£2.4bn in taxes missing from council coffers

Spending watchdog the Audit Commission said councils in England gathered on average 97 per cent of what they were owed in 2013/14, down 0.4 per cent on the previous year.

The fall in collection rates – only the second on record – took overall arrears to £2.38bn.

Worst-performing authorities failed to secure 8.3 pence in every pound, with one council now owed a total of £105.2m.

However, all but 13 chose to write off historic debts, in one case of up to £25.3m.

Audit Commission chairman Jeremy Newman said: “While collection rates are high, when we consider such large sums of taxpayers’ money, even a small percentage shift can produce substantial changes in the income councils have to deliver their services.

“There has to be room for improvement for many councils.”

But the Local Government Association pinned the blame on the Treasury – and said town halls had a much better record on collecting taxes than Whitehall.

Its chair David Sparks said: “The slight increase in unpaid council tax will come as little surprise to those in local government, who warned that this would be a consequence of Government cutting funding for council tax support.

“This cut has left local authorities with little option but to reduce discounts for people on low incomes, some of whom have found it a struggle to pay.

“The high collection rates for local taxes could be improved still further if government gave local areas more control over them. If councils were able to set council tax discounts locally, we could ensure they are targeted at those who need them most.”

The figures showed that the overall sum collected rose by 2.7 per cent in real terms.

The collection of business rates, which is also the responsibility of local authorities, improved over the year from 97.7 per cent to 97.9 per cent.

Mr Sparks added: “These figures confirm that council tax and business rates have among the highest collection rates of any tax.

“The Exchequer would be billions of pounds better off each year if central government’s collection rates matched those of councils.”

Local Government Minister Kris Hopkins said frontline services could be improved and tax bills frozen if councils were better at collecting. “Improving tax collection rates and reducing arrears are a key way of making sensible savings to help keep overall council tax bills down and protect frontline services,” he said.

“Every penny of tax that is not collected means a higher tax bill for the law-abiding citizen.”