MP calls for outdated tax debt rules to be scrapped

Makerfield MP Yvonne Fovargue says “heavy-handed” techniques such as using bailiffs or demands for all arrears to be paid in one lump sum are doing little other than plunge vulnerable people into more and more debt.

Ms Fovargue’s comments came following a Citizens Advice report which revealed that many people in council tax arrears can’t afford to repay them.

The report, titled Wrong Side of the Tax, found that nine out of 10 Citizens Advice clients who needed help with council tax arrears also owed money on other bills.

The report also expressed concerns that debts can quickly escalate because of the way council tax is collected. For example, two weeks after missing a payment, people can become liable for their entire annual council tax bill. This means that missing an average payment of £167 could rise to a debt of more than £2,000 in just two weeks.

And local councils were also losing out because of the debt recovery systems being used. For every £1 of debt referred to bailiffs by local authorities, only 27p is returned.

Citizens Advice has called on the Government to widen their current review of Council Tax collection methods, and “to look beyond guidance and tackle the flaws in the underlying Council Tax Regulations.”

Ms Fovargue said: “New research shows that a typical Citizens Advice client owing council tax has just £7 a month left to spend on debt repayments. This is why heavy-handed debt collection techniques, such as a demand for all arrears to be paid in one go, or bailiffs threatening to seize goods if they don’t pay up, don’t work. The Government needs to scrap outdated regulations so that councils have the tools to collect council tax fairly, without locking people in debt, and to give greater support to vulnerable people struggling to pay arrears. Otherwise, the debts will simply get worse and worse.”

Dame Gillian Guy, Chief Executive of Citizens Advice, said: “Government regulations push local authorities to use harsh collection processes. They pile rapidly-escalating debts on people who barely have enough money to get by.

“Many people who need our help with council tax arrears have no more than a few pounds spare every month to repay their debts. An unexpected bill for thousands of pounds, accompanied by legal threats and bailiff action, is terrifying for the person concerned and ineffective for the council trying to recover the debt.

”To protect people from further harm, the government must change the rules to give councils the flexibility to collect council tax fairly and compassionately.”