Well known Debt charity organisations StepChange and the Money Advice Trust (MAT) have both reported increasing levels of council tax debt in England & Wales.
It is said that cuts to local government funding has meant that some people who had previously been exempt from having to pay council tax, were now having to pay and were running into arrears.
“Significant cuts mean many [councils] have had little choice but to reduce council tax discounts for the working-age poor or low-income families, to avoid finding even more savings from spending on local services to meet the shortfall,” says councillor Claire Kober, of the Local Government Association.(LGA)
The named charities said around a quarter of callers to its debt services now have council tax arrears as a result.
StepChange said that its clients were typically in arrears by £961 last year, up from £717 in 2011. There was a slight fall in arrears in 2013, but otherwise there had been a sharp rise each year between 2011 and 2015.
The charities argue that the threat of bailiffs and debt recovery companies causes additional stress to those in debt, so there should be a delay before the Debt Collection Agents are called in.
“It may come as a surprise to people that public bodies are more aggressive in pursuing debts than many private companies,” said Mike O’Connor, chief executive of StepChange.
“This counter productive approach needs to stop immediately and be replaced with one that is fairer and more constructive.”
The LGA has argued that providing debtors with more time to pay could have subsequent consequences.
“We agree that bailiffs should only ever be used as a last resort. Before the situation reaches a stage where bailiffs are involved several letters should have been written, people should have been encouraged to apply for financial support, and efforts should be made to arrange new payment plans or to attach the debt to a salary,” said the LGA’s Ms Kober.
“It is in everyone’s interest to ensure those struggling to pay their council tax bills are set up on affordable and sustainable payment plans. However, there is always a risk that the longer a debtor goes on without paying, their repayment instalments will become even more difficult for them to manage and the debt will take longer to clear.”
With 97% of council tax collected without the need for bailiffs or court action, the Department for Communities and Local Government said that the vast majority of residents paid on time.