted. The Scottishauthority questionnaire was designed with the assistance of the Executive Committee of theScottish Branch of the Institute of Revenues, Rating and Valuation (IRRV). The Englishquestionnaire received design comment from members of the Law and Research Committeeof the IRRV who were based in English local authorities. Qualitative data, concerningindividualsÕ experiences and views of the council tax processes, was gathered through in-depth, semi-structured interviews with key revenues officers in local authorities. Lessformally structured interviews were held with officials of the Scottish Courts Administration,elected representatives and officers of the Society of Messengers-at-Arms and SheriffOfficers, and a partner of a firm of Sheriff Officers. The information arising from theseinterviews provided very useful insights into council tax recovery and enforcement issues asseen from non-local government perspectives. The project also required an analysis of therelevant available statistical information, and the relevant legislative arrangements.

2. It was important that all Scottish authorities were given the opportunity to contributeto the report. All 32 Scottish authorities were invited to complete the postal questionnaire.Responses were received from 30 of the authorities. A sample of 10 Scottish authorities wasvisited for follow-up interviews. These authorities to be interviewed were chosen as arepresentative sample spanning the Ôfamily groupsÕ97 of local authorities as identified by theAccounts Commission. In each family group, one authority was selected from each of theupper and lower quartiles and mid-range of collection rates, with one additional authority alsobeing selected. A number of other factors were identified as important in selecting theindividual authorities for interview:

• housing tenure mix;• whether aggregation/ disaggregation had occurred upon re-organisation;• population sparsity/density;• population mobility;• proportion of population in receipt of Income Support; and• use of local area offices for collection.

3. Postal questionnaires were issued to 33 English authorities. These were selected inorder to provide a broad match to the Scottish authorities selected for postal survey, using thesame criteria as listed above. Returns were received from 20 authorities. Follow-upinterviews were conducted with a sample of 10 authorities, chosen to broadly match thoseScottish authorities selected for interview, again on the criteria listed above. The lowerresponse rate from English authorities had been anticipated, and is attributed to the lowermotivation of English authorities to take part in the survey. A number of them saw littlepoint in allocating resources to the survey at a very busy time in the revenues calendar, whenthere was little perceived payback for them in terms of the reportÕs findings. Copies of thequestionnaires are attached as annexes to this report, as is a copy of the interview schedules.

97 Both the Accounts Commission for Scotland and Audit Commission uses family groupings of authorities.These allow more of a like-for-like comparison than would be the case by comparing all councils with oneanother.

186

4. It should be noted that the research only sought information and views from localcouncils, sheriff officers and the Scottish Courts Administration and therefore does notinclude the views of money advice workers, Citizens Advice Bureaux etc.