On 2 November 2016, the APPG brought together council representatives, advice agencies and MPs to discuss how Council Tax debt collection practices can be improved.
Joanna Elson from Money Advice Trust introduced the subject. Debt advice charities have shown how councils are often too quick to send bailiffs round for unpaid Council Tax. The charity’s Stop the Knock campaign shows over 1.27 million Council Tax debts were referred to enforcement in 2014/15. This was in spite of government guidance saying bailiffs should only ever be used as a last resort.
The Money Advice Trust says overly aggressive debt collection is blighting individuals, creditors and the local taxpayer. Ms Elson cited a StepChange survey showing how two thirds of clients seeking help from their council faced a lump sum payment demand or the threat of enforcement action. This approach creates needless stress and anxiety and harms people’s ability to get a job or stay in work. Moreover, MAT evidence shows that the heaviest users of bailiffs for council tax are not more successful in collecting arrears but less.
According to Ms Elson, a stronger public policy response is needed. Although the Government is reluctant to put good practice guidance on a statutory footing, MAT suggests two more limited interventions DCLG could make. First, ending the use of enforcement agents for recipients of Council Tax Support. Some councils already protect the most financially vulnerable from the threat of bailiffs, but this needs to be rolled out further and faster. Second, statutory reporting of debt collection methods. The spotlight of transparency would be an effective measure to incentivise councils to comply with good practice.
Cllr John Parham from Mendip District Council (Conservative) said that Mendip has developed a more progressive approach to Council Tax collection than some local authorities. Mendip is a signatory to the Citizens Advice/Local Government Association good practice protocol. Bailiff action has been consciously reduced through wider use of attachment of benefits (AOBs) and attachment of earnings orders (AEOs); and more collaboration with civil society organisations and independent debt advice.
Charles Metcalfe, Corporate Revenues Manager at Manchester City Council (Labour) explained how a 50% reduction in central government funding for Council Tax Support put upward pressure on arrears. Despite this, Manchester has reduced the number of cases being passed to bailiffs and improved its debt collection rates – both in year and for arrears. The Council takes a ‘firm but fair’ stance on arrears and employs a high number of staff in order to prioritise early engagement. Discretionary payments are available where claimants are in hardship. Manchester also has a policy of no referral to bailiffs where there’s the possibility of making an attachment. Overall, Manchester takes a holistic approach, with a ‘current year plus’ approach to Council Tax payment difficulties.
Cllr Russell Holland from Swindon Borough Council (Conservative) said Swindon had prioritised Council Tax collection as a social inclusion issue. The Council is working hard to provide early support and help people maximise their incomes. This includes supporting DWP work coaches to help people into employment. Swindon has invested £50,000 in seeking to telephone and offer assistance to residents behind on payments before they receive a court summons. This has reduced summonses from 14,500 to 9,500 in just two years. Both Cllr Holland and Mr Metcalfe said that they hoped HMRC would allow data sharing where liability orders are obtained.
Cllr Jane Corbett from Liverpool City Council (Labour) described how it was often the cumulative impact of welfare reforms that is stretching household finances to breaking point. One quarter of Liverpool’s most financially vulnerable residents on Council Tax Support are still affected by the under-occupancy penalty, creating significant pressures in terms of Council Tax debt.
Sam Ashton from Zacchaeus 2000 described how there has been a significant increase in the number of CTS claimants referred to bailiffs in London. However, there are some good examples in the capital of efforts to help the most vulnerable. Mr Ashton highlighted the record of Lambeth Borough Council (Labour) which brought in extra recovery measures for residents in receipt of CTS and established the organisation “Advising London”, an independent debt relief agency. As a result, Lambeth’s use of bailiffs to collect Council Tax arrears from CTS claimants went from 3,244 uses in 2013–14 to zero in 2015-16. This was accompanied by a significant reduction in summonses among this group and an increase in collections rates.
Following the seminar, Yvonne Fovargue MP met with the Minister for Local Government Marcus Jones MP to brief him on the issues raised and seek support for policy proposals. The secretariat also submitted an evidence briefing to the Department for Communities and Local Government.