Steep rise in debt problems due to council tax arrears

13 March, 2014

There has been a huge increase in the numbers of people with council tax arrears seeking help from StepChange Debt Charity, according to new figures released today. Last year the charity helped 45,561 people in arrears on council tax, up from 25,500 in 2012, an increase of 77 percent.

The figures highlight how the squeeze on household budgets is leaving more people struggling to pay essential living costs: clients falling behind on council tax were on average £102 short of what they needed to cover essential household bills every month.

StepChange Debt Charity chief executive Mike O’Connor said:

 “More and more people are struggling to pay essential household costs.  Stagnating incomes, changing work patterns, rising living costs and changes in welfare benefits are a toxic combination. Government, business and charities need to ensure that safety nets and protections are in place to ensure that short-term financial problems do not escalate into problem debt which can blight the lives of individuals, families and whole communities.”

Local councils must do more to support those in difficulty

The charity is calling on local councils to do more to support those struggling with arrears and to ensure that vulnerable people do not see their debts inflated through the unnecessary use of bailiffs.

Under new bailiff fees set to be introduced on April 6, people with council tax debts could see £310 added to their debt simply through bailiffs being instructed and making one visit to a person’s home.

In a survey of StepChange Debt Charity clients* 50 percent of respondents said they’d had council tax arrears at some point, while 19 percent of respondents said they’d been threatened by bailiff action by their local council.

In addition to avoiding punitive charges associated with bailiffs, StepChange Debt Charity believes that the following policies should be implemented:

• Breathing space - if people can show they need time to recover their financial position, councils should allow a period of “breathing space”.
• Accepting reasonable payment – councils must take into account a person’s ability to repay and accept reasonable offers of repayment.
• Signpost to free debt advice – council tax notices and other literature to publicise the availability of free debt advice through organisations such as StepChange Debt Charity
• Good practice protocol – sign up to The good practice protocol on council tax arrears agreed by the Local Government Association and Citizens Advice

The charities figures are released almost a year since council tax benefit was replaced with localised council tax support across England. It is estimated that this change will result in 2.4 million low income families paying an average of £138 more in council tax per year for 2013/14**.

The increase in debt as a result of council tax arrears is part of a trend. In 2013 25  percent of council tax payers coming to the charity were in arrears, up from 10 percent in 2009.  The number of people seeking advice from Step Change Debt Charity increased by 30% between 2012 and 2013.    

Notes to editors:

*StepChange Debt Charity survey of 845 helpline clients (January 2014)

**The Impact of Localising Council Tax Benefit, Joseph Rowntree Foundation (March 2013)