Using data obtained by a UK wide Freedom of Information request (FOI), and combining with data from the Insolvency Service & ONS, DebtBuffer has created a unique analysis of how people living in local authorities around England & Wales were coping with the UK’s no1 household related debt, Council Tax, before the COVID-19 crisis took hold.
Council Tax is one of the most punitive forms of debt to get into. The consequences of getting into arrears on your payments are harsh and they occur relatively quickly.
So far 113 Councils have resumed enforcement for Council Tax arrears after nearly all Councils across the UK suspended enforcement action due to COVID-19.
If you pay by monthly instalments and fall into arrears, you lose the right to pay your Council Tax by instalments. Your entire bill becomes immediately due. If you then fail to pay this within the timeframe required, your local authority will issue a Court Summons to begin the enforcement process. The earlier in the Council Tax year someone defaults, the larger the immediate debt due is. This compounds the impact of enforcement action and the stress suffered by people in financial difficulty.
243 Local Authorities from England & Wales have responded so far to our FOI request concerning Council Tax for the 2019/2020 Financial Year.
Key Data highlights:
Click around the map to see unique data for each local authority that we have received a response from.
| # | Local Authority | Value |
|---|
The top 10 local authorities ranked (highest) by total number of summons issued in the 2019/2020 financial year.
| # | Local Authority | Summons |
|---|
The top 10 local authorities ranked (lowest) by total number of summons issued in the 2019/2020 financial year.
| # | Local Authority | Summons |
|---|
The top 10 local authorities ranked (highest) by the percentage of households issued with Council Tax summons for the 2019/2020 financial year. This shows the local authority areas where residents are least able to afford to pay their Council Tax. Average national figure is 11.77% from our data.
| # | Local Authority | % |
|---|
The top 10 local authorities ranked (lowest) by the percentage of households issued with Council Tax summons for the 2019/2020 financial year. This shows the local authority areas where residents are most able to afford to pay their Council Tax. Average national figure is 11.77% from our data.
| # | Local Authority | % |
|---|
The top 10 local authorities ranked (highest) by the total revenue collected by Bailiffs/Enforcement Agents in the 2019/2020 financial year.
| # | Local Authority | £ |
|---|
The top 10 local authorities ranked (lowest) by the total revenue collected by Bailiffs/Enforcement Agents in the 2019/2020 financial year.
| # | Local Authority | £ |
|---|
The top 10 local authorities where the percentage of Liability Orders granted to Court Summons issued is the highest. This indicates the lowest ability of residents to afford to repay the full balance of their council tax which becomes due when they default.
| # | Local Authority | % |
|---|
The top 10 local authorities where the percentage of Liability Orders granted to Court Summons issued is the lowest. This indicates the highest ability of residents to afford to repay the full balance of their council tax which becomes due when they default.
| # | Local Authority | % |
|---|
The Questions we asked each council for the 2019/2020 financial year:
Average number of households per council receiving a Court Summons for unpaid Council Tax is 11.77%
Average Revenue collected per Liability Order is £159.03.
Average Revenue collected by Bailiffs per council is £1.053million
Insolvencies (Bankruptcies, DRO’s & IVA’s)
The data we used was provided by the Insolvency Service and the source to the data we used is listed above under “Sources”. Where we talk about Insolvencies, these comprise three ways someone can be declared Insolvent (in England & Wales). These are:
Bankruptcy. This is the most extreme version of insolvency, it stops creditor action. Almost all debts can be bundled into Bankruptcy and all allowable debts are written off completely, unless there are special circumstances and a court issues conditions. It currently costs £680 in court fees to declare yourself Bankrupt in England & Wales. Which is ironic..
Debt Restriction Order (DRO). This is granted by the court where someone does not have the required court fee for declaring bankruptcy themselves, typically has very little or no disposable income, and little or no assets. It stops creditors enforcing any further action and will be reviewed after a year. If there is no improvement to someones finances, their debts are then written off.
Individual Voluntary Arrangements (IVA). By far the most common form of Insolvency in England & Wales. In Scotland, the similar Insolvency process is called a “Trust Deed”. An IVA halts all creditor action and a reduced monthly fee is agreed between an Insolvency Practitioner who legally must administer your IVA and your creditors. This is based off a thorough income and expenditure assessment. After 5 years of making the reduced monthly payments, any debt remaining is written off.
Most Aggressive Enforcement
In the data tables above we make reference to the “Most Aggressive Enforcement”. This is calculated where a council provided us with a figure of revenue collected by Bailiff enforcement, we then divided it by the number of Liability Orders granted to give us a £value per Liability Order. We have a full blog post covering this here.
Out of the 243 Councils that responded to our FOI request, there were 10 Councils who said they “had not” suspended enforcement action for Council Tax arrears. Enforcement would include sending reminders, issuing court summons, instructing bailiffs to attend a household and enforcing repayment orders for Attachment of Earnings & Attachment of Benefits payments. These councils were:
London Borough of Redbridge, Maidstone Borough Council, Mid Sussex District Council, Middlesbrough Borough Council, Nottingham City Council, Rotherham Metropolitan Borough Council, Spelthorne Borough Council, Swindon Borough Council, Tunbridge Wells Borough Council, Waverley Borough Council.
Why is this important?
During lockdown and to coincide with the Government Furlough scheme, nearly every council in the UK decided to halt enforcement action for Council Tax arrears in order to show compassion & to make life easier for its many residents, who would be encountering some severe impacts on their income. For some reason, the councils above chose not to do this. We might reach back out to them shortly for an explanation..
If you are a journalist and would like access to the full data set for a story you want to write on this subject, please contact us on press@debtbuffer.com