Council tax debt collection methods ‘need reform before bailiff visits resume’

Council tax debt collection methods need urgent reform before bailiffs start knocking on doors once more, according to charities.

Citizens Advice, the Money Advice Trust and StepChange said central Government must “grasp the nettle” and allow councils more flexibility to recover debts outside the court process.

The charities said that according to figures from the Local Government Association (LGA), more than £500 million of council tax has gone unpaid during the coronavirus outbreak.

Some 1.4 million council tax debts were passed to bailiffs by councils in England and Wales in 2018/19, the charities said.

They added that a ban on face-to-face bailiff collection is due to end on August 23, under enforcement rules covering England and Wales.

The changes risk creating a “debt D-Day” of August 23, they warn.

Research from Citizens Advice suggests people who are behind on their council tax because of Covid-19 are particularly likely to have been shielding or at increased risk of the virus. They are also particularly likely to be caring for older family members.

Dame Gillian Guy, chief executive of Citizens Advice, said: “People struggling with their council tax bills could now face a nervous summer waiting for the knock at the door. The Government must take the opportunity to act to help people avoid this.”

Joanna Elson, chief executive of the Money Advice Trust, said: “There is an urgent need for changes to the way that council tax is collected before bailiff visits are allowed to resume.

“The Government must act to change the rules to ensure local authorities collect council tax debts in a fair and compassionate way, giving people the time they need to repay without unnecessarily resorting to bailiffs.”

Phil Andrew, chief executive of StepChange Debt Charity, said: “As things stand, there is a fundamental disconnect between the way in which enforcement against debts like council tax is being restarted and the way in which regulated lenders are expected and required to behave by the FCA (Financial Conduct Authority), with a clear focus on realistic affordability and fair treatment.

“It’s simply not right that, after everything we’ve experienced through the pandemic, the resumption of council tax debt collection and enforcement seems set to resume on a ‘business as usual’ basis.

“Improving council tax debt collection needs to be part of the Government’s wider post-Covid financial recovery strategy.

“If ever there was a time to grasp the nettle and reform the outdated mechanisms that hinder local authorities from adopting a more compassionate, flexible and realistic way of reaching affordable repayment plans on council tax, now is surely that moment.”

Richard Watts, chair of the LGA’s resources board, said: “Councils absolutely recognise the pressures that many households are facing at this difficult time and 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 the first two months of the year rather than the last and most councils have also suspended recovery action for people with existing arrears.

“While councils have a duty to their residents to collect taxes, which play a vital role in funding important services that people rely on, the LGA and councils are working with the major debt advice charities and a range of other partners to ensure that we can support households in the most effective way possible.

“This will be particularly crucial as payment holidays and forbearance come to an end. Anyone having trouble paying their council bills should get in touch with their local authority for financial help and advice.”

A Government spokesman said: “We expect councils to be sympathetic to those in genuine hardship and many councils have already put in place alternative payment arrangements to help people who are struggling to pay, for example by deferring payments to later in the year.

“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.”