Over 1.3m households no longer paying council tax

More than 1.3 million households in the UK are no longer paying council tax, resulting in local authorities failing to collect a record £6bn annually, according to a report by the Centre for Social Justice (CSJ) think tank.

The report highlights that council tax debt has doubled in the past six years, with the debt now representing almost a sixth of total income from the charge. Councils have increasingly relied on council tax to fund services, as central government grants have fallen by about a third in a decade.

The report suggests that harsh enforcement measures and the threat of imprisonment have driven down collection rates. The average household in debt owes £1,726, and the debt particularly affects the poorest residents. The report calls for a more proportionate collection system to improve repayment rates and increase the amount of money brought in by councils in the long term.

The average amount of council tax owed by those who have approached debt advice charities has more than doubled in the past 10 years, from £756 in 2013 to £1,726 in 2023.

The report has also called for better oversight of the bailiff industry by putting the Enforcement Conduct Board, a voluntary oversight body set up by the debt advice and enforcement industry in 2021, on a statutory footing when the Ministry of Justice reviews the policy in November 2024. It also urges a relaxation of existing rules and the amendment of the Local Government Finance Act 1992 to end the requirement to pay a full annual bill after one missed payment.

Our evidence shows that the majority of non-payers are unable to meet their commitments and the often harsh repayment methods used by many local authorities are making repayment rates worse, not better.

Matthew Greenwood, Head of Debt at the CSJ, said “The further steep rise in council tax arrears to a historic high of £6 billion is yet more evidence that in many cases, the process of collection is failing local authorities and taxpayers alike.

“Some people won’t pay their council tax even though they have the money and they should face the full force of the law. But our evidence shows that the majority of non-payers are unable to meet their commitments and the often harsh repayment methods used by many local authorities are making repayment rates worse, not better.

“Adopting a more proportionate collection system would drive up the amount of money brought in by councils in the long term.

“Enforcement is an invasive procedure by its nature and putting the Enforcement Conduct Board on a statutory footing would ensure that vulnerable households have practical recourse to protection should things go wrong.

“Debt collection is an important function of Government, but where households are clearly vulnerable, they should be treated sensitively to enable them repay. But the structure of our collections system incentivises against this by providing opportunities for local authorities to quickly advance to enforcement (action by bailiffs).”