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Charities welcome moves to rein in ‘overzealous’ council tax debt collection

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The Government’s Money Advice Service (MAS) has launched new guidance for local authorities on the collection of unpaid council tax, designed to stop overzealous debt collection practices.

The MAS said a third of people seeking debt advice have missed council tax payments and this is on an upward trend. As a result, debt enforcement activity has increased, and there have been complaints about poor practice. For example, Wealden District Council in East Sussex was recently forced to defend its use of bailiffs for debt collection. The Money and Mental Health Policy Institute found that more than 100,000 people attempt suicide each year as a result of problem debt.

Between 2011/12 and 2017/18 council tax arrears problems increased from 168,000 to 217,000 with the amount of council tax arrears is calculated at £2.84 billion. This year, MPs on the Treasury Select Committee this year labelled government debt collection practices as “overzealous and with routine recourse to bailiffs.”

MAS added that Local Authority recovery strategies have fallen behind best practice in the private sector. Its new ‘Supportive Council Tax Recovery toolkit’ is designed to encourage best practice support for those with council tax debts, through greater collaboration between Local Authority revenue teams and the debt advice sector when recovering these debts.

It identified eight steps to support those in debt:

  • Payment arrangements and enforcement: Build MAS recommendations into Council Tax revenues policies and use the MAS pre-enforcement checklist to create a fair and consistent approach to use of enforcement
  • Resident affordability: Support financial statements from debt adviceagencies based on the Standard Financial Statement (SFS) spending guidelines and align all internal affordability processes with the SFS
  • Debt advicereferral strategies: Use the toolkit to review all resident channels and help appropriate residents to easily access independent debt advice
  • Debt adviceinterventions: Track the benefits debt advice brings to residents as well as their ability to collect arrears payments
  • Local Authority oversight of referral partners:Have oversight of what happens to residents after debt advice referral, agreeing on an approach with debt advice referral partners
  • Engagement and partnerships: Have day-to-day contact with debt adviceagencies, utilising MAS guidance on getting the most from the relationship
  • Target specific resident cohorts for debt adviceintervention: Our resource shares some examples and case studies of innovative partnership working with debt advice agencies

The guidance was welcomed by groups on the front line for people in debt, such as Citizens Advice. Gillian Guy, chief executive, said: “Council tax arrears are the most common debt issue we help people with at Citizens Advice. Too often we see the harm that’s caused by the way this debt is collected, including further financial hardship and stress. The pursuit of government debt by authorities has also been criticised by MPs.

“Good collection practices by local authorities can work. By helping those who are struggling to meet their payments, councils can improve their collection rates. While voluntary approaches are welcome, to properly protect people from bad practices the government needs to establish an independent bailiff regulator.”

Councillor Richard Watts, chair of the Local Government Association’s Resources Board, said: “Councils have a duty to their residents to collect taxes, so that important services can be delivered for local people. However, councils do realise that times are tough and do their best to protect those affected the most. It is good to see positive examples of councils taking a sympathetic and constructive approach to the way they collect unpaid tax highlighted by MAS. We would urge all councils to carefully consider the recommendations in this report in light of their own practice and local circumstances.”






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