Business Irish

Monday 26 September 2016

Councils calling in debt collectors for €340m due in rates

Paul Melia Environment Editor

Published 10/05/2016 | 02:30

The NOAC warned that 60pc of local authorities are operating in the red and reliant on bank overdrafts and borrowings to make ends meet.
The NOAC warned that 60pc of local authorities are operating in the red and reliant on bank overdrafts and borrowings to make ends meet.

LOCAL authorities are employing debt collectors and mounting legal action in a desperate bid to collect almost €340m owed in unpaid commercial rates.

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A report from the National Oversight and Audit Commission (NOAC) said that councils including Leitrim, Laois, Limerick and Sligo are taking a harder stance against businesses which are refusing to pay up.

And the NOAC has also warned that 60pc of local authorities are operating in the red and reliant on bank overdrafts and borrowings to make ends meet.

A report said three local authorities have deficits which account for more than 9pc of their annual revenues - they are Sligo, which had a deficit of €12.7m at the end of 2013, representing almost 40pc of its revenue; Donegal (€17.8m, or 13.6pc) and Offaly (€5m, or 9.3pc).

The NOAC was established in July 2014 and is charged with scrutinising the performance of local authorities and helping to develop best practice.

It has published four reports - on the financial performance of local authorities between 2013-2105; another on rates collection between 2013-2014, on shared services projects in the councils and a fourth on reforms highlighted under the Local Government Efficiency Review.

The reports set out progress achieved to date and a range of issues which require urgent action. They find:

• Nineteen of the 31 local authorities are running deficits. This is due to poor collection of local authority charges, retirement payments to departing staff, loss of income from planning and other fees, increased demand for services and cuts in government funding.

• Auditors have warned that the deficits are a "very serious matter" to be addressed, but in some cases they will not be cleared until 2020, assuming there is no downturn in the economy.

• Commercial rates account for 32pc of local authority income, but collection rates are falling even in councils most in need of money including Donegal, Mayo and Leitrim, all of which are operating at a loss.

• At the end of 2014, a total of €394m was outstanding but there was a reduction in arrears of €56m in 2015, leaving an accumulated shortfall of €338m.

The report added that a review of debt management practice has put in place a series of recommendations to improve collection rates, but added that the country's local authorities have identified a range of problematic issues.

They include limited collection powers, no ability to charge interest and penalties, "frequent changes of company identity", no priority in the courts, adding that when a court order is obtained, "there are usually no goods to seize".

The report says that while there has been some improvement in performance, 11 local authorities examined had "poor collection performance" and faced challenges in improving collection rates.

The NOAC said that local government had achieved a number of successes, and that it wanted to ensure a "drive for efficiency" was embedded in the day-to-day work of councils.

It added there was "variable performance" across some areas which needed to be improved.

Irish Independent

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