Urgent action needed to help people in council tax debt, say charities

More than two million people are estimated to be behind on their council tax bills due to the impact of coronavirus, according to major charities which fear local authorities’ debt collection methods could push households into a spiral of hardship.

Citizens Advice, the Money Advice Trust and StepChange Debt Charity said action is needed to prevent households being pushed over a council tax enforcement “cliff-edge”.

They fear that a wave of aggressive debt collection by cash-strapped local authorities could be triggered.

The three charities welcomed the Government’s temporary ban on bailiff visits to enforce debts during Covid-19 restrictions, and said its measures to protect people’s finances during the crisis have been a lifeline.

But they are concerned there could be a sudden escalation of council tax debt enforcement in future.

The charities are calling for changes to regulations on how council tax is collected.

A survey of more than 2,000 people in April carried out for Citizens Advice suggests 4.4% of the population – potentially equating to around 2.3 million adults in the UK – have missed a council tax payment because of Covid-19.

The three charities said they recognise the need for councils to recover arrears from those who can afford to pay to fund vital local services.

But they warned that with the financial impact of Covid-19 likely to be felt for months and even years, regulations used by councils to collect debts may lead to “heavy-handed tactics” that could push struggling households further into debt.

They said 1.4 million council tax debts were passed to bailiffs in 2018/19, adding costs and fees on to existing debts.

If someone misses one council tax payment, they could become liable for their entire annual bill, adding further pressure on struggling households.

The charities want a requirement for councils to set up an affordable payment plan before starting council tax debt recovery.

They said councils should be encouraged to collect debts over more than a year and people should not automatically be liable for their entire annual bill when they fall behind on instalments.

More hardship funding should also be provided to councils to reduce tax arrears accrued as a result of Covid-19, they said.

Dame Gillian Guy, chief executive of Citizens Advice, said: “Coronavirus has caused huge financial uncertainty for local councils. But this pressure must not trigger a wave of aggressive debt collection against people who are themselves struggling to pay their bills. Aggressive collection drives vulnerable people further into debt and is inefficient.”

Joanna Elson, chief executive of the Money Advice Trust, the charity that runs National Debtline, said: “There can be no going back to ‘business as usual’ for council tax collection.

“The Government should move quickly to address the weaknesses in the way local authorities collect arrears from people in debt – to ensure that this is fair, proportionate and does not make bad financial situations worse.

“At the same time, councils need more funding for both existing council tax support schemes and to support residents in hardship in other ways.

“This needs to be put in place right away so that local authorities can play their part in supporting the nation’s financial recovery from the outbreak.”

Phil Andrew, chief executive of StepChange Debt Charity, said: “Council tax is often one of the bills that households experiencing financial difficulty struggle to pay, yet enforcement of it is harsher and more punitive than most other forms of debt.

“Particularly this early in the council tax year, if people miss a payment and become liable to repay the full amount, this is a worry.

“The Government needs to take steps both to support councils who will understandably be worried about their funding, but also to require them to adopt fair and compassionate approaches to residents who fall into arrears as a result of the current situation.”

A spokesman for the Local Government Association (LGA) said: “Councils are putting in place a wide range of measures to help residents who are facing financial hardship because of the virus.

“Some have delayed taking council tax payments for first two months of the year rather than the last and most councils have also suspended recovery action for people with existing arrears.

“Government has provided councils with funding to make deductions from council tax bills for some low-income residents. Many are also offering other hardship and local welfare support. Anyone struggling to pay their council tax bill should contact their council as soon as possible to find out what support is available to them.”

A Ministry of Housing, Communities and Local Government spokeswoman said: “Council tax plays an important part in funding frontline services in the coronavirus response, but we expect councils to be sympathetic to those in genuine hardship.

“We’ve introduced a £500 million hardship fund that builds on local support schemes by further reducing the council tax bills of some of the most vulnerable households by up to £150.

“We’ve also changed the law to protect households by banning enforcement visits from bailiffs at residential premises for the duration of the pandemic in line with public health guidance.”