‘Punitive’ processes used to collect council tax arrears criticised by charity
Someone missing an average council tax payment of £167 in the first month of the financial year could potentially see the size of their debt balloon to around £2,065 in just nine weeks, Citizens Advice calculates.
The charity, which said it had based its calculation on typical costs in England, said the debt can quickly escalate because when someone falls behind on their council tax payments, they can become liable for the rest of their annual bill after only two weeks – a sum which could amount to £1,671 according to Citizens Advice.
Two types of fees are then added on top of the original tax debt: court costs (typically £84) and bailiff fees (commonly £310) – adding up to £2,065 according to the charity’s calculations, with this total estimated debt potentially reaching the enforcement stage nine weeks after the initial missed payment.
The charity claimed “outdated and punitive” regulations are encouraging local authorities to collect debts aggressively.
On average, Citizens Advice clients in council tax debt have just £14 a month in disposable income.
Citizens Advice said it wants to see changes which would stop people being asked to pay their entire annual bill if they miss one monthly payment.
It said there should be statutory guidance stating that councils must attempt to develop an affordable repayment plan for arrears before taking the debt through the courts.
It wants to see more use of processes enabling councils to collect fees without using a court order, which incurs fees for those in debt.
Council tax arrears are the most common debt problem Citizens Advice helps people with – and last year its services across England and Wales helped more than 96,000 people struggling to make their council tax payments.
Citizens Advice estimates that across England and Wales over £560 million in fees was added to people’s council tax debt in 2016/17 alone, including £300 million of bailiffs’ fees.
It said financial pressures on councils mean they are increasingly reliant on council tax to fund local public services – while at the same time stretched household finances mean people are struggling to keep on top of essential bills including council tax.
Earlier this month, the Government pledged to improve the way council tax is recovered.
The Ministry of Housing, Communities and Local Government (MHCLG) will engage with charities, debt advice organisations and local authorities on changes to improve the council tax collection system before considering further reforms later this year.
Gillian Guy, chief executive of Citizens Advice, said: “By forcing local authorities to use rigid and outdated collection processes, council tax regulations make it harder for people to pay their original debts instead of helping them to get their finances back on track.
“Through its council tax collection review, the Government must fundamentally reform the regulations governing how local authorities collect debts.
“Punitive processes such as charging a full year’s bill after a single monthly payment is missed show how broken the system is – they both tie the hands of councils and force people into debt.”
An MHCLG spokeswoman said: “While council tax collection is essential to running public services, we expect councils to be sympathetic to those in genuine hardship and proportionate in enforcement.
“We are working on making the council tax collection system fairer and more efficient – so people are still treated with compassion while raising funds for public services.”
Cllr Richard Watts, who chairs the Local Government Association (LGA)’s resources board, said: “Since 2010, councils have lost 60p out of every £1 they had from central government to run local services.
“Council tax is vital so that services like caring for the elderly, collecting bins, protecting children fixing roads are not affected.
“Councils want it to be easier to recover money without having to go to the courts so would be in favour of a review of the regulations, including whether to remove the requirement for the entire annual sum to become payable if an instalment is missed.”
He said anyone having trouble paying their council bills should get in touch with their local authority for financial help and advice.
Cllr Watts said: “Councils will, where possible, take steps to make sure that people in financial difficulty are supported.
“The LGA will be working with the Government to identify best practice and update the current guidance.”