Lord Pickles is a former Communities and Local Government Secretary
The Covid-19 outbreak has caused huge suffering in this country and around the world. The government is rightly straining every sinew to stop the virus and save lives. Through the furlough scheme, support for the self-employed, and payment holidays on many essential household bills, it’s taken action to help protect people’s livelihoods.
But even with these protections, many have seen their incomes take a hit. For some groups it’s getting harder and harder to make ends meet. According to the charity, Citizens Advice, more than six million people haven’t been able to pay at least one bill because of coronavirus. Of these, over two million say they have missed a council tax payment.
In the context of the enormous challenges facing our country right now, just missing a bill might seem a minor issue. But getting behind on your council tax is one of the most problematic debts someone can have. With over two million already getting behind – and millions more saying they expect they’ll have to miss a payment – a crisis is building in household budgets.
Unlike almost all other bills, council tax arrears can send debtors to prison in England. What’s more, the rules are set centrally so local authorities have less discretion around chasing payment.
And one of the rules is that one missed payment can lead to someone becoming liable for the whole year’s council tax payment. This could mean a debt of a hundred pounds or so rocketing to over a thousand in an instant – a danger that’s greatest now when we’re close to the start of the financial year.
Councils are also driven by these same rules to recover debts through the courts, which means bailiffs are widely used to collect debt. Bailiffs add extra costs onto recovery which pushes people further into debt. There is also evidence from debt charities that they frequently break the rules, treating many people unfairly.
We know councils are finding it tough as well. They’ve been hit by billions in falling incomes as fees and charges dry up during lockdown, as well as widespread non-payment of council tax. All the while they’re still having to pay for vital services for all their residents.
Councils are doing everything they can to protect hard-pressed people right now. But because of the inflexible rules, it may become impossible for them to avoid acting to recoup debts – including bringing in bailiffs.
Such draconian methods of collection don’t work for anyone. For every pound of debt passed onto bailiffs, less than 30p is returned to the taxpayer. Many councils across England are desperate to be able to collect arrears more sensibly, but the red tape locks them into this destructive cycle.
So the question that councillors up and down the country will be asking themselves is this: how can they continue to pay for services without piling further debt onto their struggling residents?
The Government has shown it can take bold action to protect the economy, people’s livelihoods, and fund vital services. Robert Jenrick, the Secretary of State for Local Government, has announced two tranches of funding for councils which has helped – more may yet be needed.
But this must be combined with changes to the Council Tax rules. Councils need more flexibility on how they can collect debts in a way that lets them consider the effect of Covid-19 on their residents. And people who have fallen behind on their bills should have the security of knowing that councils will take all reasonable steps to avoid referring their debt to bailiffs and the courts.
Not everything is in the Government’s control, we’re in the midst of a pandemic. But there are steps that can be taken that would make a real difference to people trying to make ends meet. If we ignore them, we’d be missing an opportunity to help prevent a long-term legacy of Covid-19: millions locked into a spiral of worsening debt that began with a letter from their Council.