Martin Lewis launches assault on council tax assortment practices | EUROtoday

Martin Lewis has hit out at council tax assortment practices, evaluating them to mortgage sharks.

He additionally highlighted the truth that UK households can face a invoice of round £1,600 for lacking a £140 cost by three weeks.

The Money and Mental Health Policy Institute, a charity based by Mr Lewis, mentioned processes are driving unacceptable harms that disproportionately have an effect on folks with psychological well being issues.

Mr Lewis mentioned: “Council tax collection practices are so aggressive they’d make the banks blush. The grotesque process couldn’t have been designed better to accelerate distress for people in council tax debt, especially those with mental health problems.

“When someone misses a monthly payment, rather than asking: ‘How can we help?’, many councils say: ‘Now you have to pay 12 times that’ – it’s like a caricature of the worst loan sharks.”

The analysis, funded by abrdn Financial Fairness Trust, indicated that round two million folks with psychological well being issues within the UK have fallen right into a council tax “trap” – lacking one cost after which probably dealing with quickly escalating debt assortment exercise, charges and costs when some folks could also be too unwell even to open their publish.

Money and Mental Health mentioned that, inside three weeks of lacking only one council tax cost, folks could discover themselves being hit with a remaining discover from an area authority requiring them to pay a full annual council tax invoice inside seven days.

For a mean UK family, this might imply a missed £140 cost ends in a invoice of round £1,600 three weeks later, the charity mentioned.

People who fail to pay their full annual payments may be hit with a legal responsibility order – a letter that lets councils step up debt assortment, together with probably sending in bailiffs.

Debts can probably be handed onto bailiffs simply six weeks after the primary missed cost, the charity mentioned.

Money and Mental Health’s evaluation signifies that individuals with psychological well being issues are greater than twice as more likely to be in council tax arrears than these with out psychological well being points.

The charity highlighted the case of a 55-year-old girl who has borderline persona dysfunction and bipolar dysfunction.

She described to researchers how she obtained a letter on Christmas Eve – which had arrived late due to postal delays – saying that she wanted to pay her council tax invoice by Christmas Day.

She mentioned: “I was in meltdown. I ended up taking out more credit and took out a credit card with 40% interest just to be able to pay it off.”

The girl added: “I was a mess, I couldn’t do anything. I’d already bought Christmas presents for the grandkids, but I couldn’t spend any time with other family because I was so stressed.”

Money and Mental Health is campaigning for central Government to finish the “council tax trap” and  make collections fairer and extra constant.

It desires the Government to vary rules which dictate how shortly native authorities chase missed funds.

Council tax debt assortment ought to be introduced at the very least according to shopper collectors, who usually wait three to 6 months earlier than demanding full compensation of an overdue debt, the charity mentioned.

The report added that the Welsh Government has capped costs for issuing legal responsibility orders at £70, however whereas welcome it’s nonetheless too excessive, given {that a} third (34%) of individuals behind on council tax funds say they might not afford to pay any sudden invoice.

It mentioned native authorities ought to urgently take a look at their very own debt assortment practices. Some councils are already taking steps, for instance by specializing in offering extra assist and recommendation to folks in arrears.

Mr Lewis added: “Rapidly piling on payment demands, court threats, charges and bailiff action isn’t a fair or productive way to respond to someone missing a payment, either through limited funds, or personal life crisis.

“It’s like councils are setting a trap for people who miss a payment that they have no hope of escaping from, and that needs to stop. Councils will recover just as much money, and keep their constituents financially and mentally healthier, by working with those who are struggling, signposting them to help, and working on repayment plans.

“Of course, councils have faced major budget cuts, and some are struggling to survive – a policy challenge the new Government must address.

“Yet plugging budget gaps by ramping up punitive action on people in debt, a significant majority of whom have mental health problems, won’t fix that. That’s why we also need central Government to change the rules and stop allowing councils to behave in a way no commercial lender would ever be allowed to.

“It is ironic that some of the council leaders who are ultimately responsible for overseeing this process, are likely among the most vociferous protesters against the harms of dodgy private sector debt practices and big financial institutions.

“So I’d ask them to turn that focus on their own organisations. While central Government action is needed, while we wait for that, councils need to take a hard look at what they are doing and to mitigate the harms some are causing.”

Mubin Haq, chief govt of abrdn Financial Fairness Trust, an unbiased charitable belief, mentioned: “Piling debt onto people who are financially struggling not only risks further harm to their health and wellbeing, it may ultimately put further pressure on other parts of local authorities’ budgets, such as emergency discretionary assistance funds.

“The safeguards we have in place for mainstream lenders needs to be mirrored in the collection of council tax debt.”

A spokesperson for the Local Government Association (LGA), which represents 350 councils throughout England, mentioned: “Councils strive to ensure they have fair council tax collection policies and should always try to work with people who are struggling to meet their council tax bills.

“We agree that bailiffs should only ever be used as a last resort and anyone having trouble paying their council bills should get in touch with their local authority for financial help and advice.

“Councils do have a duty to their residents to collect taxes so important services are not affected but realise that times are still tough for many low-income households.

“Record numbers are claiming a discount on their council tax, which is adding further pressure on this already underfunded vital local safety net.

“Without enough funding to provide council tax support to those who need it, it is almost inevitable that bills will continue to be forced up for those who can least afford to pay.”

A Ministry of Housing, Communities & Local Government (MHCLG) spokesperson mentioned: “While the collection and enforcement of council tax is the responsibility of councils, we expect local authorities to be proportionate and sympathetic to those in genuine hardship when determining the most appropriate action to collect unpaid tax.”