Chamber and committees

Citizens Advice Scotland submission of 6 December 2021

PE1897/C - Reform certain of the procedures for the collection of Council Tax

Introduction

We welcome the opportunity to comment on this important petition.

We agree with the petitioner in saying that people can and do run into difficulties paying their council tax. Council tax debt is the single biggest debt issue that the CAB network deals with each year. Falling behind in payments, getting into council tax debt is a genuine problem for people. Money advisers across the CAB network always seek ways to get those in council tax payment difficulty to make some sort of payment due to the challenging consequences that come from falling behind such as earnings arrestment, bank arrestment, or even bankruptcy. Advisers will help by exploring options around income max advice or applying for Council Tax Reduction or any other types of savings that could be made. This in turn helps local authorities maximise their income from council tax. At the same time, local authorities take various steps to highlight that help is available if there are payment problems and seek to work with individuals to help find a solution.

We have focused on our response in two areas. Firstly, corrections and clarifications to certain elements of the petition. Secondly, our view on improvements to the system of council tax debt collection.

Corrections & Clarifications

• The petitioner isn’t quite right when he states that council tax debts are recorded on credit refence files. This is not the case. Only if the council tax debt led to a bankruptcy would it be recorded on their credit files.
• The petitioner isn’t quite right when he states that “the powers that Sheriff Officers now have are seemingly limitless.” While they do have a range of powers, they are not limitless and are subject to constraints and thresholds.
• We would like to clarify the petitioners claim that: “Those going to Citizens Advice Bureau for advice will be offered a form of voluntary bankruptcy known as a Protected Trust Deed (PTD).” Firstly, our clients do not get ‘offered’ solutions rather there is a discussion with the client around suitable options. Secondly, the option of Protected Trust Deed is the least likely debt solution to be discussed because the nature of PTDs rarely align with needs and financial circumstances of the client. Last year, only 1% of over 86,000 debt issues involved any aspect of a Protected Trust Deed.
• It isn’t quite right when the petitioner states: “There has been a 20% jump in Protected Trust Deeds.” Nationally there has been a 40% drop in actual Protected Trust Deeds registered between 2019/20 and 2020/21.

• It isn’t quite right for the petitioner to state that a council tax payment issue cannot be raised as these can always be raised with the council to discuss the payment problem and to seek a resolution. Each local authority has discretion in how it helps people in financial distress around council tax but the opportunity to get support is there.

Our view - the system of council tax debt collection

We do not believe the system needs overall reform but we do believe there are improvements that can be made, especially in light of the very significant increase in people who are expected to struggle financially due to the ending of furlough, job losses, reduced incomes, cuts in welfare benefits and rising living cots, most notably energy.

We would like to see:

• A review of the time between the point someone falls behind and the issuing of a summary warrant. At present this is very short and more time would allow more opportunity for people to engage and discuss repayment options before the stringent recovery methods are applied. This could involve introducing a moratorium period whereby a person in council tax debt can work with a money adviser to find a solution before any diligence action is taken.
• A review of whether liability for the whole year should be applied when falling behind with just one month’s council tax payment. This seems unnecessarily harsh and unfair.
• An increase in the points of return so that wherever a person is with their council tax arrears, they can always find an easy way back to speaking to someone about a payment solution.
• A review of how savings on council tax are promoted so as to widen access to those who need it such as Council Tax Reduction (CTR) and in particular ensuring that all councils have a system of automatic entitlement to CTR for those on qualifying benefits.
• An enhanced promotion of lesser known savings on council tax such as Severe Mental Impairment.
• Improvements in making those who receive council tax exemptions, reductions and discounts more aware they are still liable for water and sewerage, as this lack of awareness can cause people to unknowingly fall into arrears.