Charity’s plea to restrict Council tax Debt Collection

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charity's plea to restrict council tax debt collection

The Charity, National Debtline says action is needed to improve debt collection practices at a effectively-bankrupt authority.

Financially-stricken Birmingham City Council sent almost 60,000 debts to bailiffs last year – as a charity warned the tactic risked pushing those who owed cash to despair. The authority said it referred more than 58,500 cases in 2023-24, with the number increasing again following a drop after the pandemic.

Council bosses said the 2022/23 total of 39,618 – a 47 per cent drop on levels in 2018/19 – was “due to a number of issues” including delays with its debt recovery process “following the implementation of a new finance system”. The figure had now returned to “normal levels”, a spokesperson said.

“Our numbers are higher than most other councils due to the fact we have the most properties liable for council tax,” the authority said in response to a joint Freedom Of Information request by National Debtline and The Centre for Social Justice.

National Debtline said action was needed to improve debt recovery practices so fewer debts were sent to bailiffs in the first place.

It urged the council – which last year declared itself effectively bankrupt – to commit to improving the way it collected council tax arrears and other debts. The charity called for national changes from the Government to help reduce and reform bailiff action – including through new ring-fenced funding for authorities to provide 100 per cent Council Tax Support schemes for those on the lowest incomes.

Steve Vaid, chief executive of the Money Advice Trust, the charity that runs National Debtline, said: “Local authorities remain under significant financial pressure and council tax plays a crucial role in funding vital local services. Facing bailiff action, however, can be a distressing experience and risks pushing people already struggling into deeper financial difficulty. Bailiffs should only ever be used as a last resort.

“We have written to the leader (of Birmingham City Council) to set out simple steps they can take to improve the way the council collects debts it is owed. We’re also calling on the new government to support Birmingham City Council and other councils by introducing ring-fenced funding to enable all local authorities to provide 100 percent Council Tax Support to households on the lowest incomes.

“I would urge anyone in Birmingham struggling with their finances to get in touch with National Debtline as soon as possible. ”

Across England and Wales, 2.71 million debts were referred to bailiffs by councils during 2022/23 – broadly unchanged on pre-pandemic levels (2.65 million in 2018/19).

A Birmingham City Council spokesperson said: “In 2022/23, the council did issue fewer cases than normal to enforcement agents (bailiffs). This was due to a number of issues as things returned to ‘normal’ following the pandemic.

“Some delays in our debt recovery process were incurred following the implementation of the new finance system, and things returned to normal levels in 2023/24 when we referred over 58,500 cases. Our numbers are higher than most other councils due to the fact that we have the most properties liable for council tax compared to other councils.”

“Where customers are struggling to pay, our enforcement agents ensure that cases are be handled sensitively with affordability discussions. Referrals would be made by the enforcement agent to their welfare team if appropriate. Where there is clear sign of vulnerability the cases will be returned to us for consideration/cancellation of fees. The council also has a specific Council Tax Discretionary Hardship Fund (CTDHF).

“The CTDHF scheme provides the council with discretion to reduce the amount of council tax payable in certain circumstances. The cash limited discretionary fund to supports people meeting their council tax liability where they are able to demonstrate extreme financial hardship.”

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