Council tax: six steps councils can take before sending in bailiffs

Arrears need to be recovered in a more sustainable way to prevent households sinking into problem debt

Councils are under pressure from central government to collect debt on council tax, but current collection methods are not only far too aggressive but also not working. Council tax arrears have been one of the fastest growing debt problems: our recent report showed a 372% rise in the number of people we’ve helped between 2010 and 2015.

Just 25% of our clients struggling to pay were offered affordable payment options by their council, while 62% had been threatened with court action and 51% with bailiffs.

Enforcement can be overly aggressive, counterproductive and have dangerous knock-on effects for struggling families – 47% of people said they fell behind on other bills in order to pay their council tax when faced with tough demands, and they were three times more likely to take out a payday loan.

Here are six things we believe councils should do before sending in bailiffs:

1. Talk to your taxpayers

Of the 86% of people with arrears who sought help from their council, 65% were met with a tough demand or threat of enforcement. When people seek help instead of burying their heads in the sand, it is crucial they are given the support they need. Training frontline staff to deal with people in financial difficulty can be an effective first step in developing a responsible collections framework.

2. Identify vulnerable people

Those with council tax arrears are more likely to be families with children, single parents, private renters or part-time workers. Of the clients we surveyed, 43% were suffering from stress or mental health issues when they fell into arrears, 15% were ill or physically disabled, and 9% had recently experienced a bereavement. Yet only a small minority were asked about their circumstances by their council. It is crucial that councils seek to identify where households might be vulnerable and adjust their approach accordingly.

3. Help people understand their entitlements

Councils should do more to publicise the possibility of 12-month repayment schedules, for example, and make sure that struggling households know if they are entitled to council tax benefit or reductions they are not currently claiming.

4. Negotiate affordable repayment plans

The most sustainable method for repaying debts is a steady repayment plan based on an objective calculation of what households can afford. Demanding large lump sum payments only leads to greater anxiety and unaffordability for households. Those who receive help through channels such as an affordable payment plan have a greater chance of getting back on to a steady footing: 70% said their anxiety reduced, 60% said it stabilised their finances, and 47% said their family relationships improved.

5. Examine the long-term costs associated with debt

We estimate that debt creates £8.3bn in social costs. Unlike other creditors, councils are more likely to be footing a chunk of the bill, including a share of the £2.8bn costs of people losing their home and much of the £658m social care and £229m children’s care costs. A better framework for debt collection – where people repay their debts rather than falling further into a cycle of unaffordable credit – has clear long-term benefits on both sides.

6. Promote debt advice

This may be through a number of channels such as sending information on debt advice services to households in arrears, or placing telephones in local centres to connect to free debt helplines. We have worked with Leeds city council for two years to promote debt advice to struggling households. In that time, the number of people contacting our services has increased by 34%, almost twice the pace of growth we have seen nationally. Signposting to free debt advice such as that provided by StepChange Debt Charity enables people to find the support they need.

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Mike O’Connor

The GuardianTramp

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