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Four years on from booting out bailiffs, is Bristol’s ‘ethical’ council tax debt collection working?

Bristol City Council’s 2018 vow to stop using bailiffs to collect unpaid council tax, after a Cable campaign, appears to be giving vulnerable people breathing space. But Covid and the cost of living crisis have seen debt levels spike.

Illustration: Alex D

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A student being hounded for council tax debt he did not owe. A bailiff demanding £1,000 in cash at the door of a mother in poor mental health. Thousands of other Bristolians unable to pay council tax facing intimidation and spiralling debts. 

These were the shocking stories the Cable told in 2018 when we called for Bristol City Council to stop using bailiffs to collect unpaid council tax. The council duly promised to pilot a new ‘ethical’ approach, where enforcement is only used when people can pay but won’t pay.

The move, which barely any other councils have attempted, was welcomed by leading debt charities. Four years on, has the council stuck to its word? And what has the impact been on people in the city struggling to pay their bills?

Over that time, the total debt owed to the council has tripled, which it says is down to a pause on collecting council tax arrears during the pandemic. 

Meanwhile, the authority has recently come under fire over plans to cut £3m from its council tax reduction scheme, which means the poorest will have to pay more. Its justification? That after more than a decade of reduced government funding, there is simply nothing left to cut from the city’s budget that won’t affect vulnerable people. 

So with the cost of living crisis biting hard and local authorities around the country struggling to balance their budgets, is Bristol City Council delivering on its promise to collect council tax in a more ethical, less punitive way? The Cable set out to find out. 

An ethical approach?

It used to be normal for council tax arrears to be referred to debt enforcement agencies, leading to intimidation and costs being heaped on top of what people had to pay.

In 2019, more than 8,000 debts were passed on to enforcement agencies by the council, according to data acquired under freedom of information laws. This was 36% lower than in 2016, but this still represented £7.4m of debt for potentially vulnerable people.  

That year, Bristol City Council launched its ethical approach to collecting council tax debt. This meant phasing out the use of bailiffs, creating an in-house team to provide extra reminders before people get into arrears, and referring them to advice agencies. 

Now, if someone repeatedly misses payments and warning notices without showing they are in financial hardship or some other vulnerability, the council may take them to court for a liability order. These add £79.50 to your bill and could lead to enforcement action being taken.

But according to the council’s new debt collection policy, which in 2022 was extended to other types of debts, such as business rates, enforcement agents will only be used for people who won’t pay rather than can’t pay. 

The policy says the council will provide people with guidance and support, refer them to other advice agencies, assess what they can afford and any vulnerabilities they might have, and agree an affordable repayment plan – sometimes over years. 

Craig Cheney, Bristol’s cabinet member for finance, tells the Cable the initial pilot was “really successful” and “didn’t impact our collection rates”.

“As someone whose parents were often hounded by bailiffs, I’ve tried to avoid using them, because we don’t think it’s the right way to do it,” he says.

“We would only use a bailiff in a scenario where somebody who can pay is just refusing to pay.” 

“For a vulnerable customer, we continue with arms around the shoulder, referring to advice agencies, working with them to build a comfortable payment plan. 

But what is the reality on the ground? Data acquired by the Cable shows that a debt was only referred to an enforcement agent on two occasions in 2022, the most recent data available. 

Jon Shoesmith, CEO of Citizens Advice Bureau (CAB) Bristol tells the Cable he welcomes the council’s approach. 

Data provided by CAB Bristol shows the number of queries about council tax arrears rose sharply in late 2022, but remains lower than 2019 levels.

Shoesmith says CAB has built an effective relationship with the council, which allows it to discuss individual cases, often avoid enforcement and agree realistic repayment plans, including repayment up to three years for low-income households.  

“We’ve seen them make a concerted effort to treat vulnerable debtors more sensitively and refrain altogether from using enforcement agents to go the extra mile to collect those arrears another way,” Shoesmith says.

CAB only sees liability orders being issued to people who are able to pay, he adds – and the council sometimes encourages people to apply for a debt relief order, a way of writing off what you owe. However, the council did not provide the number of liability orders it issues.

‘Not much empathy’

But Shauna Stewart, a debt advisor at St Pauls Advice centre, says it’s not always easy to negotiate repayment plans with the council on behalf of clients.

“We have been seeing council tax debt more and more,” she says. “I almost dread council tax coming through the door at the moment.”

She says although some repayment plans are over a three-year period, they are still sometimes unaffordable for people, and in some cases, arrears from last year are being added to this year’s bill, which means this amount has to be paid by the end of the year.

“When it comes to lack of affordability, the council tends to wait until the current year has passed before negotiating a three-year repayment plan. If this is still unaffordable for the client it will be sent to the Magistrates court before agreeing to a repayment plan, which then adds costs… Then you send a financial statement with what they can afford, and the court considers it.”

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She gives one example of someone who owes roughly £1,500 dating back to 2019, who has been taken to court. 

Another client is a pensioner who owes more than £8,000 going back to 2010, including an old bill for £3,500 from 2016 has been sent to a debt collection agency. Luckily, they haven’t taken action yet. 

“There was zero consideration of his personal statement showing that he had zero income left over. I don’t think there’s much empathy from some members of staff.”

Another key trend Stewart mentions is the pause on collecting arrears during the pandemic, which according to the council, is behind the spike in total levels of debt. 

Debt spiking or spiralling out control?

“A lot of these debts have come from Covid, when they stopped taking payments,” says Stewart. “During lockdown, they let a lot of people get behind. They stopped taking deductions from benefits to cover overpayments. It’s crazy. Dealing with the aftermath of Covid is really hard work.

“It’s a sore spot for me that lots of it comes from Covid and the cost of living going up.”

Over this period, the total amount of council tax owed to the council tripled from £15.8m in 2019/20 to £51.1m in 2022/23. Although most local authorities across England saw debt rise, Bristol saw one of the biggest spikes in the country. 

Cheney says most of this extra debt comes from the pandemic. “The government, with the best of intentions, stopped all collection of debt, but that included reminding people they were getting into debt, so at the end of the pandemic people ended up with these big council tax debts that they hadn’t been reminded to pay throughout the process.”

Peter Tutton from debt charity StepChange says total arrears rising is also linked to people’s ability to pay. 

He adds that elsewhere in the country, bailiffs are often used despite people being vulnerable or simply not being able to afford to pay their bills. By contrast, he says Bristol’s approach was likely to lead to lower collection rates in the short term, but this will likely rise again in years to come.

“What Bristol is trying to do is deal with the problem of collecting council tax when people have got no money in an ethical way that doesn’t make debt worse, and we’re very supportive of that.”

Cheney says the council only started formal recovery processes from spring 2022, even though the pandemic pause was lifted in October 2021, in order to have more time to send people reminders. 

He adds that an estimated 40% of the current arrears comes from the pandemic, but the council has commissioned an independent review to find out more about what is behind the spike.  This comes after a recent audit report found that the council wasn’t fully following its debt collection policy in 2022/23 due to staff still being reallocated to Covid-related work.

I ask if the ethical approach led to an increase in debt? “I genuinely don’t think so,” Cheney says. “We did not see that at all prior to the pandemic. Officers are not so convinced, and that’s why I’d like to get it independently verified.

“We’re not particularly out of step with other local authorities,” Cheney adds. “It’s not a great time to be collecting debt in the country – people are struggling everywhere.”

“There was an anomalous few years and now we’re returning to normal,” he says, adding that collection rates are already up 8% on this time last year.

The bigger picture is that council tax is a postcode lottery that isn’t tied to people’s incomes, because it’s based on house prices in 1991. “Rebanding council tax is an absolute essential, and something I will be asking Labour to do if we win the next election,” Cheney says. “The whole thing needs a rethink really.”

Council under fire for cuts to support

Despite the council’s debt collection policy drawing praise from some, its plans to cut support have been met with anger. The authority has announced plans to cut £3m from their council tax reduction scheme, which gives thousands of low income households a full discount.

This culminated in community union ACORN storming a council cabinet meeting in September in protest and instructing solicitors earlier this month to query the “lawfulness” of the council’s consultation on the plans.

“It’s fundamental to my survival,” says William Goss, 63, who worries whether he’ll be able to cope if the discount is cut. 

William, who is unemployed due to health conditions after a stroke and has also been homeless in the past, says it could cost him an extra £150 a month, which represents only a bit more than his weekly budget so “would be quite a hit”.

“I’m in the lowest council tax property budget, and I’m single. It will hit me badly, but what about those people who have children and larger properties! 

He criticises the mayor for the council’s spending on other things in the city. “He wants to claw back £3m but he spends £130m on the Bristol Beacon?! Why collect pennies from poor people for a hole you made, for no effect.” 

The council currently spends £43.4m on the scheme, £30m of which gives 23,000 working households up to 100% off their council tax bills. The council’s consultation, which closed in September, presented 10 different options for reducing the support available by £3m. The results of the consultation could be brought to the next cabinet meeting in November for a decision.

Craig Cheney responds to the criticism: “I grew up in a family that relied on council tax benefit as it was in those days. We have supported this all the way through our administration. It’s by far our biggest non-discretionary spend – something we don’t have to do, but we still do.”

He adds that this non-discretionary spending – what is left over once the council has delivered all the services it has to – was 60% when Labour came to power in 2016, but this has now been whittled down to 20% because of reductions in funding from central government. 

“It’s not a decision I’ve wanted to be involved in,” he says, with frustration. “But we are where we are. I actually understand the criticism. It’s not something we’d do if we had more money, we wouldn’t even go near it. 

“If we decided not to do it then there’s £3m more of service cuts that we need to find somewhere else… Trying to find more money out of adult and children’s social care is also going at the most vulnerable in the city.”

According to the council’s latest projections, it already has a £17m budget gap it will need to fill. 

“We’re still the only core city that maintained a 100% funded CT scheme,” Cheney adds, which is what the administration has said throughout the process to counter criticism from opposition councillors and campaigns. 

The council has already cut lots of back office staff, which Cheney says has left the authority without enough HR support, accountants, lawyers and planning officers. 

“There’s no fat left to trim, we’ve done all of that. Then we’ve gone at things that we didn’t want to, so it’s our last bastion of things that we’re trying to protect but struggling to. If we look at next year’s budget and think there’s more money than we thought, then this comes off the table, but it’s not an easy one.

Despite the financial crisis that local government finds itself in, Cheney says it’s important to stick with the non-punitive approach to debt collection. 

“I think this process is working. It’s a really important thing for us to be doing,” he says. “We’ve got work to do to make sure it works and make sure everyone is on the same page and believes in it throughout the organisation. We’ll get there. 

“We’re starting to see collections come back up, so it can be a success. There aren’t many other councils doing this, if we can make a success of it, I think others should follow and we can make the country a better one overall.”

Additional reporting by Priyanka Raval

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  • I work for a local authority hence the pseudonym, but the obvious issue is teh abolition of Council Tax benefit in 2013, prior to that there was a national Government Funded scheme to help low income households with Council Tax.

    Since the what is happening is that the lowest earning households get help thanks to Council Tax levied on other low income households.

    A first step is to bring back a National Council Tax Benefit scheme.

    It would also make sense to make landlords not tenants liable to pay Council Tax, it would cut admin costs and make it much simpler to collect.

    Reply

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