The number of households threatened with bankruptcy, repossession and ultimately prison has increased at double the rate in local authorities that passed on government cuts to council tax benefits, leaving 670,000 facing bailiffs in the first six months of this year, new figures have revealed.
In local authorities that made no cuts to the benefit there was a 15% increase in the number of liability orders – issued by magistrates courts for non-payment of council tax – on the previous year as the economy stagnated. However, this figure jumps to 30% in local authorities that withdrew public assistance to the poor.
The survey of more than 200 local authorities, conducted using freedom of information requests by anti-cuts campaigners False Economy, revealed that more than 25 people a day were issued with liability orders between April and September in areas without council tax support.
Ministers cut funding for the means-tested benefit by £500m, around 10% of the total, in April and instructed local authorities to decide how the reduced benefit should be distributed.
Labour warned that vulnerable people, including carers, widows and war veterans, would be hit hardest by the cuts. However local authorities controlled by Labour, often with large poor populations and unable to absorb the drop in central funding, which have seen liability orders issued most frequently.
Up to September the 49 Labour authorities making cuts to council tax benefit sent an average of almost 7,800 people a liability order – which adds a fine of between £75 to £125 on top of the outstanding bill. By comparison, the 72 Tory-controlled councils averaged 2,400 orders during the same period.
In London's Haringey, where residents who have paid nothing in the past will have to pay a fifth of their council tax – at least £200 a year, magistrates issued 12,105 liability orders for non-payment, up 42%. All the increase in orders was made up by people previously considered too poor to pay full council tax. The order gives wide-ranging powers of seizure and bankruptcy and even allows the council to deduct amounts from benefits to pay the bill.
"It's outrageous," said Reverend Paul Nicolson, who is refusing to pay his council tax in protest at the changes. "The poor are being targeted. People are losing everything. Hundreds of cars are being repossessed to settle this debt now in the borough.".
Nicolson said Haringey could have raised council tax by just 86p a week on wealthy householders to cover the cuts in government funding.
A Haringey council spokesperson defended the actions saying the local authority had a "statutory duty to collect council tax" and it had to make up a funding gap of £4m. "Direct support from government for council tax reduction schemes reduces year on year. It would simply not be sustainable for the council to absorb the cost of the government's cut, especially when already faced with reductions in government grant of around £144m up to 2016. Increasing council tax to cover the shortfall would have meant placing extra burden on thousands of hard-pressed local families."
False Economy said the poor faced "a triple hit – falling incomes, austerity-hit councils and council tax support cuts are combining to drive up council tax arrears and the court orders chasing them up. This is just another symptom of the government's multiple policy disasters having a real impact on real people's lives, where benefit cuts by government and wage cuts by employers drive people into crisis."
Councils argue they have little choice but to tax the poor to preserve public services. The Local Government Association said its members "have been pushed into an impossible position by the government's cut in funding for council tax support. This comes on top of the 43% cut to local government funding and as a result many councils have been left unable to protect those who can least afford to pay."
The government said the latest statistics showed council tax collection rates were increasing. Local government minister Brandon Lewis defended the cuts saying that "spending on council tax benefit doubled under the Labour government, and is costing taxpayers £4bn a year – equivalent to almost £180 a year per household. Welfare reform is vital to tackle Labour's budget deficit, given under Labour, more taxpayers' money was being spent on benefits than on defence, education and health combined."
• This article was amended on 2 December 2013. An earlier version said that in Haringey magistrates issued 12,105 liability orders for non-payment of council tax, up 42%, and that all the orders were sent to people previously considered too poor to pay council tax. That has been corrected to say that those orders accounted for all the increase.
