New figures reveal £6 billion of unpaid council tax as lockdown and cost of living bites

Unpaid council tax debt has rocketed to £6bn as households reel from the pandemic and the price of dwelling disaster, based on a brand new report.

Arrears have practically doubled since earlier than the Covid disaster – once they totalled round £3.6bn.

The figures are contained in a brand new report revealed days after the chancellor, Rachel Reeves, stated she had recognized a £22bn black gap within the nation’s funds since coming into authorities and that she confronted “troublesome choices” forward.

She has warned taxes should rise in October to plug the hole, resulting in fears Labour may increase cash by rising levies akin to gas obligation or altering council tax.

Matthew Greenwood, head of debt on the Centre for Social Justice (CSJ), which compiled the report, stated the rise in council tax arrears was “but extra proof that in lots of instances, the method of assortment is failing native authorities and taxpayers alike”.

Their analysis reveals nearly all of non-payers are unable to, he stated, “and the customarily harsh reimbursement strategies utilized by many native authorities are making reimbursement charges worse, not higher”.

A “extra proportionate” assortment system would drive up the sum of money introduced in by councils within the long-term, he added.

The report discovered 1.3 million households are struggling to pay their payments, a lot of them households on the bottom incomes.

The CSJ warns of a rising divide between the poorest 10 per cent of households and the remainder of the nation.

Whereas most can deal with native taxes, some are in such determined want that they’ve little cash left after they pay for housing, meals and power.

The households more likely to face enforcement motion can have as little as £150 a month to spend, the report discovered.

Among the many harsh enforcement measures they face are the specter of imprisonment.

The CSJ warned that the common quantity of council tax owed by these approaching debt recommendation charities has greater than doubled up to now 10 years, from £756 in 2013 to £1,726 in 2023.

The organisation known as for a “clearer distinction” to be made between those that can’t pay and people who refuse to.

These going through real hardship needs to be helped and provided tailor-made reimbursement phrases and recommendation on find out how to get assist, it stated. This might end in more cash for the council by lowering the necessity for bailiffs.

These households must also come below the oversight of the Enforcement Conduct Board – a voluntary oversight physique arrange by the debt recommendation trade in 2021.

The report requires a leisure of the rule that requires full cost of a yr’s council tax after one missed invoice.

It provides: “Debt assortment is a vital operate of presidency, however the place households are clearly weak, they need to be handled sensitively to allow them repay.

“However the construction of our collections system incentivises towards this by offering alternatives for native authorities to shortly advance to enforcement [action by bailiffs].”

The Ministry of Housing, Communities and Native Authorities has been approached for remark.