Martin Lewis charity warns 3.3 million face council tax debt - how to get help
More than three million people are in council tax debt, a charity founded by Martin Lewis has said.
The Money and Mental Health Policy Institute said 3.3 million people are behind on their council tax, and that this is the most common of all types of public sector debt. TV licences (with two million people behind on their payment) and repayment of overpaid benefits or tax credits (1.1 million people behind) are the next highest.
The report, released earlier this week, focused on the psychological toll of local and national government debt collection practices, but shared illuminating figures on council tax debt itself.
Here, Yahoo News UK breaks down some of the key statistics, as well as the criticism - led by Lewis himself - of local authorities for acting like “loan sharks” when it comes to council tax collection.
Who is in council tax debt?
The report found people who have had a mental health problem are twice as likely to be behind on council tax.
And younger people and people from a minority ethnic background - who are "more likely to be on a low income, experience housing affordability problems and face greater barriers to building financial resilience" - are also more likely to be in council tax debt.
The report also cited Citizens Advice data, which revealed the average amount of council tax debt among those it supports with debt advice has increased by 36% on pre-pandemic levels.
It also noted "missed payments can lead to a demand for the full annual council tax bill (which currently average £1,668) after just three weeks" - which 91% of people in council tax debt can't afford. This is what Lewis picked up on in a blistering speech on Monday to mark the release of the report.
'Council collection tactics would make banks blush'
Lewis said: "The majority of council tax debt collection processes are outdated, outmoded and cruel. They are behind the times.
"There are no commercial financial services firms who would be allowed to act in the way that we allow our councils to act... bully boy and girl tactics for collecting debt that banks would blush at if they did the same thing.
"The idea that you miss one monthly payment on your council tax and within a week, your council, your elected officer, is not there saying: 'How do we help?'
"[Instead] it says: 'We want the whole year.' That's the way council tax debt collection practices work. And then, within another five weeks of that, the processes work that they can send the bailiffs in. If you were a commercial firm it would be, typically, six months before you ever got to that."
Lewis's charity is now calling for a change in the regulations, which dictate how quickly councils chase missed payments, in order to give people in arrears more time before being hit with bigger bills and further action. It wants council tax debt collection to be brought "at least in line with consumer creditors, who often wait three to six months before demanding full repayment of an overdue debt".
It also called on councils to "urgently" look at their debt collection practices, citing the example of Bristol City Council which has reduced its use of bailiffs and focused on providing more support.
Why this matters now
The focus on council tax debt comes as government spending cuts loom.
Keir Starmer has already introduced one: the hugely controversial withdrawal of the £300 winter fuel payment for millions of pensioners.
Labour has claimed this was necessitated by a £22bn “black hole” in the public finances left by the previous government. The Institute for Fiscal Studies has disputed this narrative, saying that while the Tories left "a lot for the new government to clear up", the level of economic problems was "predictable" and Labour "refused to confront them" during the election campaign.
Starmer warned last month: “There is a Budget coming in October, and it’s going to be painful. We have no other choice, given the situation that we’re in."
And one of those "painful" decisions could revolve around council tax itself. On Friday, Starmer refused to rule out scrapping the 25% single-person council tax discount, which is worth £3bn a year.
What to do if you need help
Citizens Advice says anyone who is in council tax arrears "should contact your council straight away. Don’t wait for them to contact you.
"Ask to speak to someone in the council tax office and tell them about your situation. They should be able to tell you how to get help - for example, they might help you find a free debt adviser."
Further information can be found on the Citizens Advice website here.
