More than two million in council tax arrears, as charities demand government action

Debt charities have demanded the government change “ineffective” regulations on council tax collections, after publishing estimates that two million people are in arrears to local authorities.

The UK’s three major debt charities – StepChange, Citizens Advice and the Money Advice Trust – have urged the government to take action to prevent a council tax enforcement “cliff-edge”.

The organisations fear that with council tax enforcement measures likely to restart soon, many residents already struggling as a result of coronavirus will soon face harsh enforcement methods, pushing them deeper into financial hardship.

Citizens Advice estimates that more than two million people have already fallen behind on council tax bills as a result of covid-19, while people in the ‘shielded’ group are four times as likely to fall behind on a household bill, compared to those not at increased risk. The charity added that 2.2 million households were already behind on their bills before the start of the outbreak.

In a joint statement, the 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’re making the case that, with the financial impact of Covid-19 likely to be felt for months and years to come, existing regulations used by councils to collect debts will lead to “heavy-handed” tactics – such as deploying bailiffs.

The charities also claimed that existing council enforcement powers often result in bailiff action, (with 1.4 million council tax debts passed to bailiffs in 2018/19), which adds costs and fees onto people’s existing debts.

They also came back to the issue that, if someone misses one council tax payment, they become liable for their entire annual bill.

While welcoming the government’s temporary ban on bailiff visits to enforce debts during Covid-19 restrictions, the charities are concerned there will be a sudden escalation of enforcement when this lifts.

To prevent this, they are calling for the government, as part of its Covid-19 response, to take the following measures:

• Introduce a ‘pre-action protocol’ for councils to follow before beginning to enforce council tax recovery. This would include a requirement to set up an affordable repayment plan.

• Encourage councils to collect debts over more than one year by changing collection rate targets.

• Stop people becoming automatically liable for their entire annual bill when they fall behind on installments.

• Provide more hardship funding to councils to reduce council tax arrears accrued as a result of Covid-19.

The charities have written to Simon Clarke MP, minister for local government, outlining their recommendations.

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. Councils get back just 27p for every £1 of debt passed on to bailiffs.”

She added: “The government must urgently change the rules so local authorities can collect council tax debts fairly and sustainably.”