Baliff costs could add £150m debt to households already in council tax arrears, charity warns

Bailiff costs and court fees could add more than £150m worth of debt to households across the UK already in council tax arrears due to the Covid-19 pandemic, a charity has warned.

Local Government Association figures estimate that 800,000 households across the UK owe close to £700m in unpaid council tax.

And experts fear those figures could rise further when people become unemployed as the government begins to wind down its jobs retention scheme.

At the height of the pandemic in April, the government passed emergency legislation to ban bailiffs visiting homes and enforcing debts during lockdown.

But debt collectors can resume their work from 23 August following months of inactivity due to the virus.

StepChange, a debt charity, fears that charges associated with bailiff visits and court costs could add a collective £158m debt to the £700m already owed in council tax arrears.

“The issue of how commonly local authorities use bailiffs to enforce unpaid debts, piling shocking levels of fees and fear onto already struggling households, seems to go unnoticed as the Cinderella of the debt recovery landscape,” said StepChange CEO Phil Andrew.

“That is wrong at any time, but in the wake of coronavirus it needs urgent attention.”

Councils are the largest users of bailiffs with 1.4 million debts passed on by authorities in England and Wales in 2018/19, according to StepChange.

In 2018/19, bailiff activity added £200m of fees to people’s debts, but councils recovered less than 30p out of every pound of debt referred.

StepChange is calling on the government to provide extra protection for council tax payers struggling through the crisis. It is also urging ministers to introduce measures that would require councils to take certain steps before calling bailiffs to deal with unpaid debt.

Mr Andrews added: “Local authorities need both help and a prescribed process from central government to ensure that their first and foremost aim in current circumstances is to help their residents get back on their feet financially through affordable repayment plans, rather than to subject people who can’t afford to pay their council tax to even higher costs and stress.

“We call on the government to amend the council tax regulations, and to introduce a statutory council tax pre-action protocol, to ensure people facing debt do not see their problems exacerbated by archaic elements of council tax regulation and practice that are lagging behind the government’s wider policy objectives.”

A spokesperson for the Ministry of Housing, Communities and Local Government said: “We expect councils to be sympathetic to those in genuine hardship and they should consider carefully how they take forward any enforcement action for outstanding council tax debt.

“Many councils have put in place alternative payment arrangements to help people who are struggling to pay, for example by deferring payments to later in the year.

“Our £500 million hardship fund builds on local support schemes by further reducing the council tax bills of some of the most vulnerable households by up to £150.”