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Government changes could risk creating a debt D-Day of 23 August
Over 1.3 million households nationally are likely to have built up council tax arrears because of coronavirus
Carers and people who’ve been shielding are likely to be hit hardest
Following legislation that came into effect on Wednesday 24 June, the ban on face-to-face bailiff collection will now come to an end on 23 August. This is the same day as protections from eviction end for people in the private rented sector and comes at a time when redundancies are expected to rise.
According to figures from the Local Government Association, over £500m of council tax has gone unpaid during the coronavirus outbreak, a figure which could mean over 1.3million households in council tax arrears. While many councils have been supporting residents during the pandemic, their precarious financial position – and the government’s restrictive rules – may leave them little choice about calling in the bailiffs in August.
Citizens Advice in Ipswich, Babergh and Mid Suffolk are pleased that the Shared Revenues Partnership that is in charge of Council Tax Collections for these three Councils have signed up to the Citizen Advice Council Tax protocol. This shows a commitment to making council tax collection fairer. But the current government regulations tie their hands on how fair and flexible they can be – that’s why we’re calling for reforms of these rules.
We will work with the Shared Revenues Partnership to support residents who have fallen behind with payments in these difficult times with the aim of reducing the need for formal enforcement proceedings which can ramp up the costs and make clearing the debt even more difficult.
Since January, the 3 local Citizens Advice have dealt with over 330 issues of council tax arrears (Ipswich has dealt with over 187 issues of council tax arrears) and we know that figure will rise when the Councils start to contact households who have fallen behind.
Nicky Willshere Chief Executive at Citizens Advice Ipswich said:
“The more that can be done to support households in arrears BEFORE bailiffs are called in to play, the more cost-effective and efficient the process can be. We continue to urge the Councils to use Bailiff enforcement as a LAST RESORT rather than an automatic first step.”
Residents really don’t need to worry alone – we are here to help. We have teams of qualified Money Advisers ready to support with these and other debts. We can also help households make claims for Council Tax Reduction or Discretionary Housing Payments”
Research from Citizens Advice has shown that council tax arrears have hit some groups particularly hard. People who are behind on their council tax because of Covid-19 are twice as likely to have been shielding or at increased risk of the virus. They are also four times more likely to be caring for older family members.
The UK’s three largest debt charities – Citizens Advice, Money Advice Trust and Stepchange – last week wrote to the Local Government Minister to call for urgent action on council tax. The charities are urging the government to implement simple measures that could protect millions of people from the prospect of spiralling council tax debt.
The charities are warning of potentially huge problems for those behind on council tax. Outdated government regulations mean councils often resort to bailiffs to collect outstanding debts. These rules drive councils to use court-based enforcement to recover council tax arrears, which is both harmful and inefficient. In 2018-19, the use of bailiffs added £200 million of fees to people’s debts, but councils recovered less than 30p out of every pound of debt referred. Councils are also the largest users of bailiffs – 1.4 million council tax debts were passed to bailiffs by councils in England and Wales in 2018/19.
Central government reform is needed to resolve this problem before the bailiff ban is lifted. The charities are calling for simple changes to the council tax regulations to give councils more flexibility to recover debts outside the court process. This decision can be enacted by ministers without taking up precious parliamentary time and has been supported by local councils.
Dame Gillian Guy, Chief Executive of Citizens Advice, said:
“The government now has a two-month window of opportunity to make changes to council tax collection that will help millions of people facing the prospect of spiralling debt. Over the last few years, Citizens Advice has helped hundreds of thousands of people with council tax arrears.
“Using bailiffs to collect debts is a blunt tool that’s extraordinarily damaging to those on the receiving end, and economically ineffective for councils. Former government ministers, backbenchers, charities, campaigners and councils themselves are lining up to call for change on this issue.
“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 OBE, 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.
“Sadly, millions of people have already fallen behind with their bills – these changes are needed now to prevent a bad financial situation being made worse by heavy-handed debt collection practices.”
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, 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.”