New reports from StepChange and MMHPI highlight how aggressive council debt recovery tactics cause distress for vulnerable people.
Published November 2024
Record levels of council tax debt
Council tax debt in the UK has hit a record £6 billion, according to figures from the Ministry for Housing, Communities and Local Government published in June 2024.
Reports from two national debt charities reveal how aggressive council tax debt collection causes financial distress and worsens mental health issues for vulnerable people.
StepChange published its report Through the keyhole in October 2024, drawing on the experience of 420 debt advice clients and a YouGov survey of over 2000 people across the UK. The Money and Mental Health Policy Institute (MMHPI) published its report In the public interest? in September 2024, relying on 185 survey responses from indebted individuals.
A look at who's falling behind on council tax
The MMHPI report shows more than three million people have council tax arrears. People with mental health issues, younger people, and minoritised ethnic groups are more likely to fall behind on council tax payments. They are more likely to have lower earnings and face barriers to building financial resilience.
The StepChange report raised similar concerns.
A third of StepChange debt advice clients have council tax arrears, and two thirds of those people have extra vulnerabilities beyond finances, including mental or physical health conditions, learning disabilities, and addiction. People cited conditions including stress, anxiety and depression as a cause of falling behind on council tax.
As the cost of living crisis continues, many people find it impossible to keep up with essential outgoings. Two thirds of StepChange clients cited a cost of living increase as a reason for falling behind on their council tax.
Some try to stay afloat by sacrificing necessities: two thirds of of StepChange clients missed a utility payment to keep up with council tax. Over half rationed their heating, electricity, or water.
But many people simply do not have enough money to cover the basics. Nearly half of StepChange clients with council tax arrears had a negative budget, meaning their monthly income does not cover their costs.
Of the clients who responded to StepChange's survey, 73% were behind on energy bills when they fell behind on council tax. More than half were behind on housing costs.
Unlike some other taxes, council tax isn't income-adjusted. For people on low incomes, it represents a significant chunk of the household budget. Financial help with council tax is patchy. There's the Council Tax Support benefit scheme, but what is available depends on the local council's policy. One StepChange debt adviser called it a "postcode lottery."
Rapid escalation to bailiff visits
Council tax enforcement quickly moves from payment demands to court orders to bailiff visits.
When someone misses a monthly council tax payment, the council sends them a reminder notice. If the overdue amount is not paid within three weeks, the council can demand the entire year's bill as a lump sum, £1,688 on average. MMHPI research shows that 91% of people behind on council tax can't afford to pay the full amount.
If the person doesn't pay the lump sum, they can become embroiled in costly legal processes. A liability order is a payment demand from the court. While the council pays 50p for a liability order, they charge people up to £130 in fees.
Once enforcement agents are involved, extra fees quickly mount. Private bailiffs often work on commission and collect their fees before a penny goes towards the debt. Fixed charges apply, and for debts over £1,500 a percentage of the total debt is added on.
Many councils face mounting financial pressures. It's perhaps expected they have an incentive to use the most robust enforcement methods available to them to raise much needed income.
The human cost of council tax enforcement
The two reports from StepChange and MMHPI both focus on the experiences of people experiencing government debt collection practices. They show that aggressive enforcement can leave people feeling isolated, fearful, and less likely to seek help. StepChange suggests these methods are counterproductive, reducing the council's chances of recovering the debt.
Only 5% of clients with council tax debt felt their council took their personal situation into account before starting enforcement, according to StepChange. One client told StepChange, "a little bit of compassion goes a very long way."
Over 80% of StepChange clients said that council communications leave them feeling anxious, scared, or depressed. The rapid escalation of action leaves people feeling overwhelmed, unable to think clearly as more demands land on the doormat. MMHPI's report shows how people with mental health problems are particularly affected, as their symptoms can make problem solving under pressure a challenge.
Almost half of StepChange survey respondents with council tax arrears reported experiencing bailiff enforcement. After the council has obtained a liability order from the courts for unpaid council tax, it can enforce payment using bailiffs.
The MMHPI found three quarters of people referred to a bailiff have experienced a mental health problem. A quarter of StepChange clients said bailiffs threatened them with imprisonment and 94% struggled to sleep at night. Some said they were pressured into a payment plan they couldn't afford. People described feeling trapped in their own homes: afraid to leave, yet fearful of a knock at the door.
Intimidating bailiff practices on camera
Research by the Enforcement Conduct Board published in October 2024 analysed footage from cameras worn by bailiffs. There were multiple instances of breaches of the National Standards for Enforcement Agents. The National Standards, published by the Ministry of Justice, set out what bailiffs need to do to follow the law.
Bailiffs were recorded employing intimidating tactics against vulnerable individuals. In one, an older widowed woman was clearly distressed after being left with unmanageable debt by her deceased husband. In others, bailiffs breached data protection rules and threatened to remove essential goods like beds and furniture.
One enforcement agent was recorded falsely claiming that obstructing them is a criminal offence leading to 52 weeks in prison. Another falsely claimed that he is “connected to all the banks in the country, so I can see your movements”.
In a harrowing example, an agent attended a property which appeared to be occupied solely by Muslim women, and said that if the debt is not paid straight away another agent will "walk in and disrespect you." This threat is repeated.
Recommendations for change
The reports from StepChange and MMHPI set out a number of recommendations for change, advocating for a regulated approach to council tax debt collection to ensure consistent and fair treatment for vulnerable people with debt.
Improving the council tax debt collection process
Both reports recommend a pre-action protocol, ensuring that councils must take specific steps before court action or instructing bailiffs. People should have more time to deal with their debts and not be pursued for the full year's tax after just one missed payment.
The MMHPI report recommends that court processes to obtain a liability order and enforce the debt must be thoroughly examined, including timescales and costs for people in debt. The law says the council can recover reasonably costs, but there is no information about what that might be.
Contrast council tax debt with the consumer credit sector. Utilities, personal loans, and car finance are regulated by the Financial Conduct Authority and must provide tailored support to vulnerable people. Regulation of council tax enforcement lags behind with fewer protections for people in debt.
The need for bailiff reform
The bailiff enforcement sector's lack of effective regulation or failure to follow standards was a recurring issue in both reports. The video evidence from the Enforcement Conduct Board research paints a shocking picture.
There's no redress scheme that covers all enforcement agents and is available for people to use. People wishing to complain about bailiffs face costly, complex court processes.
Since 2022, the Enforcement Conduct Board is responsible for standards in the bailiff industry. It recently launched its updated standards, but it has no statutory basis. StepChange recommends giving it legal standing to protect people facing unfair or intimidating bailiff action.
Other recommendations
Other recommendations from the reports include increasing the awareness of Council Tax Support and ending imprisonment for debts.
