Council tax arrears point to a “broken system”, claims debt charity – London Wallet

Council tax arrears have increased by more than £600m and now stands at a total of £6.6bn, the latest data published this week by the Ministry of Housing, Communities, and Local Government shows.

StepChange Debt Charity, a major provider of debt advice and solutions, state that these figures point to a broken system, as they come just days after the Government announced a consultation on council tax reform.

In addition to Government figures, StepChange client data and polling shows the scale of the council tax crisis:

+ YouGov polling for StepChange found that for those earning under £35,000, close to the median UK salary, 41% of are worried about meeting their council tax payments.

+ The polling also found that almost two-thirds of people (63%) are saving less because of increases in essential household bills like council tax.

+ Over one in three (35%) of StepChange clients are in council tax arrears, and between financial years 2023/2024 and 2024/2025, council tax arrears amongst StepChange clients have increased by 16%, from £1,805, to £2,094.

Peter Tutton, director of policy, Research and Public Affairs at StepChange Debt Charity, said: “These figures are unsurprising and point to a broken system which is repeatedly pushing the most financially vulnerable groups into hardship, as councils scramble to fund essential services against an incredibly difficult financial backdrop. As such, households across Britain have faced significant increases in their council tax payments, all coming at a time when other bills and general living costs are going up across the board. Despite the best efforts of some councils, local authorities lack a binding set of standards which would create an environment to better support people in arrears facing financial difficulty.

“As it stands, existing practices around council tax debt collection only exacerbate financial difficulty and the reality is that the current system lacks compassion and clarity. Our previous research has consistently shown these debt collection practices are worsening people’s mental health and wellbeing – over four in five (85%) StepChange clients with council tax arrears said the communications they received from their council about their arrears made them feel scared, anxious or depressed.

“The government’s recent publication of a consultation on council tax debt collection reforms marks an opportunity for real change. We are calling on central government to reform existing rules around council tax debt escalation, including the punitive regulation which means one single missed council tax payment can lead to your council demanding a full year’s payment.”

Council tax arrears by calendar year per StepChange client: