Council Tax Collection – Report Summary

This is a House of Commons Committee report, with recommendations to government. The Government has two months to respond.

Author: Levelling Up, Housing and Communities Committee

Related inquiry: Council Tax Collection

Date Published: 1 December 2023

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The covid-19 pandemic and resulting lockdowns pushed many households in England into council tax debt for the first time and shone a light on local authorities’ approaches to recovering arrears, especially from vulnerable residents. It also resulted in a corresponding rise in the overall level of in-year council tax arrears and highlighted local government’s ever growing reliance on council tax revenue. It appeared that pressures on local authorities budgets, combined with the increasing financial vulnerability of many households, might have led to some authorities seeking to recover unpaid council tax from individuals who simply could not afford it. In this context, we sought to review the statutory and non-statutory framework for council tax collection.

The Council Tax (Administration and Enforcement) Regulations 1992, the statutory framework governing council tax collection, has not been updated since it was introduced. Among other things, it states that the remaining year’s unpaid balance shall become payable, in certain circumstances, when an individual misses a monthly instalment. The speed at which this provision can be applied can cause an individual’s debts to quickly escalate, however, and it is not clear how much discretion local authorities have to agree manageable repayment plans. Best practice guidance from the Department for Levelling Up, Housing and Communities strongly implies they do not have to demand immediate payment in full, but this message might not be getting through. We strongly urge the Government to clarify the provision in the Council Tax (Administration and Enforcement) Regulations 1992 that requires the unpaid balance to become payable in certain circumstances. If local authorities do, under this provision, have the discretion not to require immediate repayment of the full unpaid balance, the Government should make this much clearer, either by updating the regulations or by amending the best practice guidance by the end of this Parliament. If an individual genuinely cannot afford to pay, rushing to take enforcement action will only waste a local authority’s resources, cause avoidable distress and miss an opportunity to provide appropriate debt advice.

The 1992 regulations also permit local authorities to instruct enforcement agents to seize goods to the value of any unpaid council tax owed by an individual. In 2020, despite temporary bans on enforcement action, which the Government introduced for public health reasons during the covid-19 pandemic, media reports appeared raising concerns about some local authorities’ heavy-handed approach to enforcement, including an overreliance on enforcement agents. We are clear that the use of enforcement agents to collect unpaid council tax should always be a last resort. We accept it will sometimes be needed, in the case of those who wilfully refuse to pay, but it can never be justified in the case of those who genuinely cannot afford to pay. In particular, we urge the Government to direct local authorities to give it extra careful consideration before using enforcement agents against those in receipt of council tax support.

On the behaviour of enforcement agents themselves, the industry has recently committed to funding a new Enforcement Conduct Board (ECB), with the stated purpose of addressing inconsistent and at times inappropriate behaviour by agents. We welcome the progress made in establishing the ECB, including the launch of its accreditation scheme in September 2023, but we are concerned that industry support might not have been matched by the necessary voluntary financial contributions. We urge the Government to consider putting the ECB on a statutory footing, and in the short term to require local authorities to only engage enforcement agents accredited by the ECB.

Despite positive developments, such as the pilots being carried out under the Digital Economy Act 2017 and the creation of the Office for Local Government, barriers to data sharing within local authorities and between central and local government are impeding councils’ ability to identify vulnerable residents. Identifying and engaging at an early stage with residents who are at risk of falling into arrears could help to prevent them from building up problem debt and also improve collection rates. To encourage greater data sharing for the purpose of identifying households in financial need, we recommend, among other things, that the Digital Economy Act pilots be rolled out more widely and that the Government clarify the circumstances in which data protection legislation permits local authority teams to share information on vulnerable residents.

In July 2023, the Government established an Office for Local Government (Oflog) to provide authoritative and accessible data and analysis on the performance of local government. We are closely monitoring Oflog’s progress and believe it could help to improve the functioning of local government. It is regrettable, however, that the Secretary of State has not yet confirmed that the position of Oflog Chair will be subject to pre-appointment hearing by our Committee, despite our having first written to him about this matter in January 2023. We consider the position of Oflog Chair to be critical to the functioning of local government and believe that Oflog more widely has a vital role to play in supporting taxpayers. We urge the Secretary of State to confirm in writing immediately that the position of Oflog Chair will be added to the list of posts subject to pre-appointment hearings by our Committee.