INSIGHTS ¦ Council Tax: Looking through the keyhole – Stepchange report

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Key Takeaways

  1. Council tax arrears are a significant and growing issue, with £6 billion owed in England by March 2024.
  2. Three-quarters (73%) of StepChange clients in council tax arrears were also behind on energy bills.
  3. Escalating debt collection practices have detrimental mental and physical health impacts on individuals.
  4. Only 5% of surveyed clients said councils took their personal circumstances into account before escalating enforcement.
  5. Bailiff involvement often exacerbates the financial and emotional strain, with 95% of clients reporting negative mental health effects.
  6. 60% of respondents went without a healthy diet to keep up with council tax payments.
  7. Enforcement action is frequent, with 49% of clients facing bailiffs for council tax collection.
  8. Current council tax systems are deemed regressive, with outdated tax bands and variable support systems across councils.
  9. Council tax demands, including threats of imprisonment or full-year payment requests, are common.
  10. The lack of compassion and understanding from councils drives isolation and worsens debt problems.
  11. Vulnerabilities, such as mental health or disabilities, often overlap with financial difficulties, yet are not adequately addressed.
  12. Recommendations include statutory bailiff regulation, better council tax support, and reformed debt collection practices.

Innovation

  • Reforming council tax debt collection through mandatory protocols, focusing on empathy and support.
  • Use of affordability tools and the Standard Financial Statement (SFS) for realistic repayment plans.
  • Policy recommendations for statutory regulation of bailiffs and the introduction of mandatory council tax debt collection standards.

Key Statistics

  • £6 billion in council tax arrears in England (2024).
  • 73% of clients with council tax arrears were also behind on energy bills.
  • 95% of those facing bailiff enforcement reported negative impacts on mental health.
  • Average council tax arrears per client rose to £1,726 in 2023.
  • 49% of clients with council tax arrears experienced bailiff involvement.
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Key Discussion Points

  1. The growing problem of council tax arrears exacerbated by the cost-of-living crisis.
  2. Aggressive collection practices leading to detrimental health impacts.
  3. The inadequacy of council tax support, creating a “postcode lottery” for financial assistance.
  4. Bailiff involvement is prevalent and harmful, with many clients reporting undue pressure and aggression.
  5. Council communication often feels threatening and exacerbates financial stress.
  6. Vulnerabilities, including mental health and physical conditions, are frequently overlooked in debt recovery processes.
  7. Unsustainable repayment plans lead to further financial strain.
  8. Many clients turn to harmful coping mechanisms, such as skipping meals or taking on more debt, to meet council tax obligations.
  9. Inequities in council tax enforcement, particularly between regions and income levels, contribute to growing arrears.
  10. Many clients are unaware of or unable to access available support for council tax payments.
  11. The emotional toll of debt recovery processes, with some clients reporting suicidal ideation due to council tax enforcement.
  12. Recommendations for reform include bailiff regulation and enhanced support for vulnerable households.

Description

This podcast episode delves into the escalating issue of council tax arrears in the UK, particularly in England and Wales, focusing on the findings from StepChange’s latest research. The discussion highlights the financial difficulties households face, compounded by rising living costs and insufficient council support. It critically examines the current debt collection practices by local authorities and the adverse health and wellbeing effects on individuals. Key recommendations include reforming the approach to council tax collection, prioritising empathy, and ensuring councils adopt more supportive measures, especially for vulnerable populations.


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