News

Navigating the Debt Crisis:

How Local Councils can Utilise Automation to Aid Collection and Recovery

13th March 2025

Local councils in England are in trouble. Many are heading towards a financial crisis due to years of severe underfunding, which – without action – will see significant cuts to vital public services. In fact, reports suggest that one in four English councils could go bankrupt in the next two years, amid an enormous £54bn funding black hole.

Without the necessary finances, councils are struggling to meet the needs of their local communities. And this will only worsen as the cost of social care, special educational needs and disabilities (SEND) services, school transport and homelessness continue to grow. Not to mention, an increased focus on services to support a population that is both growing and ageing.

Unfortunately, aside from government grants, councils have few sources of revenue, meaning they are often unable to raise additional funds locally if demands exceed resources. One of the main sources of income councils rely on is Council Tax. However, local authorities in England are currently owed £6bn in council tax arrears, highlighting both the impact of suspending recovery activities during the pandemic, and the growing challenge for struggling councils to collect revenue during a cost-of-living crisis. According to the National Debtline, the amount owed by citizens has increased, from an average of £1,181 in 2019 to £1,762 in 2024, making Council Tax arrears the most common debt faced by citizens today.

Tackling the issue requires proactivity

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With financial fragility continuing to impact councils and the services they provide, it is more important than ever that councils take a proactive approach to the collection of revenue.

Traditionally, councils have responded reactively to the issue. However, with overall levels of uncollected debt rising, it is increasingly clear that early intervention is vital to ensure better outcomes for both citizens and councils. Left unaddressed – particularly in today’s tough economic climate – the failure to collect Council Tax can quickly spiral. But if action is taken earlier, payment plans can be easier to negotiate and additional support can be provided to ensure these plans are viable and sustainable.

A key challenge, however, is to resource early interventions. With demand growing, councils are finding it increasingly difficult to recruit and train staff.

The role of automated technologies

“With the Revenues and Benefits function accounting for approximately 40% of customer contact on a day-to-day basis in a typical Unitary council, rising to 60% for District Councils, finding more efficient and effective ways to process work is essential.”

Andrew Melvin

Commercial Director, Govtech Solutions – A Netcall Company

Fortunately, smart automated technologies are available to support local councils by modernising and transforming tasks such as Revenues processing – both for Council Tax and Business Rates. By embracing automated technologies that are plugged in with minimal IT intervention and quickly configured to take care of complicated back-office processes, Revenues officers can be freed up within weeks to focus on tasks that add more value to the council, such as supporting vulnerable people, or those struggling to make payments.

For smaller councils with just a handful of employees in the Revenues and Benefits service, automation offers much greater resilience during peak periods, such as Annual Billing, or when illness and annual leave take their toll. This ensures that Revenues processing can continue to run effectively during these times and backlogs don’t build up.

When looking at citizen experience, automation also offers the seamless journey that citizens expect in today’s digital age. If a citizen submits an online form, they expect it to be processed instantly, rather than join a manual processing work queue. By automating the end-to-end process, tasks such as confirming and updating liability for Council Tax, dispatching bills and even calculating refunds and credit transfers can be completed without officer intervention. And, when intervention is triggered by business rules, these automatically classify priority items and improve workload management.

The opportunities beyond revenue collection

As local councils continue to battle financial challenges with limited resource, reducing avoidable contact remains a core focus. This means reducing the number of times citizens need to contact the council by making better use of the data available. For example, when a citizen moves into a new area, in addition to getting in touch to register for Council Tax, they may also wish to register to vote, apply for a parking permit or a green bin license. Smart automation means citizens only need to contact the council once – not only providing significant efficiency gains for the council, but vastly improving citizen experience.

“Automation – when used effectively within local councils – is extremely powerful, with tools such as AI and robotics helping to unlock further benefits and improvements. Whilst the path to financial sustainability for many local councils is a complex one, embracing technology that streamlines revenue collection, frees up resources and improves citizen experience, will make a significant difference, both now and in the future.”

Mark Gannon

Director of Client Solutions, Netcall