Council tax arrears ‘now top debt complaint’

27 May 14
Council tax arrears is now the biggest single debt problem reported to the Citizens Advice Bureau following government reforms that localised the support scheme for the tax, it has been revealed.

By Richard Johnstone | 27 May 2014

Council tax arrears is now the biggest single debt problem reported to the Citizens Advice Bureau following government reforms that localised the support scheme for the tax, it has been revealed.

Council tax

Publishing figures on debt problems, the charity Citizens Advice said problems paying council tax had surpassed credit card and unsecured personal loans as the most frequently raised issue. It was now raised by one in five people following the establishment of local support schemes in April 2013, the group said.

Localisation of council tax support meant some people who previously had their liability met in full were now billed for some of the tax, as the amount transferred from government to councils for the creation of new schemes was cut by 10%.

Councils therefore developed different local support schemes for working-age people, but the entitlement of pensioners was protected nationwide. As of March 2014, 244 out of 325 authorities in England require all working-age households to pay at least some council tax regardless of income, Citizens Advice said.

Chief executive Gillian Guy highlighted that in the first three months of this year, 27,000 people with a council tax arrears problem received help from Citizens Advice, an increase of 17% compared with the same period last year.

‘For some households council tax bills can be the tipping point that plunges them into debt,’ she said.

‘Last year over 90,000 people came to Citizens Advice looking for help with council tax arrears as they struggle in the face of low incomes, rising prices and reduced financial support.

‘As their budgets shrink local authorities are increasingly stretched, but they must ensure that the resources available for their local council tax support scheme are focused on those who are most in need.’

Responding to the figures, a spokesman for the Local Government Association said coupling the localisation of the scheme with a 10% cut meant councils faced an ‘impossible dilemma’ between making bigger reductions to services or asking those on the lowest incomes to pay more council tax.

‘When government handed the responsibility for administering council tax support, it cut hundreds of millions in funding for it,’ he added. ‘The shortfall between the money councils receive to fund council tax support and the money we would need to protect those on low incomes is going to get bigger and is likely to reach £1bn by 2016. At the same time, councils are tackling the biggest cuts in living memory and cannot afford to meet the shortfall.

‘Government should consider giving councils the full amount of funding needed to provide council tax support and ensure that decisions over council tax and discounts are fully localised.’

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