Council tax – councils should not be chasing arrears from households that can least afford it, say MPs

The Government should act to ensure local councils are not aggressively chasing council tax debt from those who can least afford it, says the cross-party Levelling Up, Housing and Communities (LUHC) Committee in a report published today (Friday).

The Council tax collection report highlights pressures on local authority finances and on household budgets and reported instances of local authorities adopting heavy-handed tactics to recover unpaid council tax.

The report calls for the Government to take steps to ensure councils understand they are not required to demand immediate in full payment from individuals who are in arrears. The report also recommends the Government change the law to state the principle that collection of council tax arrears should be based on a resident’s ability to pay.

Clive Betts, Chair of the Levelling Up, Housing and Communities (LUHC) Committee, said: “The cost-of-living crisis is a real and everyday experience for many and the spectre of council tax arrears risks pushing some households over the edge. Some people may feel pushed into putting their council tax payments ahead of heating and eating – this is deeply concerning and highlights the need for local councils to act responsibly when trying to recover unpaid council tax.

“Councils are themselves under significant financial and service pressures, but councils should not be chasing arrears from individuals who can least afford it. Councils should not rush to escalate collection activity but consider the ability of the individual to pay, avoid causing distress, and signpost suitable debt advice.

“Enforcement action should absolutely be a matter of last resort. Heavy-handed tactics to recover council tax debt are not acceptable. The Government should stamp out the prospect of poor enforcement behavior by considering the case for a statutory code for the enforcement agent industry.”

The Committee’s report recommends the Government clarify the statutory regulations, the Council Tax (Administration and Enforcement) Regulations 1992, which provide the framework governing council tax collection and ensure these make it clear to local councils that they have discretion not to require immediate repayment of the full unpaid balance.

The report examines the use of enforcement agents and welcomes the progress made in establishing a new Enforcement Conduct Board (ECB) as an industry oversight body. The report recommends local authorities only engage with enforcement agents accredited by the ECB.

The report expresses concern that barriers to data sharing are impeding councils’ efforts to identify vulnerable residents. The report recommends the Government act, including by widening the roll-out of the Digital Economy Act pilots, to improve data sharing to help identify households in financial need.

The Committee’s report also notes the role of the new Office for Local Government (Oflog) and finds it ‘regrettable’ that Oflog does not yet have a permanent Chair. Given the position of Oflog Chair is critical to the functioning of local government, and that Oflog has a vital role in supporting taxpayers, the report calls for the Secretary of State to immediately confirm that the position of Oflog Chair will be subject of a pre-appointment hearing by the Levelling Up, Housing and Communities Committee.

ENDS

Further information

1. The report summary is on p3. A list of the report’s conclusions and recommendations can be found on p.35. A list of the public evidence sessions for this inquiry (and links to the transcripts in each case) can be found on p.40 of the report.