Increasing Trend In Outstanding Welsh Council Tax Balances Over The Years
Over the years, the outstanding balances in Council tax have followed an increasing trend. 2020 has seen a drastic year-on-year increase in the outstanding balances in Wales. The highest increase is seen in 2021, an increase of 35%.
Steady Increase In The Reliance On Council Tax In The Total Budget Requirement
The amount to be collected from Council tax in the total budget requirement had a steady increase of approximately 2% over the years. However, the outstanding balances in council tax had a sharp increase since 2019-20. This implies that although the reliance on council tax hasn’t increased much, it is the people’s ability to pay which is of growing concern.
Rate Of Increase In Outstanding Council Tax Balances Outpaces Council Tax billings
Year-on-year comparison shows that the Council tax bills have only increased by approximately 2% since 2017-18. Since 2019-20, despite the fall in the Council tax bills, the outstanding balances continue to follow a dramatic increase in the same time period.
Insights
Forecasted Year-On-Year Increase Of 16% In The Council Tax Outstanding Balances Based On The Current Economic Crisis
Forecasting Method
All the insights have been derived by using datasets from StatsWales website which is a open source of Welsh local government data.
Our forecasting is based on the insights from the historical data which shows that people’s inability to pay the council tax is one of the main factors for the outstanding council tax balances. Hence, if people were already financially vulnerable, the current cost of living crisis will just add fuel to the fire.
The forecasting of the outstanding Council tax arrears has been done using the forecasted inflation rate for 2022-23. The inflation rate has been broken down into: Food inflation, electricity (megawatts per hour), petrol (pence per litre), UK gas (pence per therm). The correlation between the outstanding Council tax balances and the inflation rate is 0.5, which implies a moderate positive correlation and indicates the possibility that increasing inflation rates have led to increased outstanding balances.
Using regression analysis, we predicted that year-on-year, there might be 16% increase in the outstanding council tax balances in 2023 in Wales, if the economic crisis continues in the UK.
Summary
Our analysis shows the dramatic increase in the rate of outstanding council tax balances over the years. There has been a minimal steady increase in the rate of contribution made by council tax in the budget requirement in the same time period. The rate of increase in council tax arrears is higher than the rate of increase in council tax bills, which emphasises on people’s struggles to pay. Furthermore, using regression analysis, we have forecasted the impact of the current ‘cost-of-living’ crisis on the outstanding council tax balances for 2023.