Saturday 21 April 2018

Struggling councils owed €870m in unpaid bills

Officials now forced to make door-to-door calls to collect outstanding business debts

The details are contained in audits completed by the Local Government Auditor based in the Department of the Environment.
The details are contained in audits completed by the Local Government Auditor based in the Department of the Environment.
Paul Melia

Paul Melia

Struggling city and county councils are owed €870m in unpaid rates, water charges, rents, housing loans and development levies.

New figures obtained by the Irish Independent show that despite many local authorities being unable to balance their books, they are failing to collect monies owed by businesses and households.

And the financial situation has become so precarious in one local authority that officials are forced to call to businesses seeking payment of outstanding debts.

Sligo County Council, which is owed €4.4m in total and was €6.31m in the red in 2013, has told the Department of the Environment that its staff are now "refocused on door-to-door collection where necessary".

The details are contained in audits completed by the Local Government Auditor based in the Department of the Environment.

Some councils have been told they must prepare "realistic achievable budgets" which will need to be "carefully monitored and implemented".

The figures paint a worrying picture of revenue collection across the local government system, despite problems being flagged in previous years.

The audits show that almost €320m of the total is made up of unpaid development levies, much of which is classed as long-term debt, which will take many years to collect given the low number of new homes being built.

But the vast bulk of the debt - €551m - is for services already delivered by councils but which businesses either cannot or are refusing to pay.

Sources said that many councils were reluctant to address the outstanding debts, as it could lead to the closure of businesses or result in people losing their homes.

The figures show:

* Some €300m is owed in unpaid commercial rates, one of the main sources of local government finance. Some of this relates to vacant properties. Almost a quarter of the total, €74m, is owed to Dublin City Council.

* Unpaid water bills amount to €134m. Councils currently collect this money on behalf of Irish Water, but the utility is expected to take responsibility next year.

* Another €54m is owed by council tenants who are not paying their rent. The amounts owing from the top 10 debtors in Cavan County Council range from €8,000 to €13,000, suggesting rent has not been paid for many years.

* Homeowners who purchased their properties using local authority loans owe some €45m. If they do not address the arrears, the council will be forced to repay the money.

* Another €16m is owed in unpaid waste bills, despite most councils no longer operating a collection system.

The auditor has told many local authorities they must both increase their collection rates, and set aside more for bad debts.

The highest yield for commercial rates is in Fingal County Council, where 90pc of bills are paid. Despite the high collection rate, it is still owed €12.7m. Among the lowest yields is in Louth County Council, where just over 51pc of bills are paid.

An examination of 20pc of the debts owed to Fingal showed that one in three customers had payment plans in place, suggesting the debt is being repaid over time. Almost 10pc of outstanding debts related to empty units, while 26pc of the total was being pursued. The council said some 12pc of bills related to companies in liquidation or in receivership.

In Longford, more than half of all council mortgages are in arrears.

Just 10 accounts in Leitrim account for 80pc of total housing loan debt.

South Tipperary has also been told that follow-up of house rent arrears is "poor" in a number of instances. The council said a new debt management system was being introduced.

Despite Donegal County Council running an accumulated deficit of almost €18m, it is owed €22m in unpaid rates and water charges.

Irish Independent

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