Charities urge end to use of bailiffs as council tax debt problems hit record high

Local authorities have been urged to stop the "counterproductive" practice of using bailiffs to chase council tax arrears as new figures show debt problems related to the charge have hit record levels.

Debt charity StepChange said that between 2011 and 2015, the proportion of its clients with council tax arrears more than doubled from 14 per cent to 30 per cent. Over the same period, the average debt jumped by 25 per cent from £717 to £961.

Meanwhile, the proportion of callers contacting the National Debtline, a free service run by the Money Advice Trust, has climbed from 14 per cent in 2007 to 25 per cent last year.

According to the trust's Stop the Knock campaign, local authorities passed 2.1m debts to bailiffs in 2014-15 - an increase of 16 per cent in a two-year period. Of these, 1.27m referrals related to council tax.

A recent review of the localisation of council tax support by former MP Eric Ollerenshaw said that council tax collection rates have declined as more and more low-income households previously exempt from the charge are asked for minimum payments. Some councils, he added, are facing a build-up of arrears "that are unlikely to be paid off".

StepChange and the Money Advice Trust argue that councils "defaulting to aggressive enforcement" through the use of bailiffs can add to stress and anxiety for those in debt, pushing them into decisions that can actually deepen their financial problems.

The Local Government Association said councils take "sympathetic and constructive approach" to dealing with arrears.

However, a previous survey of StepChange clients with council tax arrears found that 62 per cent of those who contacted their council for assistance were threatened with court action and more than half (51 per cent) were threatened with bailiffs. Only 13 per cent were encouraged to seek debt advice.

The charities are calling for reforms to ensure councils' "primary focus" is on supporting people in debt with affordable repayment plans

They want a statutory "Breathing Space" scheme that guarantees a temporary freeze on interest, charges and enforcement action for those who seek debt advice. These protections would stay in place as long as people can repay their debts in an affordable and sustainable way.

In addition, local authorities are being encouraged to follow the example of London boroughs such as Islington, Bexley, Brent and Southwark in ruling out bailiff action in cases where residents are in receipt of council tax support because they have already been identified as being financially vulnerable.

StepChange and the Money Advice Trust are also calling for the current voluntary guidance on dealing with council tax arrears to be put on a much stronger legal footing, including a requirement for local authorities to report their debt collection methods and outcomes to DCLG.

"The increasing levels of council tax arrears are a continuing cause for concern. We know that often the default position of councils is to aggressively pursue arrears through the court process and by instructing bailiffs. It may come as a surprise to people that public bodies are more aggressive in pursuing debts than many private companies," said StepChange chief executive Mike O'Connor.

"This counterproductive approach needs to stop immediately and be replaced with one that is fairer and more constructive. It is up to both central and local government to implement systems that both incentivise affordable repayment and support those in financial difficulty."

Joanna Elson OBE, chief executive of the Money Advice Trust, added: "Bailiffs should only ever be used as a last resort - and they shouldn't be used at all in the case of recipients of council tax support, who councils have already identified as requiring additional help to keep on top of their finances. The publication of Eric Ollerenshaw's review gives the Government a welcome opportunity to put this right."

Cllr Claire Kober, resources portfolio holder at the LGA, said: "Councils do have a duty to their residents to collect taxes so important services are not affected. But we realise that times are tough and councils do their best to protect those affected the most, whether through introducing hardship funds or taking a sympathetic and constructive approach to the way they collect unpaid tax.

"We have worked closely with Citizens Advice on a protocol for councils using bailiffs when recovering debts. It includes the need for fair collection and enforcement policies and the ability for councils to take back cases involving vulnerable families. 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.

"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. That is why it would be vital for any breathing space to avoid the unintended consequence of adding any further financial pressure onto the debtor."