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MPs ask – “Is it time to level up council tax collection?”

Grace Brownfield reflects on the Levelling Up Committee's recent council tax inquiry oral session

Grace Brownfield

Senior Influencing Manager at Money Advice Trust

Posted June 10, 2022

Our Public Affairs and Policy Manager, Grace Brownfield, reflects on the Levelling Up Committee's recent council tax inquiry oral session.

This week could hardly be described as a quiet one in Westminster. You would certainly be forgiven for having missed the Levelling Up, Housing and Communities Committee session on council tax collection, which took place on Monday – just a few hours before Conservative MPs took part in the vote of confidence.

The session comes at an important time with the proportion of people contacting National Debtline with council tax debt at (27% in May 2022, and with the overall level of arrears in England growing significantly too (£4.4bn was owed in England as of March 2021).

With written evidence now submitted from debt advice charities (you can read our submission on the Committee’s website), local authorities and enforcement agencies, these oral evidence sessions provide an opportunity for the Committee to delve into further detail.

So, what were the key discussions during the session, what did we learn about where the challenges lie in improving council tax collection, and what might be some of the solutions?

[Alistair Townsend - IRRV, Rachel Beddow - Citizens Advice and Catherine Brown – Enforcement Conduct Board give evidence to the Committee ]

  1. There’s a clear link between council tax support and council tax arrears

Chair of the Committee, Clive Betts MP, began by asking why arrears have risen so much, and what the impact of changes to council tax support had been. Changes to funding mean many working-age people on low incomes now have to pay a partial council tax bill, when previously they wouldn’t have had to pay anything (for more information, see our Council Tax After Covid report).

Rachel Beddow, from Citizens Advice, told the Committee that, even though these amounts might seem small, relative to a full bill, they are often unaffordable for people on low incomes – something that chimes with what we hear through our services.

Council representatives on the panel (Cllr Stephanie Cryan from London Borough of Southwark, and Kevin Stewart from Mid Sussex District Council) agreed that changes to support was impacting on arrears levels. Alistair Townsend from the Institute of Revenues, Rating and Valuation cited evidence that local authorities with less generous council tax support schemes tend to have higher arrears levels.

This points to a much wider issue around the affordability of council tax bills, with Cllr Cryan highlighting that bills have risen much faster than incomes. Rachel Beddow from Citizens Advice shared that 53% of people they help with council tax debt have a ‘deficit budget’ – meaning their income doesn’t cover their essential costs. As one of our own callers to National Debtline, Robert,* put it:

“I just can’t afford to pay it out of my Universal Credit. What do you do? I know council tax and your mortgage are the priority debts, but if all the money you’re getting in is less than even your mortgage, what do you do?” *(Name changed to protect identity)

*name has been changed

With many of the people in arrears being people struggling to pay, this has clear implications for how the debt should be collected.

2. Good practice exists, but reform of council tax collection rules could bring wider improvements 

There is undoubtedly good practice out there when it comes to council tax collection. Cllr Cryan highlighted Southwark’s Step-by-Step programme as one such example. The council works with residents to set up one, affordable payment plan for any debts they owe them.

However, as we highlighted in our evidence to the Committee, current regulations mean council tax debts can escalate quickly. People can become liable for their entire annual bill after one or two missed payments, and extra debt is added in the form of liability order fees.

It was therefore positive to see Committee members asking whether current regulations need reforming. Rachel Beddow from Citizens Advice recommended the introduction of a pre-action protocol, requiring councils to take certain steps, including negotiating an affordable repayment plan, before they can seek a liability order – something we too have called for.

Finally, Ben Everitt MP asked whether council tax collection rates ‘league tables’ help or hinder best practice. We’ve previously highlighted difficulties people can face getting an affordable repayment plan if this would mean repaying beyond the tax year, and we think this can be partly driven by pressure on councils to collect as much as possible in-year. We’d prefer to see a focus on measuring and reporting debt collection methods and outcomes – to incentivise good practice.

3. Plenty of anticipation (and promise) for the new Enforcement Conduct Board 

With councils being the largest users of bailiffs, it’s no surprise this was also a focus on the Committee’s questioning.

Catherine Brown, Chair of the Enforcement Conduct Board (ECB), set out her key priorities for the new body, including setting up data and monitoring processes to understand current practices and where these need to be improved, as well as ensuring there is a clear, easy to use complaints process.

The establishment of the ECB has been warmly welcomed by both the bailiff industry and debt advice sector – a sentiment echoed by representatives of the enforcement industry on the panel

While the Government has committed to reviewing the case for the ECB to have statutory underpinning within two years, Darren Henry MP understandably questioned how firms would be encouraged to sign-up to the body given its voluntary nature. Catherine set out that local authorities only working with enforcement agents that are signed up to the ECB would be key to achieving this - something we hope the committee will recommend in its final report.

Looking ahead – the view from government

The Committee now turns its attention to taking oral evidence from the Minister for Local Government. We hope this will provide an opportunity for Committee members to question the Minister on reforming the regulations and improving council tax support – both of which would lead to better outcomes not just for people in debt, but for councils too.

Grace Brownfield

Senior Influencing Manager at Money Advice Trust

Grace is the Money Advice Trust’s Senior Influencing Manager. She previously worked in the policy team at StepChange Debt Charity. Before that she worked on issues related to the financial impact of cancer at Macmillan Cancer Support and NSPCC. View all posts from Grace Brownfield.

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