‘Two million in council tax debt’
MORE than two million people are estimated to be behind on their council tax bills due to the impact of coronavirus, according to major charities which fear local authorities’ debt collection methods could push households into a spiral of hardship.
Citizens Advice, the Money Advice Trust and Stepchange Debt Charity said action is needed to prevent households being pushed over a council tax enforcement “cliff-edge”.
They fear that a wave of aggressive debt collection by cash-strapped local authorities could be triggered.
The three charities welcomed the Government’s temporary ban on bailiff visits to enforce debts during Covid-19 restrictions, and said its measures to protect people’s finances during the crisis have been a lifeline. But they are concerned there could be a sudden escalation of council tax debt enforcement in future.
The charities are calling for changes to regulations on how council tax is collected.
A survey of more than 2,000 people in April carried out for Citizens Advice suggests 4.4% of the population – potentially equating to around 2.3 million adults in the UK – have missed a council tax payment because of Covid-19.
The three 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 warned that with the financial impact of Covid-19 likely to be felt for months and even years, regulations used by councils to collect debts may lead to “heavy-handed tactics” that could push struggling households further into debt.
They said 1.4 million council tax debts were passed to bailiffs in 2018/19, adding costs and fees on to existing debts.
If someone misses one council tax payment, they could become liable for their entire annual bill, adding further pressure on struggling households.
The charities want a requirement for councils to set up an affordable payment plan before starting council tax debt recovery. They said councils should be encouraged to collect debts over more than a year and people should not automatically be liable for their entire annual bill when they fall behind on instalments.
More hardship funding should also be provided to councils to reduce tax arrears accrued as a result of Covid-19, they said.
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.”
Joanna Elson, chief executive of the Money Advice Trust, the charity that runs National Debtline, said: “There can be no going back to ‘business as usual’ for council tax collection.”