A new report from Citizens Advice Wales “Fairness for all – Improving council tax debt collection in Wales” highlights the findings of research undertaken to better understand the recent increase in council tax arrears seen over the last few years.
Council tax arrears is now the largest debt issue representing 13%t of all debt issues. Council tax debt has often been one of the biggest debt-related problems seen by the charity however the number of council tax arrears problems has steadily risen over the past five years. In 2014 to 2015 it became the largest single debt-related issue seen by the network in Wales.
This trend continued during 2015 to 2016 when 5,947 people came for help with over 16,000 problems, an increase of 7 per cent compared with the previous year.
In April 2013 the UK Government abolished council tax benefit (CTB) and responsibility for its replacement, localised council tax support (CTS), was devolved to the national government in Wales. At the same time the budget to provide such support was cut by 10%.
The Welsh Government have a national Council Tax Reduction (CTR) Scheme with a commitment to provide additional funding to local authorities, until at least 2016-17, to meet the full costs of the CTB system at the point of abolition. This means at the moment, recipients in Wales receive the same level of support they would have received under the old CTB system. In spite of this local Citizens Advice offices in Wales are continuing to see steady increases year-on-year in council tax arrears problems.
The research found that undoubtedly low income is the largest contributory factor for people struggling to pay their council tax bills wherever they live.
And looking in greater detail the charity found that the profile of the people who sought help for council tax arrears (CTA) in Wales between April 2014 and March 2016 showed:
almost 90% are of working age
3 in 10 are living with a disability or long term health condition
1 in 5 are employed (either part-time, full-time or self-employed)
6 in 10 rent their homes (slightly more rent from social landlords)
2 in 5 have dependent children in the household
1 in 4 live alone.
The charity states that council tax arrears problems vary quite considerably across Wales, with good or poor practice being identified in some local authority areas, and a mixed picture being evident in many other areas.
Throughout the research it became clear that there are significant aspects common to many local authorities in Wales where improvements need to be and could be made.
Key areas of concern relate to the perceived over-use of bailiffs, inadequate processes for identifying debtors in vulnerable situations, and debtors frequently being asked for repayments they simply can’t afford.
Other areas for improvement included the need to make greater use of alternative repayment options and the need to improve communication, not only with debtor households but also within the local authority itself.
From a clients’ perspective in many ways the findings of this research paint a picture of the realities of in-work poverty and a life on benefits.
For many, current collection methods, where Liability Orders are regularly sought and debts readily passed to bailiffs, are counter-productive and only serve to increase the debt, after fees and charges are added, and prolong the stress and anxiety for debtors.
Advisers expressed their concern about the capacity of many low income households in Wales, whether solely reliant on benefits or in low paid, irregular work, to meet their council tax liabilities.
Fran Targett, Director Citizens Advice Cymru, said: “There is an on-going shift in the nature of debt problems being seen by local Citizens Advice across Wales. We have seen increasing numbers of people seeking help with arrears on essential household bills. I find that the whole situation is particularly worrying, people need to be made aware of the severe consequences of not paying priority debts such as council tax. They include local authorities taking enforcement action through the courts, and in extreme cases imprisonment.
“Our research emphasises the need for both local authorities and debtors to be more responsive earlier in the process to help ensure people’s circumstances are fully understood and more appropriate action is taken. We encourage people struggling to pay their bills to seek help as soon as possible. Once agencies like Citizens Advice are involved the critical factors which support things working well include trust, mutual respect and a willingness to listen to and act on advisers’ requests. This can result in a fairer outcome for the local authorities and the debtors”.
The on-going impact of welfare reform and potential future changes to the Council Tax Reduction scheme in Wales, highlights the important need for the Welsh Government, WLGA, local authorities and advice agencies such as Citizens Advice, to work together to inform and improve council tax debt collection practices so that they work for the benefit of both local authorities and debtors.