Page last updated at 12:16 GMT, Wednesday, 7 January 2009

Restraint urged over tax arrears

Council tax bill
Council tax arrears could be "devastating", the Lib Dems said

Councils in England and Wales are taking people to court too quickly if they fall behind with their council tax payments, the Liberal Democrats claim.

An answer to a Freedom of Information request showed that one million people received court summons and that bailiffs called on 600,000 defaulters.

Councils filed for bankruptcy against non-payers in 1,700 cases.

The Local Government Association said just 1% of cases ever got to court and bankruptcy orders were a last resort.

It added that it had a duty to those who pay their council tax to pursue those who do not.

The Liberal Democrats used the Freedom of Information Act to find out what councils in England and Wales did to recover arrears - 172 councils answered.

Accounts frozen

Many used "attachment of earnings" orders to recover unpaid tax - in which a person's employer is asked to deduct the money from their salary and pay it directly to the council.

But bailiffs were used on some 600,000 occasions, the party said.

Just as lenders are being asked to reduce repossessions, public bodies should do everything they can to ensure that bankruptcy is avoided where possible
Julia Goldsworthy
Liberal Democrats

And in 1,700 cases, councils filed for bankruptcy against those owing more than 750, which can result in frozen bank accounts, credit blacklisting and in the most extreme cases can lead to people losing their homes.

The Liberal Democrats said with household budgets under increasing strain, councils should observe a code of conduct which puts the emphasis on agreeing a payment plan rather than rushing to court.

This should apply to all councils, the party insisted, irrespective of their political make-up.

They said as banks are asked to explore all avenues before threatening homeowners in arrears on mortgage payments with repossession, public bodies should do the same.

The party's local government spokeswoman Julia Goldsworthy said: "Overstretched families are already struggling to meet their mortgage repayments and keep their homes but this survey shows that failing to pay council tax can have just as devastating an effect on householders.

"Just as lenders are being asked to reduce repossessions, public bodies should do everything they can to ensure that bankruptcy is avoided where possible."

She said it was not "a licence to avoid paying bills" but said court appearances and bankruptcy should be the "last resort".

BANKRUPTCY APPLICATIONS FOR NON-PAYMENT: 2007-8
Tower Hamlets: 185
Sheffield: 143
Bristol: 105
Newham: 100
Brent: 93
Lambeth: 85

But the Local Government Association said it had a duty to those who do pay their council tax to pursue those who do not.

It said only 1% of people who received summons ended up in court and that bankruptcy was a last resort usually against those with a history of non-payment.

Among the councils with the largest number of court summons, bailiff visits and bankruptcy applications was Sheffield, which is controlled by the Lib Dems.

Other councils with high rates included the London boroughs of Brent, Lambeth and Tower Hamlets as well as Bristol.

'Last resort'

The government said councils had to pursue unpaid bills because, otherwise, law-abiding households would find themselves penalised with higher bills.

"Local authorities must have the tools at their disposal to tackle the small minority of people who can but won't pay their bill," a Department of Communities and Local Government spokesman said.

"Our existing guidance makes clear that they should only consider court action as a last resort for collecting council tax."

Ministers have said controlling council tax bills is a "top priority" and predicted average bills would rise by less than 5% this year.

The Conservatives said if they were in power, they would bring forward measures to encourage English councils to freeze tax bills for two years.



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SEE ALSO
Council tax increases kept 'low'
28 Feb 08 |  England
Council tax rises 'under control'
26 Nov 08 |  UK Politics
Tories pledge council tax freeze
29 Sep 08 |  UK Politics

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