A record number affected by Council Tax arrears
Record numbers of people are falling further into debt caused by Council Tax arrears, according to new figures released by two debt charities which are calling for an end to the use of debt collectors by local authorities.
StepChange and the Money Advice Trust say that the average amount owed in Council Tax arrears is £961 up from £717 in 2011, a rise of 25%. In 2011, just 14% of the charity’s clients had Council Tax arrears, but last year this figure had increased to 30%
The Money Advice Trust’s recent ‘Stop The Knock’ campaign revealed that 2.1 million debts were passed to bailiffs by local authorities in 2014/15, an increase of 16% over a two-year period. Of these, 1.27 million referrals related to Council Tax arrears.
The charities are both concerned that the increasing use of bailiffs is adding additional stress and anxiety, prompting people to take decisions that can deepen their financial problems.
Non-payment of Council Tax can lead to a jail term. Those who end up in court because of Council Tax arrears are forced to pay around £150 in fees and administrative costs, causing the debt to spiral.
A small number of councils have now introduced a policy of ruling out bailiff action in cases where the resident is in receipt of Council Tax Support. This is on the grounds that they have been identified as being financially vulnerable. The debt charities believe this approach should be adopted nationwide.
“Bailiffs should only ever be used as a last resort”
StepChange and the Money Advice Trust are calling upon central and local government to stop the use of bailiffs and implement systems that both incentivise affordable repayment and support those in financial difficulty.
Joanna Elson, Chief Executive of the Money Advice Trust said: “With Council Tax arrears continuing to increase, it has never been more important for local authorities to improve their debt collections. Unfortunately many councils are being far too quick to pass debts to bailiffs with 2.1 million referrals made in the space of just 12 months alone.”
Elson added that: “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.”
Mike O’Connor, Chief Executive of StepChange said: “The increasing levels of Council Tax arrears are cause of concern. We know that often the default position of councils is to aggressively pursue arrears through the court process and by instructing the bailiffs. It may come as a surprise to many people that public bodies are more aggressive in pursuing debts than many private companies.”
Councils left with little choice
Councils say they are faced with growing funding pressures and are increasingly unable to plug the ever-widening gap between the money they receive to fund Council Tax Support and what is needed to protect those on low incomes.
“Those having difficulty paying Council Tax should be offered more support”
Turn2us commented: “Our research has tells us that when somebody falls behind on one bill the chances are that they have fallen behind on many others. Those having difficulty paying for Council Tax should be offered more support and it is concerning to see such relatively small sums grow so quickly once collection charges have been factored in.
Many of those struggling may be eligible for support that they may be unaware of. Anyone wanting to find out what support they may be eligible for should visit www.turn2us.org.uk
Our website has information on Council Tax Support which you may find useful.
You can also use the free Turn2us Benefits Calculator to check your benefits entitlements. Even if you have checked before, it is worth checking again, especially if there has been a change in your circumstances.
You can also check if you are eligible for a charitable grant or other support by using the Turn2us Grants Search.
If you are worried about any issues and would like further advice, you can use the Turn2us Find an Adviser tool to locate face-to-face advice in your local area.