What is a Debt Relief Order and how does it work?
Find out which debt solution is right for youGet started
Answer a few simple questions
See if you are suitable
Understand your next steps
New figures show soaring council tax debt and millions lost from the economy
Figures from the National Audit Office (NAO) and Money Advice Trust (MAT) show the scale of Britain’s debt problem.
The National Audit Office says that 8.3 million people in the UK are struggling with ‘problem debts’ they can’t pay. And it's costing the economy almost £900m a year.
The level of non-credit debts - like rent, utilities, council tax and benefit overpayments - has grown especially sharply. Money Advice Trust’s National Debtline has seen the proportion of its callers unable to pay their council tax double in the last ten years. And this has a knock-on effect on other forms of debt. More than 10% of recent callers told National Debtline they were paying council tax bills with credit.
This is due in part to the change from statutory Council Tax Benefit to Local Council Tax Support (LCTS) schemes in 2013. This led to a ‘postcode lottery’ in England. Moving from one council area into another could mean a huge change in how much LCTS you’re entitled to, and whether you can get help at all. In many authorities in England, those on the lowest incomes have had to pay council tax for the first time. (Wales and Scotland have kept funding for their schemes at pre-2013 levels, although council tax arrears have gone up there too.)
Meanwhile, local councils are struggling for cash themselves. Central government funding for local authorities has been reduced almost by half in real terms since 2010. But demand for services has gone up. This has left councils more reliant on council tax to keep going.
It’s also changed the way council tax debts are collected. MAT found that 10% more council tax debts were passed to bailiffs in 2016-17 than in 2014-15. Research suggests that involving bailiffs risks driving vulnerable people into further financial trouble. Being chased by bailiffs can also worsen stress and other health problems.
So what needs to change? MAT has made some recommendations about how to help people in council tax debt. They have called on the Government to bring back funding for full LCTS support for people on the lowest incomes. They also want to see local authorities review their debt collection practices and fees.
Would this help? These changes could definitely help more people avoid falling into debt. But if you’re already struggling with your council tax, it’s important to take action now. Missing council tax payments can have serious repercussions. Your council could take legal action against you, and even take money straight from your wages or benefits. You can find out how to deal with council tax arrears on our website here.
by Christine WalshBack to blog home