The number of people struggling with their council tax payments has “rocketed” following the introduction of the Government’s welfare reforms, figures from Citizens Advice show.
Council tax arrears are now the most-common problem plunging people into debt, with one in five approaching the charity in England and Wales behind in their payments. Until this year, credit card and unsecured personal loans were the most-common types of debt reported to Citizens Advice.
The surge in council tax debt problems follows the Government’s changes to support for those on low incomes. Under new, localised council-tax support schemes introduced in April 2013, many on benefits and very-low incomes have to pay the tax for the first time, or fork out a higher rate.
In the first three months of this year, 27,000 people went to Citizens Advice with a council-tax arrears problem, a 17 per cent increase on the same period last year. Councils can use bailiffs to get the money or even force people into bankruptcy.
Hilary Benn, shadow Secretary of State for Communities and Local Government, said: “These figures show exactly why the architect of the original poll tax, Patrick Jenkin, warned that what the Government was doing would be a poll tax mark two. Combined with the bedroom tax, these changes have pushed those on the lowest incomes into debt – including the disabled, carers and war widows – and they now face summonses, bailiffs and court hearings.”
Every council in England now has its own support scheme and three-quarters of them – 244 of 325 – require all working-age claimants to make at least a minimum contribution to their council tax bill. This includes those solely reliant on benefits who used to be exempt.
People in Wales and Scotland have largely been protected from the changes as national schemes were set by the Welsh Assembly and Scottish Parliament that are very similar to the old council-tax benefit. Northern Ireland is not currently affected by these changes.
Citizens Advice chief executive Gillian Guy warned that council tax bills were a tipping point for some households that could send them into debt.
“Last year over 90,000 people came to Citizens Advice looking for help with council-tax arrears as they struggle in the face of low incomes, rising prices and reduced financial support,” she said.
“Consumer debts like credit cards and personal loans have traditionally been the most-common debt problems that come through our doors, but since the end of council tax benefit we’ve seen council tax arrears problems go through the roof.”
Many of those struggling with council tax payments also had other debts. One-in-six also had a credit or store-card issue, one-in-five also had a problem with an unsecured personal loan and 5 per cent had mortgage arrears.
Local Government Minister Brandon Lewis, said: “This Government has delivered an 11 per cent real-terms cut to council-tax bills for hard-working families across the country.
He added: “Latest official annual figures show arrears are falling and collection rates across the country now stand at 97.4 per cent.
“Council-tax benefit doubled under the last administration costing every household £180 a year so welfare reform is a vital part of reducing the inherited deficit.”