Council tax is important. It’s the largest property tax in England, and the revenue it raises accounts for 32% of local government funding. But for households, it is also a growing source of debt.
As of March 2019, the overall level of council tax arrears stood at £3.2 billion - 7% more than the year before. Last year Citizens Advice helped 83,000 people in England with council tax arrears. It is the most common debt they see, impacting more than 1 in 4 of all those they help with a debt problem.
Not so long ago the main reason why people fell into debt was because of credit cards, payday loans or expensive bank overdrafts. But that has changed. Yes, people still get into financial difficulty repaying those loans, but tougher regulation in recent years has limited charges and given borrowers far more protection.
It is far more likely these days to see people struggling to pay their everyday household bills, and in particular their council tax. Helping people with council tax debt is now, by a long way, the most common debt issue that Citizens Advice deals with. In fact, someone sought help from them with a council tax issue every 90 seconds in 2019.
And recent research published by the charity has laid out in stark terms what this means for people. On average, someone they help with council tax debt has just £7 left over at the end of the month after paying their living costs. Shockingly, 42% of these people have no money left at all and these people are more likely to be women, or under thirty, or have mental health problems.
Despite this hardship, government regulations push councils into taking harsh routes to recover debts. People who miss just one payment become liable for the whole annual bill in one go, and that could mean having to pay thousands of pounds. They’re often forced to pay extra court fees and to face bailiffs threatening to take their goods. The result is often huge stress and anxiety for people. It should also be remembered that non-payment of council tax is a criminal offence and there is evidence that both councils and bailiffs are quick to threaten imprisonment.
This heavy-handed approach is meant to encourage people to pay, but it doesn’t allow for the many hundreds of thousands who just do not have the funds. Intimidated by a stream of threatening letters, emails and text messages from bailiffs, it’s little wonder that people are flocking to charities like Citizens Advice for support with debts.
The Government has the power to change this. Councils want to be able to collect council tax fairly, without locking people in debt, and to give greater support to vulnerable people struggling to pay arrears, but the government regulations make it far harder to do so.
The government needs to listen and act now by giving councils the tools they need. It also needs to give the green light to an independent regulator of bailiffs and bailiff firms, as well as a user-friendly complaints mechanism. This is now the only way to stamp out the threats, intimidation and other bad behaviours that are all too common in the bailiff industry and which only add to the misery of people struggling to pay their council tax arrears.