The fastest-growing area of the debt problem is not, as many people might expect, payday loans. According to the charity National Debtline, it is the debt owed to magistrates' courts in unpaid fines – and it rose 67 per cent in the first eight months of this year, compared with the same period in 2012.
The issue represents a major problem not just for these individuals but also for the courts overall because, if too many people run away from their debts, the credibility of the justice system is threatened.
Only one thing is certain: the subject will remain a pressing problem in 2014. The basic facts speak for themselves. National Debtline received just over 9,500 calls for help in this area between January and August this year. The proportion of its clients with such debts climbed from 3.8 per cent in January 2012 to 5.5 per cent in January this year, and rose again to 9 per cent in June. Meanwhile, at the Citizens Advice service, there was a 27 per cent increase between July and September this year, compared with the same period in 2012, in queries being raised by the public about the use of bailiffs in relation to magistrates' courts fines.
Looking at one of the areas that lead to such fines – the non-payment of council tax, Christians Against Poverty (CAP) says 40 per cent of its clients have council tax arrears. CAP says there has been a 5 per cent increase in the incidence of this problem since April when many local authorities cut back on the amount of council tax they would subsidise for residents on benefits.
Almost 815,000 fines were given out in magistrates' courts in the year to September 2012. Fines average £175, according to 2011 data. Common reasons are non-payment of a TV licence or council tax, speeding and other motoring offences, and lower-level criminal offences. Fines imposed amounted to £106m in the second quarter of 2013. Fines still waiting to be paid added up to £576m at the end of June this year.
Commenting on the situation, and particularly on the use of bailiffs in some cases of unpaid fines, Gillian Guy, chief executive of Citizens Advice, says: "Many people are being chased by bailiffs for TV licence fines, and in some cases are getting into debt with payday loans in order to pay the bailiff. It's important bailiffs recognise when people are struggling and just don't have the money to pay."
One strange aspect about the statistics at the moment, however, is that magistrates are not giving out more fines. Ministry of Justice statistics show them more or less standing still. What seems to be the problem is that they are either being pursued harder, by debt collectors and bailiffs, or that people are finding them harder to handle.
Since law centres are closing down in greater numbers, less free legal advice is available. Legal-aid restrictions and benefit cutbacks also mean that people have fewer resources.
Anyone who gets a fine from a magistrate will be warned in court of the dire consequences of non-payment. Magistrates will often do their best to get the fine paid there and then as this eliminates the possibility of non-payment. After that, there is a series of reminders and warnings – using text messages in particular. But problem debts are outsourced to specialist debt managers and collectors, and these people will send in bailiffs in difficult cases.
Anyone who can avoid having to deal with a bailiff should do so. For a start, the debtor has to pay the bailiff's fees, and this will double the amount owing in the typical case. Someone owing £200 to the magistrates' court could easily end up owing another £300 to the bailiffs for collecting the debt. On top of this, while magistrates' courts offer flexibility on fine payments, bailiffs are at the other end of the spectrum. So, a magistrate will typically offer weekly £5 instalments as a way of paying the fine to the poorest people being sentenced by the court. But, says David May of National Debtline: "It's very difficult to get instalments agreed with a bailiff."
On a policy level, very few people have the full picture on magistrates' courts fines. Asked if she is concerned about fining levels and non-payments, one lay magistrate says: "You don't sit often enough in court to see a pattern." Statistics from HM Courts & Tribunals Service point towards an 80 per cent collection rate of all fines imposed in 2010-11.
However, it seems that the current collection rate in parts of London is much closer to 50 per cent. If only half of fines are being collected, there is a danger that people lose faith, and everyone stops paying.
Most magistrates will also admit to some despair about the way the whole system works. "I imposed a £300 fine for spitting in the street," says Magistrate A, who wants to remain anonymous. "That, to me, is crazy. But my hands were tied." The accused faced a fixed penalty fine of £80 – but he then pleaded not guilty and did not turn up for his hearing. This produced the automatic result that he was guilty and that his fine was doubled to £160. Added to this were the £20 victim surcharge and then another £120 in prosecution costs.
Like many magistrates, Magistrate A is sympathetic to the people before him and gives them the lowest fines possible, payable in instalments, in the many cases which he thinks are appropriate. "The big trick is to get them to pay straight away," he says, wanting to reduce the number of cases where a simple fine doubles and trebles in size as it goes unpaid and the bailiffs are called in.
Until a few years ago, magistrates could take most of the cash that a defendant had on them in court to pay the fine. But magistrates' courts have fewer security staff these days and, without them, it is virtually impossible to order someone to pay immediately.
The situation may well get more difficult in 2014 or 2015. "More must be done to improve fine collection," says a spokesman for the Courts & Tribunals Service.
The Government has regularly been criticised by the Public Accounts Committee, the National Audit Office and others over non-collection. At the moment, it is running a tendering process to outsource the whole of its fine collection system from the issuing of the fine notice to final payment.
There are obvious concerns. "They may come under more pressure to pay," says Magistrate A, referring to defendants.
This may be fair in many cases – but there could also be many cases of hardship. It could be that the managers of the outsourced service try to get the fining procedure to be more realistic in terms of matching fines to the ability to pay. But the contract could be based on a 'payment by results' system, which could encourage a tougher approach.
"It is vital that people are treated fairly and can set up affordable payment arrangements at any point of the process," says National Debtline. "We would like to see organisations bidding for the work ensure they take into consideration the needs of clients, many of whom will be vulnerable. The aim should be to build in an ethos of early intervention."
Case study: Bailiff trouble
National Debtline tells the tale of 'Jim':
Jim is 27, and married with young children. He received a magistrates' court fine for a speeding offence earlier this year.
Having failed to supply adequate income and expenditure details to the court, he was fined £200 – which he could not realistically afford within the 10-day repayment period offered.
Rather than contact the court to explain this, Jim became anxious and unresponsive. He failed to contact the court, and received a notice from it a few weeks later to inform him that the debt had been referred to a bailiff.
When the bailiff attempted to collect the debt, Jim called National Debtline. He was told to fill in the budget sheet detailing his outgoings and income so that he could clearly understand what he could afford to pay.
He was also instructed to contact the court's fines officer and make this offer. Before he did this, the bailiff visited his home and Jim made the same offer to the bailiff – albeit in acceptance that the repayment period would have to be extended because of the bailiff's fees. The bailiff refused the offer and demanded payment in full in order to prevent him from taking goods from Jim's home.
Jim called National Debtline again and was encouraged to stick to his guns with his repayment offer, and therefore not let the bailiff in.
The case is ongoing.