Households owe billions ahead of bill rise

Struggling households owe billions of pounds in unpaid council tax, but bills are expected to keep rising in the years ahead.

Newly-published figures show £6.6bn is owed to local authorities in England, with an extra £642m having been added to those arrears in the year to April.

Separate data from Scotland and Wales means the total cumulative amount owed in the three countries has hit more than £8bn.

Campaigners have called for a more sympathetic approach to council tax debt collection, rather than the use of bailiffs.

While the government is proposing a change in the rules over the way unpaid bills are chased, the Treasury is also assuming council tax will rise by 5% a year in the future.

Asked whether the Treasury was “baking in” a 5% increase, Chief Secretary Darren Jones told a committee on Wednesday examining the recent Spending Review: “We are doing that, yes.”

Councils can raise council tax by up to this amount, although they can go above this cap if they hold a local referendum or get approval from central government.

The latest figures for England show that, in the 12 months to April, local authorities collected a total of £41.2bn in council tax, irrespective of the year to which it related.

This was an increase of £2.8bn, or 7.2%, compared with the previous year.

However, the amount cumulatively owed has risen by 11% over the same period.

In Scotland, £1.5bn is owed, and there are arrears of £263m in Wales.

The collective, cumulative total is more than £8bn, and twice the amount of unpaid energy bills in England, Wales and Scotland.

Charities have long argued that the method of council tax collection in England punishes those who are genuinely struggling to pay.

Non-payment of a monthly bill after three weeks, or three late payments, in England means the council can send a demand for the remainder of the year’s council tax to be paid in full.

They can later send in bailiffs to recover the debt.

“People in council tax arrears are overwhelmingly on low incomes, and many are living in poverty,” said Toby Murray, from charity Debt Justice.

“Rather than help, councils are sending in the bailiffs – punishing people for struggling with their bills. Councils should end the use of bailiffs for council tax debt collection and instead introduce urgent reforms.”

The government recently unveiled plans to cap the fees added to debt when going to court and to loosen the rules on when a household may become liable for a full-year’s bill.

Ministers are already reviewing debt enforcement practices, including the conduct of bailiffs.

They are also proposing making 12 monthly payments of council tax the default option, rather than 10.

The Local Government Association, which represents councils, said councils had a responsibility to collect taxes to fund local services, but they “realise that times are still tough for many low-income households”.

It said the government needed to make sure councils had enough funding to be able to give council tax support to people who need it.

“Otherwise, it is almost inevitable that bills will continue to be forced up for those who can least afford to pay,” a spokesman said.

Charities are urging people not to ignore council tax bills and demands. Tips from Citizens Advice for those struggling include:

• Contact the council if you cannot pay – before it contacts you
• Ask to make smaller payments. The council may want you to commit to a regular payment, so you must be realistic about what you can pay
• Those on low incomes may be eligible for a council tax discount
• You may qualify for the Breathing Space scheme which could give you extra time to pay