Mr. John McCarthy:

I understand fully where the Deputy is coming from in this regard. In the first instance, we rely on the Local Government Audit Service, LGAS, and the audits it conducts. They form a crucial part of the architecture in terms of ensuring expenditure in local government is incurred appropriately and efficiently. Capital funding is more closely associated with individual projects, meaning there would be greater bilateral engagement between local authorities and us or other Departments, including Transport, Tourism and Sport in respect of road projects. There would be a specific relationship.

Regarding the wider funding of local authorities, for example, the commercial rates and housing loans and rents the Deputy mentioned, each year the LGAS produces what it calls an activity report whereby it pulls together the outcome of the audits for all the main local authorities into a single report. This gives us an overall national perspective of the performance of local authorities under a range of headings, including the specific income sources to which the Deputy referred. It provides the Department a platform to engage with local authorities as necessary.

The Deputy mentioned the issue of commercial rates. Their collection level concerns everyone, not least the local authorities themselves. In recent years and partly influenced by the economic downturn, the rate of collection has been declining. In 2009, the collection rate was approximately 86%. In 2013, it was 77%. Interestingly, 2013 was the first time in four or five years that one could see the percentage rate starting to rise again. Another point worthy of note is that this percentage is not just the percentage of the rates levied in the year but also of the arrears. If one were to strip out the arrears, which have to be pursued, one would see that the actual in-year level of collection was higher.

While it is welcome that the level of rates collection is rising, it still has a long way to go. It is at 77%. An exercise was done centrally, led by the Department of Public Expenditure and Reform, regarding debt collection generally within the public sector. That was completed last year. Arising from it, various initiatives are being taken forward in the individual sectors, including local government. A specific group has been set up within that sector to take on rates as a first area of concerted activity. In partnership with the sector, we are in a process of trying to set a target of a progressive 2% to 2.5% increase in the collection level per annum, supported by a sharing of best practice. There is significant variation across local authorities. We are trying to avoid reinventing the wheel by taking best practice from where it can be gleaned.

The other significant matter the Deputy mentioned, and it is one that is worthy of particular note, is that of loans.