Select committee urges Government action to ensure councils are not “aggressively chasing” council tax from those who can least afford it

Local authorities should not be aggressively chasing council tax arrears from households that can least afford it, the Levelling Up, Housing and Communities (LUHC) Committee has said, amid reports that some councils have been adopting “heavy-handed” tactics to recover debts.

In a report published today (1 December), Council Tax Collection, the committee acknowledges pressures on local authority finances and household budgets.

The LUHC Committtee has called on the Government to “take steps to ensure councils understand they are not required to demand immediate in full payment from individuals who are in arrears”.

The report also recommends the Government should change the law to “state the principle that collection of council tax arrears should be based on a resident’s ability to pay”.

The report notes that in January 2021, Citizens Advice found that arrears had “risen sharply” as many individuals had lost their jobs or received pay cuts in the economic fallout of the Covid-19 pandemic.

At the same time as arrears were rising, local authorities were making increasing use of bailiffs and other “strong-arm” tactics, including the threat of imprisonment, said the committee.

The report welcomes the progress made in establishing a new Enforcement Conduct Board (ECB) as an industry oversight body. It recommends that local authorities should “only engage” with enforcement agents accredited by the ECB.

However, the report expresses concern that barriers to data sharing are “impeding councils’ efforts to identify vulnerable residents”.

In response to this, the LUHC recommends the Government widen the roll-out of the ‘Digital Economy Act pilots’, in order to improve data sharing to help identify households in financial need.

Turning to council tax reform, the committee said it has “called repeatedly” for the council tax regime to be “replaced with a proportional property tax” or “reformed and updated”.

The report outlines a number of reforms recommended by stakeholders, including:

• Making property owners, rather than occupants, liable for council tax, in order to remove a layer of complexity caused by population transience.
• Making the system fairer by revaluing properties.
• Introducing new council tax bands to reduce unfairness.

Clive Betts, Chair of the Levelling Up, Housing and Communities (LUHC) Committee, said: “The cost-of-living crisis is a real and everyday experience for many and the spectre of council tax arrears risks pushing some households over the edge. Some people may feel pushed into putting their council tax payments ahead of heating and eating – this is deeply concerning and highlights the need for local councils to act responsibly when trying to recover unpaid council tax.

“Councils are themselves under significant financial and service pressures, but councils should not be chasing arrears from individuals who can least afford it. Councils should not rush to escalate collection activity but consider the ability of the individual to pay, avoid causing distress, and signpost suitable debt advice.

“Enforcement action should absolutely be a matter of last resort. Heavy-handed tactics to recover council tax debt are not acceptable. The Government should stamp out the prospect of poor enforcement behavior by considering the case for a statutory code for the enforcement agent industry.”

Lottie Winson