Broken Britain 22: 2014 tax law – lowest income households lose, bailiffs gain
Posted by admin
Britain’s lowest-income households were exempt from council tax until 2014, when the law changed, bringing 1.4m households into the council tax net, with some jobseekers and the disabled required to pay bills amounting to 10% of their benefits income, according to the National Audit Office report, Financial sustainability of local authorities 2018, (Money Advice Trust note 67)
The Money Advice Trust charity points out that between 2011/12 and 2017/18, central government funding for local authorities fell by an estimated 49% in real terms – leaving councils increasingly reliant on council tax and business rates to fund local services, according to data obtained through its Freedom of Information requests. Its 2018 report A Decade in Debt gives detailed analysis of many kinds of private debt, with a chapter on council tax arrears.
Council tax collection privatised
With most councils lacking the staff to collect arrears the money themselves, more than 2.3m debts were referred to companies like Dukes bailiffs, a “provider of ethical and efficient enforcement services across the UK”, who sponsored the 2019 Local Authority Civil Enforcement Forum’s conference.
According to the Financial Times, the Institute for Fiscal Studies reports that almost a fifth of single parents who would formerly have paid no council tax are now in debt. No link was given and a search led to the IFS 2004 report which made seven references to the deot problenms of single parents.
Hansard, the official government record, in answering questions on ‘rogue bailiffs’ refers to a September 2018 YouGov poll which found that more than one in three people contacted by bailiffs in the last two years had been subject to harmful behaviour, such as threatening to break into homes.
An article on the subject in the Mirror reports that the Commons Treasury Committee says bailiffs working for national and local government are “worst in class” for aggressive tactics.
Those with physical or mental health problems are less likely to engage with their local authority, according to research by the Money and Mental Health Institute last May. which found that people with poor mental health were three times more likely than the general public to be behind with their council tax payments. A visit from a bailiff can exacerbate psychological distress and cause stress, the MMHPI said, particularly when enforcement agents did not act with care.
Barrie Minney chair of the Local Authority Civil Enforcement Forum (LACEF), explained that bailiffs are sometimes wrongly sent out to people who are financially or mentally vulnerable because of a lack of data sharing between council departments.
Many bailiffs are paid on commission based on the repayments they recover; if they don’t collect, they don’t earn
One of the FT’s case studies is summarised here. When Charley Finlay was recovering from the death of her premature baby she missed her first council tax payment of the year and did not open reminder letters from the council. Because she missed her first payment she became liable for her entire annual tax bill of £300.
Enforcement agents are allowed to charge £75 for sending a letter and £235 for a home visit, further inflating people’s debts.
Her debt increased to over £1,000 once the costs of the bailiff’s letters and visits were added to her debt. She said that the bailiff was at her door constantly, shouting through her letterbox, ringing her all the time and telling her that her children would go into care as she would be imprisoned.
Various efforts are being made to improve practice. These include:
- LACEF is working with debt charities to build models for early intervention and developing software to help flag up people’s potential vulnerabilities to revenue collection departments. “Otherwise, we can spend a lot of time and money chasing people who cannot afford to pay us,” Mr Minney said. “That is really not ideal.”
- More than half of the councils are examining new methods of dealing with people on benefits who are in arrears, LACEF’s polling indicates.
- Local government minister Rishi Sunak vowed in April to engage with charities and debt advice bodies to create a “fairer” collection system.
- The Ministry of Housing, Communities and Local Government highlighted the need to protect people against “aggressive debt enforcement”, announcing that reforms could include taking individual circumstances into account to give people the necessary time to pay off arrears, improving links between councils and the debt advice sector, and supporting fairer debt intervention
- CIVEA – the principal trade association representing civil enforcement agencies – is hosting a one-day conference in September to present the industry’s take on the Ministry of Justice report following their recent call for evidence. This will include: the treatment of debtors, the complaints processes and whether further regulation is needed.
Comment from Peter Jennett (Private Eye letter, Jul/Aug 2018):
“Those in power not only tolerate but actively create conditions of increasing poverty, lack of access to education and life chances for large numbers of our population, then blame those affected for their own plight”.
Posted on June 22, 2019, in Austerity, broken Britain, Cuts, disability rights, Finance, Government, Inequality, Local government, Outsourcing, Poverty, Privatisation, Taxpayers' money, Welfare payments and tagged debt enforcement, Local Authority Civil Enforcement Forum, lowest-income households, mental health problems, treatment of debtors. Bookmark the permalink. 3 Comments.
This site uses Akismet to reduce spam. Learn how your comment data is processed.