Bailiff visits – often to enforce debt owed to local authorities in the form of unpaid council tax - will start up again from 23 August, following a temporary ban during the coronavirus emergency. We're deeply worried about the impact and calls for urgent action.
On a conservative estimate, people who owe more than £500 million of arrears accumulated on council tax since the pandemic, and who cannot afford to pay, could be hit by up to an additional £158 million of costs purely as a result of the bailiff and court fees that could be added.
This cannot be allowed to play out. Before Parliament rises for recess, we urgently call on the Government to put in place additional protections in light of the ongoing financial crisis.
While central Government has allocated some additional funding to local authorities and some additional flexibility about their own repayment of debt, this does not address the particular pressure that local authorities will face to resume bailiff enforcement that just makes things worse for households already struggling.
We're calling for the Government to introduce a statutory pre-action protocol for council tax that would require councils to take certain steps before seeking a liability order for bailiff enforcement action, as well as amending the council tax regulations to enable local authorities to show greater flexibility.
The Local Government Association said in mid-May that 2020/2021 council tax receipts were already £506 million down. Our research in May suggested around 820,000 people had fallen into council tax arrears during the pandemic.
The same research showed that over 4 million people had accumulated around £6 billion of debt and arrears attributable to financial shock caused by the pandemic.
It is very clear that the financial consequences of the public health crisis on households are not going to be resolved any time soon.
Many people will lose their jobs, some of whom will not currently be aware that this will happen; many people who retain their jobs will nevertheless see their income reduced; many of those not currently in work will find it even harder to get into work and will be forced to rely on the benefits system for an extended period.
While forbearance is a regulatory requirement across the mortgage and consumer credit landscape, this is not the case when it comes to the enforcement of Government debt. Indeed, local authorities themselves can be penalised financially when they try to offer more compassionate, longer term and affordable repayment plans to those who owe them money.
It is perhaps then no surprise that local authorities are the highest users of bailiffs – referring 2.6 million debts to bailiffs, of which 1.4 million were for unpaid council tax, in the 2018/19 year.
Yet bailiff firms, who are often dealing with some of the most vulnerable households, are subject to no universal statutory regulation. Too often this results in poor practice and excessive fees which
exacerbate the financial difficulties already being faced by affected households.
The bailiff sector, through its trade body CIVEA, says that bailiffs will not enter people’s homes in the short term when visits resume (which, while welcome, begs the question why visits, and the fee of hundreds of pounds that each attracts, are appropriate at all).
However, as numerous submissions to the Ministry of Justice’s call for evidence on bailiff behaviour testify [see note 2 to editors], to consumer organisations and the public it is unfathomable why a sector that operates in such a sensitive part of the market is not subject to the same kind of robust, statutory regulation that applies elsewhere in the debt recovery landscape.
In the absence of a reliable and credible regulatory framework, it is even more vital that the Government pays careful attention to the protections needed in relation to the collection of debts owed to local authorities in the post-pandemic landscape.
StepChange CEO Phil Andrew comments:
“The issue of how commonly local authorities use bailiffs to enforce unpaid debts, piling shocking levels of fees and fear onto already struggling households, seems to go unnoticed as the Cinderella of the debt recovery landscape. That is wrong at any time, but in the wake of coronavirus it needs urgent attention.
“Local authorities need both help and a prescribed process from central Government to ensure that their first and foremost aim in current circumstances is to help their residents get back on their feet financially through affordable repayment plans, rather than to subject people who can’t afford to pay their council tax to even higher costs and stress.
“We call on the Government to amend the council tax regulations, and to introduce a statutory council tax pre-action protocol, to ensure people facing debt do not see their problems exacerbated by archaic elements of council tax regulation and practice that are lagging behind the Government’s wider policy objectives.”