1.3 million households have fallen behind on council tax due to coronavirus

1.3 million households have fallen behind on council tax due to coronavirus [ 260 kb]

Councils have reported an increase of £500 million in council tax arrears in the last three months, suggesting at least 1.3 million households have fallen behind on the bill during that time. 

Without further intervention from central government, key workers, those who are shielding, and people who have had their livelihoods disrupted by coronavirus risk being pushed deeper into debt due to the high add-on costs of council tax debt collection. 

People who are more likely to have been directly affected by coronavirus are more likely to be behind on their council tax. Of people who have fallen behind on council tax due to coronavirus:

• 79% have seen their income fall by 20% or more, compared to 18% of those who haven’t

• 63% are key workers, compared to 26% of those who haven’t

• 65% are shielding or at increased risk of coronavirus compared to 32% of those who haven’t

When people fall behind on council tax, they often face escalating debts and harsh collection practices. In 2018-19:

• Councils used court action 2.3 million times and bailiffs 1.4 million times to collect council tax debt

• Bailiff fees added £200 million on top of people’s debts

Government needs to change regulations to help councils recover debt flexibly

Despite additional funding for local authorities to support people to pay their council tax, millions of households have fallen behind on their bills due to coronavirus. The government needs to update the Council Tax (Administration and Enforcement) Regulations to give councils more flexibility to recover arrears outside of the court process and to ensure that all councils take steps to help people make affordable repayments of arrears.  

This would bring councils up to speed with debt collection practices used in the County Court as well as in financial service and utility markets.