London council writes off £56m in debt in a year - business rates are biggest problem

Stock pic of Oxford Street
-Credit: (Image: Getty)

A London council has written off £56m in 'irrevocable debt', and business rates are the biggest contributor. Westminster City Council said it cleared £35m in unpaid business rates and £9m in parking charges during the 2023/24 financial year, a Freedom of Information (FoI) request has shown.

It also cancelled plans to reclaim £10.3m in council tax and housing benefit overpayments. Another £650,000 in adult social care debt and rent arrears was also forgiven. The council said the figures cover debt accrued over multiple financial years.

An FoI submitted by the BBC's Local Democracy Reporting Service (LDRS) shows 876 accounts failed to pay business rates during the 2023/24 financial year. That figure jumped to 21,498 when it came to failed council tax payments and to over 61,000 for parking charges.

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Westminster City Council offices on Victoria Street.
Westminster City Council cancelled £56m in debt -Credit:Google

The council said the amount of irrevocable debt it writes off will differ between financial years because reviews are not carried out on a yearly basis. They said the last review involving business rates and council tax debt took place during the pandemic and figures were higher than normal.

Westminster City Council said the amount it wrote off is 'relatively small in percentage terms' and pales in comparison to the roughly £2.27bn in business rates and £160m in council tax it collected last year. This is then handed to the Treasury where it is redistributed across the country.

The LDRS understands business rates write-offs are primarily due to insolvencies, like liquidations, administrations and dissolutions, and that local authorities, like private businesses, cannot avoid these from their bottom lines. The LDRS also understands those leaving behind debt without providing a forwarding address is a particular problem in Westminster due to the borough's transient resident population.

A council spokesperson said: "As home to more businesses than any other local authority area, Westminster collects the most business rates in the country on behalf of the Government. Our collection rates are in line with neighbouring London boroughs.

"Local authorities routinely write off council tax debt for a variety of reasons, including debtors absconding without a forwarding address or insolvency (bankruptcies). Overall, the council aims to recover debt as soon as possible, whilst always taking account of the current cost of living crisis that residents are facing."

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