Citizens Advice, Money Advice Trust and Step Change have teamed up to urge the Government to change ‘ineffective’ regulations on how councils collect council tax arrears.

The charities say action is necessary to protect households who have fallen behind due to coronavirus.

The charities fear that with council tax enforcement measures likely to restart soon, many residents who are already struggling as a result of the coronavirus outbreak will soon face harsh enforcement methods pushing them deeper into financial hardship.

Citizens Advice estimates that more than 2 million people have already fallen behind on council tax bills as a result of Covid-19. The charity says people in the ‘shielded’ group are four times as likely to fall behind on a household bill compared to those not at increased risk from the virus.

The three charities say they recognise the need for councils to recover arrears from those who can afford to pay in order to fund vital local services.

Heavy-handed tactics

However, they are concerned that existing regulations used by councils to collect debts will lead to heavy-handed tactics that will not recover much money for councils but instead push struggling households further into debt.

Existing council enforcement powers often result in bailiff action that adds costs and fees onto people’s existing debts. About 1.4 million council tax debts were passed to bailiffs in 2018/19.

Another issue is that if someone misses one council tax payment, they become liable for their entire annual bill which can create further unmanageable debt, particularly for those dealing with the financial impact of coronavirus.

The three charities are calling for the government to take the following measures:

Introduce a ‘pre-action protocol’ for councils to follow before beginning to enforce council tax recovery. This would include a requirement to set up an affordable repayment plan.

Encourage councils to collect debts over more than one year by changing collection rate targets.

Stop people becoming automatically liable for their entire annual bill when they fall behind on instalments.

Provide more hardship funding to councils to reduce council tax arrears accrued as a result of Covid-19.

Aggressive debt collection

Gillian Guy, chief executive of Citizens Advice, says: “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. Councils get back just 27p for every £1 of debt passed on to bailiffs.

“The government must urgently change the rules so local authorities can collect council tax debts fairly and sustainably. Otherwise millions of people could face the prospect of heavy-handed bailiff enforcement on bills they can’t afford to pay.”

Joanna Elson, chief executive of the Money Advice Trust, says: “With millions at risk of falling behind with their council tax bills, the government should move quickly to address the weaknesses in the way local authorities collect arrears from people in debt – to ensure that this is fair, proportionate and does not make bad financial situations worse.”

What do local councils say?

Richard Watts, chair of the Local Government Association’s resources board, says: “Councils are putting in place a wide range of measures to help residents who are facing financial hardship because of the virus. Some have delayed taking council tax payments for first two months of the year rather than the last and most councils have also suspended recovery action for people with existing arrears.

“Government has provided councils with funding to make deductions from council tax bills for some low-income residents. Many are also offering other hardship and local welfare support. Anyone struggling to pay their council tax bill should contact their council as soon as possible to find out what support is available to them.”