More than half of Scots with problem debt are struggling with council tax arrears - Carrington Dean

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23.04.2019

More than half of Scots with problem debt are struggling with council tax arrears

Carrington Dean is calling for the Scottish Government to act to help hundreds of thousands of Scots now struggling with problem debts.

The call comes after we recently completed a survey of 5,302 Protected Trust Deeds granted between 2011 and 2019 and found that 60% owed council tax arrears, with the average debt being £3,071.93.

The results confirm what many debt advice charities have been warning about recently, that as local authorities hike bills by 3.9%, the local tax is quickly becoming the problem debt that most Scots are struggling with.

The insight also follows recent research by the Guardian newspaper that showed in the last six-year Council Tax debts have soared by 40% across England and Wales.

Statistics produced by the Scottish Government also show the extent of the problem with nearly 8 out of 10 of all formal demands for payment being served by Sheriff Officers for Council Tax debt. Nearly 200,000 Charge for Payments were served for council tax arrears in 2017-18. Similar figures also exist for bank arrestments, with nearly 8 out of 10 being served for Council Tax Arrears.

Graeme Macleod, Head of Operations for Carrington Dean, has said:

“it is clear when you look at these figures, the scale of the problem is huge and we cannot avoid the truth, which is Government debts are now a major cause of financial stress for thousands of Scottish households.  This isn’t sustainable, and the Government needs to act”.

Scottish Government should follow UK Approach

Carrington Dean is calling on the Scottish Government to follow the UK Government’s lead after they recently announced they will be issuing new guidance to all Councils in England and Wales in relation to how Council Tax debts are recovered.

“A similar approach now needs to be adopted in Scotland” Graeme continued. “Presently, there is no Scottish wide guidance on how Council Tax debts are recovered, which means we have 32 local authorities in Scotland, all taking their own individual approach, with an over-reliance on Sheriff Officers”.

“However, evidence from some local authorities in England, such as St Albans and North Warwickshire, have  shown a different approach, which involves working with the debt advice sector, works better, with both councils’s not only recently having increased their council tax recovery rates, but also now have two of the highest recovery rates across the UK, which are higher than  that of any local authority in Scotland”.

St Albans and North Warwickshire Council staff now try and work with residents struggling with council tax, choosing to refer them onto advice agencies and not just seeking liability orders, the Scottish equivalent of Summary Warrants. They are also carrying out affordability checks on what people can afford and are not just using the draconian practices of seeking bank and wage arrestments.

Graeme continued

“such simple steps in Scotland could make the difference, where the average council tax recovery rates are only 96%, compared with that of England and Wales, which are 97%, but importantly significantly lower than the close to 99% that both St Albans and North Warwickshire are now seeing”.

Help with council tax arrears

We have listed some simple steps that Councils across Scotland could take to help people with their council tax debts:

  • Refer those struggling with arrears to advice agencies and not just applying for summary warrants from the Courts and passing cases to Sheriff Officers;
  • Agreeing to lift wage arrestments where people cannot afford their current council tax, to ensure debts don’t increase and vulnerable households don’t become trapped in a cycle of increasing debt;
  • Ending the practice of council tax arrears having to be repaid within the same financial year and instead base repayments on affordability, so people only pay what they can afford;
  • Agree to not arrest bank accounts where the only income is social security benefits;
  • For the Scottish Government to amend legislation for bank and wage arrestments to allow councils to replace arrestments with lower fixed amounts where it can be shown families are suffering from hardship.

Graeme continued,

“Everyone understands local authorities are struggling to fill shortfalls in their budgets, but this cannot be an excuse to avoid approaching debt recovery in a manner that mitigates the distress people are feeling.”

“It is time the Scottish Government, COSLA and Local Authorities stepped up and accepted they have a responsibility to help people with this problem by producing national guidance as to how council tax debts are recovered”.

Protected Trust Deeds are a formal debt solution for people in Scotland, which are used when people are struggling with debts and cannot repay them.  They normally last 4-5 years and allow people to obtain relief at the end of the process.

If you are struggling with Council Tax debts and other problem debts, speak with a Carrington Dean adviser on 0808 2085 195.