We need to talk about council tax

By Emily Whitford, Senior Public Policy Advocate

Our latest report — Looking through the keyhole — offers a deep dive into clients’ experiences of the council tax debt collection journey.

Council tax costs have risen steadily in recent years, while the financial support available to low-income households has markedly fallen over the last decade or so.

Perhaps unsurprisingly then, council tax arrears have also grown substantially — both among StepChange clients, and the public more widely.1

Fast forwarding from pre-pandemic times to the present day, the average amount of council tax arrears per StepChange client has risen by over 50% from £1,146 in 2019 to £1,726 in 2023.

In Summer this year, we surveyed our debt advice clients to understand their experiences of council tax debt collection and enforcement. The results reveal a troubling picture of widespread unaffordability, inadequate support — both on a personal and financial level — and counterproductive, harmful collection tactics.

That’s why StepChange is advocating for a number of meaningful — and crucially, fairly simple — changes that the new Government, local authorities and enforcement firms and agents can make to better support people who struggle with their council tax bills.

Firstly, who is impacted by council tax arrears?

Here at StepChange, a third of our debt advice clients who pay council tax are in arrears — that’s over 40,000 people.

Those behind on this bill are disproportionately likely to be women, renters or single parents — with many cutting across more than one of these groups. Past StepChange research has shown how these groups can be especially susceptible to problem debt and financial harm in different ways — and our new report strongly reinforces this reality.2

Not only this, two thirds of clients with council tax arrears have an additional vulnerability beyond their financial situation, and approaching half have a negative budget — meaning after going through a full debt advice and budgeting session, their monthly income is not enough to cover their basic monthly costs.

Those who struggle to keep up with council tax bills are often amongst the most vulnerable in society but, concerningly, our research shows that poor council tax debt collection practices are aggravating — rather than alleviating — personal and financial difficulties.

The increasingly unaffordable burden of council tax

More often than not, StepChange clients who fall behind on council tax face complicated and overlapping circumstances which compound their struggles and debt problems — from bereavement, to job loss, to health challenges.

Cost of living challenges also play a fundamental role in historically high levels of council tax debt. Clients tell us how high council tax payments, plus soaring housing costs, steep food prices and hefty utility bills have hampered their ability to afford all the essentials.

The bleak reality is that many are forced to choose between feeding their family or falling behind on household bills, between guaranteeing a roof over their heads or missing another priority payment. Very worryingly, three in five clients who responded to our survey went without a healthy diet and half rationed the amount of heating, electricity or water they used to try and keep up with council tax.

All in all, one thing is obvious among wider cost of living challenges: council tax has become an increasingly unaffordable burden for many people. But instead of offering compassion and support to the people who fall behind when the evidence demonstrates they clearly need it, the way council tax debt is currently collected is instead making things worse.

How the current collection system generates harm

The current rules mean that, after missing just one council tax payment, someone can suddenly find themselves with the rest of the year’s bill to pay, threats of imprisonment hanging over their head and the very tangible possibility that bailiffs will visit their home.

StepChange clients responding to our recent survey described how the rapid and severe escalation of collection activity — including a perceived lack of understanding, affordable repayment options and support — drives feelings of anxiety, isolation and fear. In fact, over four in five clients said the communications they received from their council about their arrears made them feel scared, anxious or depressed — hardly the recipe for constructive engagement.

Instead of viewing missed council tax payments as a symptom which indicates that empathetic intervention is needed, punitive responses are far too readily pursued.

The impact of heavy-handed enforcement action

When people behind on council tax bills are struggling with their situation and most need outreach and support, they too often face escalation of their debt to enforcement agents, with significant fees added and doorstep conduct that can fall worryingly short.

Around half of clients who experienced bailiff action said the enforcement agents put pressure on them to make unaffordable repayments during visits to their home, while a third said bailiffs displayed intimidating or aggressive behaviour.

One client described their perception that bailiffs “aren’t interested in reasons why you owe money. You are just another name to them.” They went on to say: “I have anxiety and dystonia, their visits were intimidating and made my symptoms worse. It was soul destroying.”

The toll these encounters take cannot be understated. The vast majority of clients who experienced bailiff action said it negatively impacted both their mental and physical health and wellbeing, as well as their ability to get enough sleep.

Clients responding to our survey told us how their experiences of bailiff action made them feel both trapped and unsafe in their own homes — unable to leave, yet scared of a knock at the door.

Crucially, in startling contrast with other sectors, the bailiff industry is not overseen by a statutory regulator. This raises significant concerns given the large number of financially and otherwise vulnerable people who interact with bailiffs every single day.

What is StepChange calling for?

Everyone deserves a sense of security in their lives, and to feel safe in their own home. Yet for those facing council tax arrears in England and Wales — including tens of thousands of StepChange debt advice clients — the rug can be rapidly pulled from under people’s feet.

With council tax arrears continuing to rapidly rack up, it is starkly apparent that more needs to be done to support those who struggle with this bill.

StepChange recognises that local authorities face funding pressures and have a responsibility to collect council tax from those who can repay. Yet a system which drives overly aggressive in-year collections at the expense of responsible debt collection practice is not in the interests of councils or residents.

We are therefore calling on the Government to take three crucial steps:

· First, ensure council tax is affordable by increasing council tax support for those who can’t pay.

· Second, end counterproductive demands for immediate repayment and the threat of imprisonment, put in place binding standards that require councils to take agreed steps to support people struggling with arrears, and ensure escalation to enforcement is genuinely a last resort.

· Finally, establish a statutory regulator of the bailiff sector and stamp out poor conduct by putting the Enforcement Conduct Board on a statutory footing.

An achievable ambition

Financial stability cannot be separated from mental and physical stability. It enables people to invest time in their health and wellbeing, their relationships and their homes. For those behind on council tax bills, this sense of safety can too often feel out of reach.

But a reimagined council tax debt collection journey which enables constructive conversations and helps people on the road to escaping problem debt is not an insurmountable task.

The solutions we are proposing would prevent more households from falling behind and ensure those who do are treated consistently, fairly and responsibly, and that councils are better placed to collect from those who can afford to pay.

You can read the full report and recommendations on the StepChange website, and find out more about how you can support our campaign to improve council tax affordability and debt collection for all.