£31m Uncollected Council Tax in Newham Sparks Budget Crisis

Key Points

• Newham Council has failed to collect almost £31 million in council tax since 2018.
• It consistently ranks as having one of the worst tax collection rates among London boroughs.
• The council’s collection rate for 2024/25 is the lowest in London at 89.9%, compared to the London average of 94.9%.
• The council is considering raising council tax by nearly 9% next year amid budget shortfalls.
• Covid-19 pandemic severely disrupted tax collection, and Newham’s recovery lacked rigor.
• Council tax arrears have led to increased pressure on the council’s call centre.
• A collection drive has recently improved the rate to an expected 94% by March 2026.
• Residents have expressed frustration about difficulties contacting the council regarding arrears.

What is the scale of council tax non-payment in Newham?

Almost £31 million in council tax remains unpaid by residents of Newham between 2018 and 2024, according to a report presented to councillors during an overview and scrutiny committee meeting on 18 November. The figure of £30,840,577 highlights persistent collection challenges faced by Newham Council, as first reported by the Evening Standard.

Paul Martin, the council’s interim chief executive, acknowledged these difficulties during the meeting, stating the authority had “taken its eye off the ball” in tax collection following the pandemic. He attributed some of the problem to the widespread disruption Covid-19 caused but admitted that Newham lacked the necessary “rigour” when trying to recover arrears.

How does Newham’s tax collection rate compare with London boroughs?

The report revealed that Newham’s council tax collection rate for the 2024/25 financial year is 89.9%, the lowest of all London boroughs. This is significantly below the London average collection rate of 94.9%. Furthermore, Newham held the second-lowest rate for each of the four previous years from April 2020 to March 2024.

Martin explained that such declines were common across councils during the pandemic.

“Every council is impacted by that, Newham is no different to any other council,”

he said, according to the Evening Standard. Still, he stressed that Newham’s recovery efforts have lagged behind those of other boroughs.

What financial pressures is Newham Council facing?

Faced with a £53 million shortfall in setting a balanced budget for the coming year, Newham Council is exploring measures to raise funds. These include a proposed council tax increase of 8.99% and potential service cuts such as reducing weekly waste collections and closing or merging youth zones and children’s centres.

Labour councillor Carleene Lee-Phakoe underscored the dilemma, telling the committee:

“Council tax is used to provide services – services that our residents need, services that our residents want and for some residents that they rely on. The reality is we don’t have enough money to pay for services.”

What steps has the council taken to improve tax collection?

The council has launched a targeted drive to improve collections by sending letters and texts to residents with outstanding payments. This initiative has led to a “significant improvement,” with officers reporting they are on track to collect 94% of council tax by the end of March 2026—a level close to pre-pandemic standards.

Their report to councillors indicated that “significantly more income” had been collected this year compared to the same point last year. However, the recovery has strained the council’s customer service resources.

Why is the council’s call centre under pressure?

Increased collection efforts have caused a surge in calls to the council’s call centre. The report described “significantly higher call volumes” and noted call-answering rates remain below expectations. Mehmood Mirza of the Newham Independents group expressed residents’ frustration:

“They have to come to their councillor – they can’t get through on the telephone, the emails aren’t replying.”

Labour councillor Susan Masters added that councillors themselves have been helping residents who were wrongly informed of arrears. She asked council officers why the anticipated spike in enquiries was not planned for.

Council officers responded they had brought in additional staff for call handling but said the demand was “unprecedented.” Dave Gibbs, head of revenues and transactional finance, acknowledged the challenge, explaining:

“We recognised towards the end of February our collection rate wasn’t great and we had to do something about it. We had to get the notices out to get the income in.”

Gibbs said that despite efforts to allocate extra resources, this was insufficient to handle call volumes during the surge. Fortunately, he noted, call volumes have since decreased, and residents should now find it easier to reach the council by phone.

What are the potential impacts of the council’s tax collection issues on residents and services?

The shortfall in council tax revenue intensifies financial constraints, forcing difficult decisions about public service delivery. Service reductions and tax increases can disproportionately affect vulnerable residents who rely most on council support.

Councillor Lee-Phakoe’s remarks reflect the broader challenge of balancing fiscal responsibility with community needs. The ongoing recovery in tax collection is a positive sign, but the council faces continued pressure to improve efficiency and communication with residents.