Money Advice Trust > Media centre > News > Changes to council tax rules ‘needed now’ as pre-crisis arrears reaches £3.6bn

Changes to council tax rules ‘needed now’ as pre-crisis arrears reaches £3.6bn

​19 August 2020

·         New official figures show £3.6bn in council tax arrears before Covid-19

·         1.3m households likely to have built up council tax debt due to outbreak

·         Changes needed to council tax collection to protect struggling households 

     The Money Advice Trust, the charity that runs National Debtline and Business Debtline, has responded to new official figures that show £3.6 billion in council tax was owed before the Covid-19 outbreak, by urging central government to make changes to the way local authorities are able to collect council tax debt.  The call comes as the government’s temporary ban on bailiff visits is set to expire this Sunday (23rd August).

The charity is concerned that with £3.6 billion owed before Covid-19 – an increase of £345 million on the previous year – even more households will now be struggling with council tax debt as a result of the outbreak.

If changes are not made to ensure council tax arrears are recovered in a fair and affordable way, the Money Advice Trust and other debt charities fear that more households will be pushed into financial difficulty at an already challenging time.

Figures from the Local Government Association estimate that over £500 million of council tax went unpaid during the first three months of the outbreak. This figure could mean 1.3 million households are likely to have built up council tax arrears because of Coronavirus.

Current government regulations mean councils often use heavy-handed tactics to collect outstanding debts, including resorting to bailiffs. This can increase financial pressures on already struggling households through additional fees and charges.

The charity is calling for the government to make changes to council tax regulations to give councils more flexibility to recover debts affordably without resorting to the court process, including to:

·         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.

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

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

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

Councils are also the largest users of bailiffs – 1.4 million council tax debts were passed to bailiffs by councils in England and Wales in 2018/19. Bailiff visits, which were temporarily banned due to the outbreak, are set to resume from 23 August – in just under a week. The charity is also concerned that, if  appropriate protections are not put in place by government, visits could pose significant risks to households’ safety and finances, particularly for people who have been shielding and for those facing financial hardship.

Jane Tully, director of external affairs and partnerships, at the Money Advice Trust, the charity that runs National Debtline and Business Debtline, said:

“These new figures show the scale of council tax arrears even before Covid-19 hit. The impact of the outbreak means many more households have already fallen behind – leaving millions at risk, particularly if councils continue down collection routes that can push residents further into financial difficulty.

“The government has to move quickly to ensure local authorities are able to collect council tax debt in a fair and proportionate way.  This needs to include changing collection rules to ensure people are given the time they need to repay and introducing a ‘pre-action protocol’ councils would be required to follow before starting enforcement action.

“With the government’s ban on council tax bailiff visits set to end this Sunday, we also need to see urgent guidance put in place to protect people from bailiff action as the Coronavirus outbreak continues to impact households.  Without this government guidance, the ban on bailiff visits should not be allowed to expire.”

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