It’s a statement of the obvious to say that reducing deprivation is a Good Thing and that it can be very helpful to local authorities since council tax collection may increase as areas develop. Indeed this is at the heart of current policy in business rate retention.
What may not have been considered so much however is a secondary by-product of reducing deprivation.
The chart below shows how income deprivation is intimately related to council tax collection rates. The greater the deprivation in an area, the lower the council tax collection rates. Its not the only factor influencing collection rates but its certainly a very important one.
This has important implications when it comes to benchmarking performance of course and may challenge perceptions of how is doing well, or not, on this indicator.
But it also means that as income deprivation drops there should be a corresponding increase in collection rates. To give a sense of this, the council marked below is not doing particularly well on council tax collection on the face of it. But when taking account of income deprivation it is performing EXACTLY where you would expect it to be since deprivation is quite acute here. However, this council would achieve an additional £2m of income per year through improved collection alone rates if deprivation levels improved to something like the lower 40% percentile.
It’s a big ask to have this much impact on income deprivation but an additional £2m a year will certainly help to fund this important work and is certainly worth considering.
income deprivation and council tax collection rates