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A recent report from PayPlan and the Institute of Money Advisers found that 62 people were sent to prison last year for Council Tax debt. 18 of them owed money to Bradford Council – which topped the league table. Ten had Council Tax arrears with Sheffield, five with Coventry. All three of these are Labour councils incidentally – always so quick to tell us how compassionate they are.

Why should there be imprisonment for Council Tax debt but not for an electricity bill or being behind with the rent?

Non payment of Council Tax is a civil rather than a criminal offence – although that might not be a huge comfort to those who can’t pay and find themselves banged up. For instance, Melanie Woolcock who was sent to prison, although Mr Justice Lewis later said:

“There was no evidential basis on which the magistrates’ court could conclude that there had been culpable neglect in non payment.”

There have also been a significant number of people locked up for not paying the TV Licence – astonishingly this is a criminal offence. Why should the state give itself these draconian powers while denying them to others who are trying to get hold of the money they are owed?

As Lord Denning said:

“Be you ever so high, the law is above you”.

So these anomalies need to be sorted out. Most of us would agree that incarceration is a more severe punishment than bankruptcy. Yet the PayPlan and the Institute of Money Advisers report says:

“In 2015, ministers changed the minimum threshold for bankruptcy to £5000. However, the law allows people with council tax debt to be threatened with imprisonment for less than this.”

The report adds that councils are positively encouraged to be litigious:

“The litigious nature of council tax collection is out of step with the way that civil debts are dealt with in the civil court system. Local authorities have a choice about whether to use the courts, but council tax regulations encourage them to do so. Court action is permitted very early in the council tax collections process. There is an incentive in the regulations for councils to take people on benefits to court. People who are behind with their payments for utility bills are able to arrange payments directly from benefits to pay their water or energy supplier. But local authorities have to take someone to court to use the same process.”

Citizens Advice has noted, in its analysis on The State of Debt Collection:

“Different creditors are bound by different rules in how they go about collecting debt….Industries which are regulated, in particular, financial services, energy and water companies are bound by stricter rules governing debt collection practices than non-regulated creditors….Local authorities have guidance from DWP on collecting housing benefit overpayments, but this guidance only very briefly mentions affordability. HMRC publishes some information about recovery of tax credit overpayments, but this does not include any high level principles about how debt is collected. It is clear that regulated industries lead the way in terms of rules and guidance governing their debt collection. The only exception is the Department for Communities and Local Government (DCLG) which provides relatively comprehensive guidance on how local authorities in England should collect council tax arrears. The guidance does not have the status that the rules issued by regulators have.”

In 2013 the Government, when Sir Eric Pickles was the Communities and Local Government Secretary, issued some welcome guidance on Councils being too keen to use bailiffs. It is clear that they need to go further. The rule of law should be applied evenly – the municipal debt collectors should not have special privileges.

Another recent report – entitled Stop the Knock came from the Money Advice Trust. It says that:

“Council tax arrears were passed to bailiffs on 1.38 million occasions in 2016/17, with around 810,000 referrals for parking fines and around 50,000 for Housing Benefit over-payments. There were around 86,000 referrals to bailiffs for unpaid business rates, around 2,200 for commercial rents and more than 22,000 for sundry/other debts.”

From the data in the report we can see the figures for individual local authorities. For instance:

“In 2016/17, London Borough of Hammersmith & Fulham instructed bailiffs to collect debts from individuals and businesses on 20,697 occasions.”

That is likely to change from April next year. Hammersmith and Fulham Council will privatise debt collection for Council Tax. The firm that will be chasing the money, 1st Credit, will operate on Financial Conduct Authority standards to public debts – in the same way as when they pursue private sector debts.

Of course the proposal needs to be scrutinised. Will those who owe the Council money be made bankrupt even if the debt is below £5,000? What about other payments being chased? The Council says that the use of bailiffs is a “medieval practice” as regards to collecting overdue Council Tax. So why continue with the practice for parking fines? There is some PR from the Council about how “ethical” 1st Credit is but in the past they have been criticised by the Office for Fair Trading for being too quick to threaten legal action.

But the principle is welcome. The state is not good at debt collection – any more than it is at anything else. The lumbering, inflexible bureaucratic approach is both inefficient at gathering in the money and insensitive as to the human cost of how it is achieved. Often it is the Council that will have to deal with some of those human costs – if a family is made homeless or a child ends up in care. Going to court is a slow and expensive way to proceed. Often there are miscarriages of justice. Far better to intervene earlier – with well trained staff to negotiate payment of the sum owed on an affordable schedule.

For obvious reasons there must be limits to how lenient those owed money can be. If paying Council Tax became effectively voluntary that would be problematic. Unfortunately the balance is wrong at the moment and nobody benefits. The Government should iron out the unfair discrepancies. But local authorities should improve their conduct. Signing up to the Council Tax Protocol, produced by the Citizens Advice/Local Government Association is a start.

Yet legal changes and protocol signing still leave us with the woeful public sector culture, the big clunking fist. So contracting out the process is a bold and innovative idea. It need not be to a private firm – charities or social enterprises could get involved. With this radical privatisation proposal, Labour-run Hammersmith and Fulham Council is showing the way.

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