In November 2005, the Audit Commission published The efficiency challenge: The administration costs of revenues and benefits. This report identified, along with other improvements in efficiency, that direct debit (DD) collection of council tax was one area where councils acknowledge the potential for improved efficiency. Our study found that if councils improve their DD rates there is potential to save millions of pounds in administration costs.
We have undertaken a more detailed study to examine how councils are approaching this issue. We also examined the position regarding housing rent collection by councils and housing associations (HAs). Although the volumes are less than council tax, the number of transactions is significant, and DD therefore offers the potential for improved efficiency. Our study has focused on:
- Identifying the cost benefit of increasing DD collection of council tax and housing rents (in councils and HAs) and associated good practice.
- Providing a clear benchmark for calculating DD rates (and the costs of other methods of payment) - improving the potential for councils to work together to build an accurate picture of what works well.
- Examining the relationship between the cash payment of rent and any link to cash payment of council tax.
- Examining the potential conflicting issues relating to choice, and balancing other local priorities;
- looking for other opportunities for efficiency gains through improved use of electronic payment transactions, for example, direct credit (DC).
- Applying lessons learnt from councils and other sectors about the best ways of maximising DD.