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27.08.15

Council use of bailiffs for public debt collection on the rise

The use of bailiffs by councils to collect debts has soared over the last two years, research by the debt charity Money Advice Trust has found.

Local authorities in England and Wales used private bailiffs to collect council tax, parking debts, housing benefit overpayments and unpaid business rates over 2.1 million times last year.

This is an increase of nearly 20% from 2013, when the figure stood at 1.8 million – despite calls for councils to “improve their debt collection practices” since then.

The trust, which runs National Debtline, also found wide variations in debt collection practices countrywide, suggesting a “persistent postcode lottery” in the treatment of residents and business that fall behind on their payments.

Joanna Elson OBE, chief executive of the trust, said: “Two years ago, our original research on local authority bailiff use led to widespread calls for councils to improve their debt collection practices. We had hoped the situation would have improved since then. Instead, more than half of councils are using bailiffs even more than before to collect unpaid debts.

“Something is seriously wrong here. On the front line of debt advice we know that sending the bailiffs in can deepen debt problems, rather than solve them – and it can also have a severe impact on the wellbeing of people who are often already in a vulnerable situation.”

She added that bailiff action is both harmful to those in arrears and a poor deal for the council: the trust revealed that councils using bailiffs the most were less successful in collecting council tax arrears.

Council tax arrears, which accounted for most bailiff use by local authorities – over 1.2 million occasions – is one of the “fastest growing debt types” that the Debtline helps people with, with 24% of callers in arrears in 2014.

Of all councils investigated, the London Borough of Barking & Dagenham used bailiffs the most relative to the number of properties within its borders, instructing them over 34,000 times last year – equivalent of 43% of the number of properties.

Other London boroughs were “featuring strikingly” in the top 10%.

On the other hand, 19 ‘lower-tier’ local authorities, responsible for collecting council tax, used bailiffs less than 1% of the time. Three authorities – Charnwood, Wyre and the Isles of Scilly – used no bailiffs at all last year.

 Cllr Claire Kober, chair of the LGA’s resources board, said: “Reduced government funding for council tax support has left councils needing to find £1bn by 2016 to protect discounts for those on low incomes. Many are facing an unpalatable choice between charging the working-age poor or low-income families, who may have never paid council tax before, or finding additional savings to spending on local services to meet the shortfall.

“No council wants to ask those on the lowest incomes to pay more. But also faced with a 40% cut to core government funding to run local services over the past five years, many have had little choice but to reduce council tax discounts.

“Bailiffs are only ever used as a last resort by councils. Before the situation reaches a stage where bailiffs are involved, several letters will have been written, people will have been encouraged to apply for financial support, and efforts will be made to arrange new payment plans or to attach the debt to a salary.”

She added that councils have a “duty” to residents to collect taxes so “important services” can be carried out, like caring for the elderly, collecting bins and fixing roads.

But Elson said that despite their duty to collect what they are owed, especially in the face of funding pressures, “too many councils are far too quick to escalate to bailiff action”.

She suggested that “far better options” include better preventive work, earlier detection and support for people who fall behind.

Part of this suggestion stems from the trust’s findings, which revealed that there were variations in the way councils responded to calls to improve their debt collection practices.

Elson reiterated the importance of using bailiffs only as an “absolute last resort”, making sure residents and business owners are referred to advice resources earlier on.

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