Clear, Fair, Understandable?

Clear, Fair, Understandable? is our latest council tax research briefing. Drawing on a Freedom of Information (FOI) request to every local authority in England and Wales, it asks whether the letters people in council tax arrears receive are helping them engage and find support or deepens fear and financial difficulty.

This follow-up to our initial council tax report Looking through the keyhole analyses template debt collection letters from councils across England and Wales. With over a third of StepChange clients in council tax arrears, how councils communicate with people who fall behind matters enormously.

Councils face significant financial pressures, and recovering council tax arrears is an essential tool for local authorities to fund local services. But the way in which councils communicate with residents in financial difficulty is not necessarily a neutral act. Letters can either open a door to support or slam it shut, demanding payment and outlining enforcement proceedings to follow.

Our FOI request found that communications vary dramatically from one local authority to the next. In the absence of any binding national standards for council tax debt collection, there is a postcode lottery at the heart of the system. Some councils offer empathetic, supportive messaging with clear pathways to help. Others send letters that lead with implicit or explicit threats, make prominent reference to enforcement, and in some cases, mention imprisonment from the very first contact. Crucially, some councils are not providing room to repay.

This briefing adds to the growing body of evidence that the council tax collection system is in urgent need of wholesale reform.

Summons are routinely mentioned before people have had a chance to engage

Local authorities have a duty to communicate the steps they may take to recover arrears. But there is a clear difference between explaining the process and using it as a threat.

• Four in five (82%) local authorities who responded to our FOI mentioned court summons in their first letter to residents in arrears
• This rises to almost all (98%) by the final letter
• Many letters lack any signposting to debt advice, payment plans, or discretionary support options

Enforcement language is common, even in first contact

When councils apply for a liability order, they can pursue attachment of earnings, deductions from benefits, and bailiff action. Our research found that these measures are often being communicated to residents from the outset of the collections process.

• Over a third (36%) of responding local authorities referenced recovery and/or enforcement action in their first letter to residents in arrears
• By the final letter, this rises to one in two (50%)
• Some councils used red font, flowcharts ending at court, or one-page letters with no support options in their very first reminder

Imprisonment is being referenced in ways that are inappropriate and misleading

The sanction of imprisonment for council tax non-payment is reserved for wilful refusal or culpable neglect and is an extremely rare outcome. Yet our research found that some councils are referencing it in ways that imply it is a realistic prospect for those in arrears.

• One in twenty (5%) councils in England directly referenced prison in their initial letter to residents in arrears
• One in six (17%) responding councils had instigated prison proceedings since 2020
• Across the responding councils, there were 1,528 cases of prison proceedings being instigated since 2020, concentrated in just ten council areas
• England is now the only nation in the UK to retain the power to imprison people for non-payment of council tax. In Wales, the sanction was removed in 2019, and statistical analysis found this had no effect on collection rates

In the absence of binding national standards, this briefing sets out steps individual councils can take now to show best practice when collecting arrears:

1. Establish pre-arrears identification and early intervention policies, working with partners including debt advice charities to establish solutions and support for residents at risk of, or in, arrears.
2. Make proactive and empathetic efforts to contact individuals who have fallen behind, effectively explaining the options and support available, and accommodating support needs and communication preferences.
3. Monitor, test and adapt communications to create an environment where people feel confident to seek help and understand their options, using simple, non-technical language.
4. Commit to ending the use of prison proceedings and explicit mention of prison in all council tax arrears correspondence.

Longer term, we continue to call on central Government to introduce a mandatory protocol for council tax debt collection, backed by statutory standards, and to bring local government under the purview of the Debt Fairness Charter.