Baroness Morgan is a former Secretary of State for Education, and for Digital, Culture, Media and Sport
Marie is 76, and usually pays her council tax via PayZone at the Post Office. However, for the last five months she has been shielding due to a chronic lung condition. Recently, her council contacted her regarding council tax arrears of just £13, threatening court action.
The prospect of council tax arrears escalating to court action and enforcement is an imminent concern for people like Marie. From next Monday, bailiffs are set to restart in-person visits, and will be able to chase Coronavirus-related debts. Yet a knock at the door poses a threat to Marie’s long-term finances, and worse, poses a serious risk to her health.
Across the country, many thousands of people are in a similar situation. Debt advice agencies report that three million people face the threat of bailiff action on missed council tax, while according to StepChange, around a million people are in council tax difficulties directly attributable to Covid-19.
In this environment, pulling the trigger on a wave of high-risk bailiff visits is not a decision that should be taken lightly. While it’s right for councils to seek to recoup their losses to fund essential services, there remain huge questions over the efficacy of bailiffs and whether they are genuinely always used as a last resort.
When I was Chair of the Treasury Select Committee, we reported in 2018 on how local authorities have come to use bailiffs almost by default, with public sector debt collection regarded as ‘worst in class’. With this in mind, what lessons should the Government learn before it allows bailiff visits to resume?
Lesson one: Despite glimmers of progress, council tax debt collection is in need of major reform.
The law governing local authority debt collection means that small debts quickly escalate. Non-binding guidance has failed to stop councils from sending in the bailiffs, with referrals totalling more than 2.6 million last year. That’s despite only 27p of every £1 of debt referred being recovered. Meanwhile, councils can be penalised for trying to offer more sustainable payment plans.
By contrast, household debt problems are dealt with far more sustainably in other sectors. Among mortgage lenders and consumer credit providers, forbearance and debt advice referrals are more widely used. Regulated sectors have seen the benefit of more holistic measures which have resulted in better collection rates and fewer defaults, whilst also crucially giving people mired in debt a sustainable way out.
Support for household finances during the crisis should now be twinned with reform of council tax collection and additional hardship funds. The Government’s initial £500 milion Hardship Fund has offered welcome respite for many, but with increased funding and wider eligibility criteria it could achieve even more. Ministers should also look to introduce a statutory pre-action protocol for debts owed to government. This would help reduce court-based enforcement and enable those most at risk from bailiff visits to set up an affordable repayment plan.
Lesson two: Independent regulation is needed to control the behaviour of bailiffs and bailiff companies.
Aggressive and intimidating bailiff enforcement plagued our system long before Coronavirus: now is not the time to cross our fingers and hope that this might change.
For too long, bailiff self-regulation has failed to protect people in financial hardship from widespread poor practice. Independent polling by YouGov conducted before lockdown for StepChange and Citizens Advice showed one person every minute experiencing a rule-breaking bailiff.
The Government has recognised the case for strengthening regulation,and started a review on this matter back in 2018. However, despite repeated calls from the Justice Select Committee, which ran a parallel inquiry to encourage Government action, the Ministry of Justice has so far failed to report back.
The case for independent regulation has never been stronger. The Government should now commit to plans for bailiffs to follow the rules and ensure the industry is held to account.
Lesson three: The basis for the temporary ban on bailiff visits has not gone away.
The Government’s decision to outlaw bailiff visits in April was welcome. In explaining the ban, the Ministry of Justice correctly identified that incentives in the industry and “financial pressures [from firms and creditors]” would create the risk of poor practice and unnecessary visits “which could endanger the health of both enforcement agents and debtors”.
In the context of an ongoing global pandemic, the nature of bailiff visits – going between people’s homes without knowledge of underlying health conditions – still presents a high risk to public health.
The use of virtual compliance methods is growing and from next week it has been agreed that any enforcement visits will not seek access to premises and will be contactless. But the visits will still happen.
Ministers could give further direction on how bailiffs can operate in a Covid-secure way. That means at the very least, guidance and oversight on test-and-trace, treatment of people in Covid-related difficulties, and suspension of visits during local lockdown.
Without the introduction of new safeguards, strong Government initiatives to help people recover from financial difficulty, such as next year’s Breathing Space scheme, are in danger of being undermined. Far better to change course now than risk a public health disaster and financial catastrophe for millions of people in financial difficulty, people like Marie.
While the original factors that prompted the ban are still in play, the solution is within our grasp. This is an area for Government rather than individual local authorities to take the lead,. National Government must learn from these three lessons in order to reverse the tide of harmful and unnecessary bailiff visits, and ensure people are protected, as far as possible, when bailiffs return. If the ban on bailiff visits is not to be extended then these changes must be made urgently. In the absence of these modest safeguards, the return of bailiffs is something we can ill afford.