Postcode lottery causing harrowing outcomes for people facing council tax arrears warns StepChange, as charity calls for urgent reform

^{14 October 2024}

StepChange Debt Charity is calling for urgent action from the Government and local authorities to overhaul the council tax debt collection system, as it says current practices are causing significant harm to people struggling with their finances, including damage to their health, wellbeing, and relationships.

As it stands, there are no binding standards for local authorities to assist those in financial difficulty with council tax arrears, which results in a postcode lottery of support and interventions depending on council practices. What’s more, current rules mean that if someone misses one council tax payment, within a matter of weeks they can receive a demand to pay the full annual bill, threats of imprisonment and rapid escalation of debts to intrusive bailiff enforcement and escalating fees.

StepChange’s new report, Looking through the keyhole, reveals aggressive council tax collection practices are commonplace and counterproductive, and the most vulnerable households are often on the receiving end. The research finds that the increasingly unaffordable burden of council tax, and the subsequent collection journey, can often worsen debt problems, and people are making impossible choices between utility bills, rent, mortgages, or even a healthy diet, to keep up with council tax.

Drawing on research with StepChange clients alongside national YouGov polling, the report finds that those going through harmful enforcement action are left feeling trapped and unsafe in their own homes – unable to leave, yet scared of a knock at the door:

• Council tax arrears among StepChange clients and in the country are rising sharply, as affordability pressures persist through the cost-of-living crisis. YouGov polling shows that 6% of UK adults have fallen behind on their council tax in the last 12 months, which StepChange analysis estimates at over 3 million people, as the average amount of council tax arrears per StepChange client stood at £1,726 in 2023, up from £1,146 in 2019, an increase of 50%. Meanwhile, the latest figures from the Ministry of Housing, Communities, and Local Government show unpaid council tax topped £6 billion last year, an increase of 46% since 2018-19.
• Existing regulations encourage councils to escalate debt quickly and take a blunt, aggressive approach to enforcement that causes harm and compounds financial difficulty. The survey found that only one in twenty (5%) clients said their council took their personal situation into account, including vulnerabilities, before taking further action on their council tax arrears, and a third of clients (34%) who agreed to a repayment plan could not keep up with it.
• Communications from councils too often push people away from support. Tellingly, over four in five clients (85%) that StepChange surveyed said that the communications they received from their council about their arrears made them feel scared, anxious or depressed.
• Enforcement action is deployed too often where clients are in vulnerable situations and escalation has negative impacts. More than half (53%) of clients surveyed who experienced bailiff action said enforcement agents put pressure on them to make unaffordable repayments during visits to their home, while a third (34%) said bailiffs displayed intimidating or aggressive behaviour. The vast majority of clients who experienced bailiff action said it negatively impacted both their mental (95%) and physical (91%) health and wellbeing, as well as their ability to get enough sleep (94%).

Tracey, StepChange client, Blackpool

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“My financial difficulties started during the pandemic in 2020. I was a full time NHS worker, and my husband worked in drug and alcohol rehabilitation support. Our income was cut and during this time, we built up credit card and overdraft debt, and accumulated arrears with utilities and council tax. I tried contacting the council to explain our situation and to ask for help but was told that there’s nothing that they could do until our case had gotten bad enough to go to court.

When I did receive the court liability order, it was not only incredibly stressful, but I saw that court costs had been added onto the arrears we already had. Only then did the council agree to an arrangement, but by this point, I owed the entire year upfront, plus the arrears, and was told that it needed to be paid off by the end of the tax year regardless of the fact that this was only a few months away.

It wasn’t long before the debt was passed on to an enforcement agency, and bailiffs started knocking on the door, adding more fees on each time. However, our situation didn’t improve for some time, and every year the cycle has continued, with me begging the council for help, receiving a court liability order, having fees added to the debt, and then the enforcement action.

The council had changed their enforcement agency and this time they were a lot less sympathetic, demanding an unaffordable amount and making multiple visits to our home, including entering the property whilst my 16-year-old son was home alone. In spite of the unaffordable demands, I was trying to prioritise paying the bailiff over the council to try and stop these visits from happening, but this just meant that the cycle continued as I fell further and further behind.“

StepChange is urgently calling on the Government and local authorities to take three crucial steps:

• First, Central Government should prioritise council tax affordability, by increasing funding for council tax support for those who can’t pay.
• Second, overhaul national regulations and guidance, ending counterproductive demands for immediate repayment and the threat of imprisonment, and embedding a binding set of standards and steps to support people who are struggling to agree repayment to ensure escalation to enforcement is a last resort.
• Finally, establish a statutory regulator of the bailiff sector and stamp out poor conduct by putting the Enforcement Conduct Board on a statutory footing.

Vikki Brownridge, CEO at StepChange Debt Charity, said:

“Rising council tax and a postcode lottery of support are making it harder and harder for many people to keep up. Aggressive debt collection practices are counterproductive: from troubling treatment of arrears to unhelpful communication, to harmful enforcement action, the current council tax collection journey is at best outdated and at worst dangerous for people who fall behind on this bill. It’s creating harrowing outcomes for many vulnerable households. While we understand that councils need revenue to fund essential public services, a fundamental overhaul is needed to ensure the system is constructive for all involved.

“Looking ahead to the Budget, we want to see increased funding for council tax support and reform to council tax debt collection practices as a priority. Vital to this is the creation of a binding set of standards across local authorities to support those in council tax arrears. As part of a wider package of change, we want the Government and councils to look compassionately to support the most vulnerable, rather than push them deeper into hardship at a time when people are struggling to make ends meet.”

Notes to Editors

1. The full report can be found here.
2. All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 2,168 adults. Fieldwork was undertaken between 8th - 9th May 2024. The survey was carried out online. The figures have been weighted and are representative of all UK adults (aged 18+).
3. Council tax collection figures from the Ministry of Housing, Communities, and Local Government, can be found here: Department for Levelling Up, Housing and Communities stats on council tax collection rates for 2022-2023
4. We have case studies who can speak to the problematic nature of the council tax collection journey, please contact the press office directly on press@stepchange.org
5. Looking through the keyhole's methodology draws on nationally representative polling, a survey of more than 400 StepChange clients, interviews with debt advisors, and internal statistics from our client base, which last year numbered over 180,000. The report also uses public datasets from Government departments, as well as data and reports from other charity partners such as Money Advice Trust, Centre for Social Justice, and Citizens Advice. More information on the methodology can be found on page 7 of the report.
6. Population figures have been estimated using StepChange Debt Charity’s own analysis of the YouGov survey findings. This analysis is based on the Office for National Statistics Mid-Year 2022 dataset on estimates of the population for the UK, England, Wales, Scotland and Northern Ireland. This estimates 53,656,829 adults (18+) in the UK.