Martin Lewis slams councils for acting like the ‘worst loan sharks’ over tax collection

Martin Lewis has slammed local authorities for acting like “the worst loan sharks” in their approaches to council tax collection. In a scathing critique, the money expert said the practices used on people in debt were unfair and caused more difficulties for the most vulnerable.

Among the “grotesque” measures Mr Lewis named are large cash penalties, court summons and bailiffs sent to homes, sometimes for those who misssed even a single monthly payment.

He accused councils of “setting a trap” for those who are unable to pay, as they are forced to avoid legal action and keep up with costs, adding that they are hostile towards constituents, rather than looking to help them as they should.

Mr Lewis, the founder and chair of the charity Money and Mental Health Policy Institute, said: “Council tax collection practices are so aggressive they’d make the banks blush. The grotesque process couldn’t have been designed better to accelerate distress for people in council tax debt, especially those with mental health problems.

“When someone misses a monthly payment, rather than asking ‘how can we help’, many councils say ‘now you have to pay 12 times that’ – it’s like a caricature of the worst loan sharks.”

The money guru called on the government to change the rules for council tax collection, making them more forgiving for low-income households. Currently, councils can order the full payment of a council tax bill within seven days of a missed payment, giving a household three weeks to pay the entire remaining bill for the year – as much as £1,668.

This, he added, is more severe than the legislation placed on commerical lenders, which are legally required to engage with consumers who missed payments and offer fair repayment options.

Mr Lewis acknowledges that the new Labour government “must address” the budget cuts faced by many local councils.

“Yet plugging budget gaps by ramping up punitive action on people in debt, a significant majority of whom have mental health problems won’t fix that,” he said.

“That’s why we also need central government to change the rules and stop allowing councils to behave in a way no commercial lender would ever be allowed to.”

A spokesperson for the Local Government Association said: “Councils strive to ensure they have fair council tax collection policies and should always try to work with people who are struggling to meet their council tax bills. We agree bailiffs should only ever be used as a last resort and anyone having trouble paying their council bills should get in touch with their local authority for financial help and advice.”

The statement from Mr Lewis, a household name for his personal finance advice, comes after he criticised the government for its decision to cut Winter Fuel Payments for millions of pensioners. The money expert is due to meet with chancellor Rachel Reeves, urging her to “rethink” the measure before her October budget, with council tax collection also likely to be on his agenda.