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StepChange response to Levelling up and Housing Committee call for evidence on Council Tax

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We welcome the Committee’s enquiry into council tax collection practices. Council tax arrears have been increasing rapidly with arrears now exceeding £4 billion nationally.

Council tax is the most common household bill for StepChange clients to be behind on and this problem is exacerbated by outdated methods of collection employed by many local authorities.

While there have been some positive initiatives from individual local authorities and a clear desire to improve collection practices, we are concerned by the slow rate of change which is allowing detriment to continue among some of the most financially vulnerable households.

Unfortunately, regulations and guidance do not support good collection practices. While there are pockets of good practice and new Government guidance which provides some useful suggestions for councils wanting to better safeguard vulnerable residents, there aren’t consistent approaches to understanding circumstances, assessing affordability, or using data to better tailor collection methods.

This is due to a lack of the clear binding standards and oversight which has helped raise standards in regulated sectors. In consumer credit (FCA), domestic fuel (Ofgem) and water (Ofwat) debt collection and vulnerability strategies have helped industry recognise that working constructively and flexibly with those in debt not only leads to better outcomes but can also increases collection rates. The regulations and guidance need to be reformed if LA practices are to catch up with this outlook. The changes that are needed include:

  • Change the regulations so that people are not required to pay their full annual bill after missing one instalment
  • Remove the outdated sanction of imprisonment for non-payment
  • Develop the recently published guidance into binding statutory standards for good council tax collection practice and a pre-action protocol which requires councils to take certain steps before seeking a liability order
  • These steps should include carrying out an affordability assessment where possible, using data segmentation when resident engagement is not forthcoming to identify hardship
  • Adherence to the standards and protocol should be monitored centrally through the collection of management information linked to fair treatment of those in debt

Local authorities also continue to use bailiffs who often use aggressive tactics, misrepresent their powers, reject reasonable repayment offers and fail to adjust for vulnerabilities.

Bailiffs should be used sparingly or not at all where people are showing signs of vulnerability like being in receipt of Council Tax Support (CTS). Finally, central government must commit to increasing funding for CTS so that 100% reductions can be re-established for those on the lowest incomes.

You can download our full response here.