Unpaid Council Tax Debt hits £6bn pounds

unpaid council tax debt level rises to £6bn

Latest data published by the Department for Levelling Up, Housing and Communities (DLUHC) show unpaid council tax debt has reached a total of £6 billion as of 31stMarch 2024.

This shows a 9% year-on-year rise and an 71% increase since before the pandemic – the total outstanding arrears stood at £3.5 billion in 2019 to 2020.

Over the same period, the average amount of unpaid council tax debt per StepChange client has risen by over 50% from £1,146 in 2019 to £1,726 in 2023.

As arrears rise, StepChange Debt Charity has raised concerns around some of the outdated and harmful collection practices employed by local authorities to recover unpaid council tax debt. This can include charging households for their full yearly council tax bill in a single payment, quickly appointing bailiffs to collect the debt, and in extremely rare circumstances, sending someone to prison for up to three months.

Around a third of clients who contact StepChange for help are in arrears with their council tax. The charity says that it can often be the most financially vulnerable who struggle to keep up with this bill and is calling on councils and Government to take a less punitive approach to collecting unpaid council tax debt and to offer more support for those who are struggling to pay.

Latest StepChange research shows that more than 2 in 3 people (69%) support stopping councils using bailiffs for the recovery of council tax debts for those considered vulnerable

More than two in three (69%) people support reducing council tax rates for people on the lowest incomes, funded by Government. Meanwhile more than 4 in 5 (84%) people support the introduction of an independent statutory regulator which ensures bailiffs abide by rules to treat those in debt fairly

Over 8 in 10 (82%) people oppose existing regulations around Council Tax which can require households to pay their annual council tax bill in full if they miss one month’s payment

StepChange is calling on the next Government to effectively regulate the bailiff industry, giving the existing industry regulator, the Enforcement Conduct Board, statutory backing to support the most vulnerable in debt, stamp out bad practice, and improve standards.

Rise in Unpaid Council tax Debt

Richard Lane, Chief Client Officer at StepChange Debt Charity, said “It is unsurprising that council tax arrears have risen as many local authorities have increased their rates by up to 5% to cover rising costs and obligations. Over the past few years, we’ve seen a rise in the number of people seeking help from StepChange who are struggling to keep up with essential bills like council tax, as inflationary increases prove unaffordable for those on lower incomes.

“Due to current council tax collection practices, these increases may mean more households face bailiff action as local authorities look to recoup unpaid debts. Our insights and research have consistently shown that bailiff action can cause increased harm to those in vulnerable positions and can make existing debt problems worse. That’s why we are calling on all parties and the next Government to introduce a statutory regulator for the industry, one which drives up standards and stamps out poor practice.”

Separate data by the National Debtline service  reports that a third (30%) of callers had unpaid council tax debt in May, making it the most common priority debt its advisers hear about.

The amount owed has also grown, with National Debtline callers owing on average £1,762 in arrears – up by 49% from £1,181 in 2019.

National Debtline says the figures are just the latest in a series of warnings on the need for reform of council tax debt collection rules.

Highlighting the fast escalation of debt collection activity for one missed payment, which often results in bailiff action, the charity is calling for the next Government to make improving council tax collection practices a key priority – a move it says will bring down arrears and ensure low income households have the support they need to keep up with their bills.

Steve Vaid, Chief Executive of the Money Advice Trust, the charity that runs National Debtline, said “Council tax debt is on a worrying upward trend and the sheer scale of arrears now underlines the need for urgent action.

“But this is nothing new. Council tax continues to be one of the most common debts amongst our National Debtline clients, and recent cost of living pressures have left many more people struggling to keep up with their payments.

“Councils have a vital role in helping residents with unmanageable bills and to ensure council tax, crucial to funding local services, is collected in a way that is fair and affordable.

“Reforming collection practices should be a priority for the next government, including putting an end to people becoming liable for their full annual council tax bill after falling behind.”


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