Debt Charities Warn Of Record Levels Of Council Tax Arrears

Two debt charities have called on local authorities to end the practice of passing vulnerable residents Council Tax debts to bailiffs.


Two leading debt advice charities have called on local authorities to end the practice of passing vulnerable residents Council Tax debts to bailiffs, as figures show the level of arrears has hit a record high.

Analysis by the StepChange debt charity found that average Council Tax arrears have increased from £717 in 2011 to £961 in 2015, an increase of 25 per cent. Just 14 per cent of the charity’s clients we’re struggling with Council Tax arrears in 2011, but this has now increased to a shocking 30 per cent.

Figures from National Debtline, an expert advisory service run by the Money Advice Trust, closely mirror those from StepChange. Nearly one in four calls (24%) to the specialist service were from people with Council Tax arrears in 2015, compared to just 14 per cent in 2007.


Both charities have expressed concerns with the increasing use of enforcement agents by local authorities. The Money Advice Trust’s ‘Stop The Knock’ campaign has revealed how 1.27 million debts directly related to Council Tax arrears were referred to bailiffs in 2014/15.

An independent review, led by former MP Eric Ollerenshaw, has also expressed concerns over the increasing use of enforcement agents by local authorities in recovering debts.

A recent survey by StepChange found that 62 per cent of people with arrears who had been seeking debt/money advice were still threatened with court action. More than half (51%) were threatened with bailiff action, while only 13 per cent were encouraged to seek debt advice.

Both charities are calling for those in receipt of Council Tax Support to be given statutory “Breathing Space” on Council Tax arrears, allowing them more time to acquire expert help and advice.

The scheme would also guarantee a temporary freeze on debt interest and halt enforcement action. These protections should remain in place while people are allowed to repay the debt in affordable and sustainable installments, the charities say.

Joanna Elson OBE, Chief Executive of the Money Advice Trust, the charity that runs National Debtline, said: “With Council Tax arrears continuing to increase, it has never been more important for local authorities to improve their debt collection practices.

“Unfortunately many councils are still being far too quick to pass debts to bailiffs, with 2.1 million referrals made in the space of just 12 months alone.

“Bailiffs should only ever be used as a last resort – and they shouldn’t be used at all in the case of recipients of Council Tax Support, who councils have already identified as requiring additional help to keep on top of their finances.

“The publication of Eric Ollerenshaw’s review gives the government a welcome opportunity to put this right.”

Mike O’Connor, Chief Executive of StepChange Debt Charity, said: “The increasing levels of Council Tax arrears are a continuing cause for concern.


“We know that often the default position of councils is to aggressively pursue arrears through the court process and by instructing bailiffs. It may come as a surprise to people that public bodies are more aggressive in pursuing debts than many private companies.

“This counterproductive approach needs to stop immediately and be replaced with one that is fairer and more constructive.

“It is up to both central and local government to implement systems that both incentivise affordable repayment and support those in financial difficulty”.

Cllr. Claire Kober, from the Local Government Association, said cuts to local authority funding, coupled with welfare changes introduced by the former coalition government, mean councils have “little choice but to reduce council tax discounts for the working-age poor or low-income families”.

“We agree that bailiffs should only ever be used as a last resort”, she told BBC News.

“Before the situation reaches a stage where bailiffs are involved several letters should have been written, people should have been encouraged to apply for financial support, and efforts should be made to arrange new payment plans or to attach the debt to a salary”.

She added: “It is in everyone’s interest to ensure those struggling to pay their council tax bills are set up on affordable and sustainable payment plans.

“However, there is always a risk that the longer a debtor goes on without paying, their repayment instalments will become even more difficult for them to manage and the debt will take longer to clear.”

A spokesperson for the Department for Communities and Local Government said 97 per cent of Council Tax is collected on-time and without the need for bailiffs.

They added: “We have also made it easier for households to pay their bills in monthly instalments and published guidance to stop bad practices from aggressive bailiffs.


“However, every penny of council tax that is not collected means a higher bill for everyone in the area so we expect councils to be sympathetic to those in genuine hardship, but take appropriate action to chase up outstanding debts, while delivering a fair deal for local families.”


 

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