The Money Advice Trust, the charity that runs National Debtline and Business Debtline, has responded to figures which show that council tax arrears for households in England have reached £5.5 billion by calling for urgent reform of council tax collection rules. Current rules mean that households can be liable for their full annual bill after one missed payment, which the charity says risks pushing struggling households into further financial difficulty.
Figures from the Department for Levelling Up, Housing and Communities show that arrears have increased by £510 million (10%) in the last year. With the sustained impact of the cost of living crisis continuing to be felt by millions of households, the Money Advice Trust is urging the Government to bring in measures to reform the way local authorities collect council tax debt – a move the charity says will protect struggling households from escalating collection activity and benefit councils.
In the past five years, the average Band D council tax bill has risen by 18% (£1,671 to £1,966). However, this has been significantly outpaced by the level of council tax arrears which have risen by 69% over the same period (from £3.2 billion to £5.5 billion).
The charity reports that more than a quarter (28%) of callers to its National Debtline service had council tax arrears in 2022, making it the most common priority debt type. The amount owed has also grown, with National Debtline callers owing on average £1,790 in arrears – up by 52% from £1,181 in 2019.
Findings from the charity’s recent Under Pressure report, based on a UK wide poll of 2,000 adults, has revealed that over a quarter (26%) of people behind on their council tax bill said they had been asked to repay arrears at a rate they couldn’t afford.
To improve current council tax collection rules for households and councils, the Money Advice Trust is urging the Government to improve support through increased and ringfenced funding for local Council Tax Support schemes to prevent arrears occurring in the first place. It also calling for reform of existing collection rules (The 1992 Council Tax (Administration and Enforcement) Regulations) including: stopping people becoming liable for their full annual bill if they fall behind on instalments and introducing a pre-action protocol so councils have to offer genuinely affordable repayment plans before progressing to other collections methods.
Joanna Elson CBE, Chief Executive of the Money Advice Trust said “Current council tax collection rules are not working for struggling households or for local authorities reliant on council tax income to run their vital services. Today’s figures, which reflect an ongoing trend of increasing council tax arrears, confirm why reform is urgently needed to help both councils and struggling households.”
“These outdated rules, that can leave people liable for a whole years’ bill after just one or two missed payments, are not an affordable or efficient way to collect council tax debts and are completely out of step with the challenges many households are facing. Reform is needed to ensure people having difficulty paying their council tax are not confronted with unfair and unsustainable collection practices that risk pushing them into further difficulty.”