Levelling Up, Housing and Communities Committee 

Oral evidence: Council tax collection, HC 20

Monday 6 June 2022

Ordered by the House of Commons to be published on 6 June 2022.

Watch the meeting

Members present: Mr Clive Betts (Chair); Ben Everitt; Darren Henry; Kate Hollern; Andrew Lewer; Mary Robinson; Mohammad Yasin.

Questions 1 - 53

Witnesses

I: Councillor Stephanie Cryan, Cabinet Member for Finance, Democracy and Digital, London Borough of Southwark; Russell Hamblin-Boone, CEO, Civil Enforcement Association; Paul Whyte, Managing Partner, Whyte & Co Ltd; Kevin Stewart, Business Unit Leader, Revenues and Benefits, Mid Sussex District Council.

II: Catherine Brown, Chair, Enforcement Conduct Board; Alistair Townsend, National President, Institute of Revenues Rating and Valuation; Rachel Beddow, Principal Policy Manager, Citizens Advice.

Examination of witnesses

Witnesses: Councillor Stephanie Cryan, Russell Hamblin-Boone, Paul Whyte and Kevin Stewart.

Chair: Welcome, everyone, to this afternoon’s session of the Levelling Up, Housing and Communities Committee. It is the first evidence session of our inquiry into council tax collection, which is something that everyone gets some experience of. Members of the public receive council services and they see the way they pay for them through council tax and the way it is collected. We have this afternoon two panels of witnesses from inside and outside councils to help the Committee understand the process, the concerns that there are, what works and what does not.

Before I come over to our first panel, I will ask members of the Committee to put on record any interests they may have that may be particular to this inquiry. I am a vice-president of the Local Government Association.

Kate Hollern: I employ a councillor in my office.

Ben Everitt: I employ a councillor.

Q1                Chair: We will come over to the first panel, if you could introduce yourselves.

Paul Whyte: Good afternoon. My name is Paul Whyte. I am a partner at Whyte and Co., an enforcement agency, and I am also the president at CIVEA.

Russell Hamblin-Boone: Good afternoon. I am Russell Hamblin-Boone. I am chief executive of the Civil Enforcement Association, which is a trade association representing the firms that employ enforcement agents.

Stephanie Cryan: Good afternoon. I am Councillor Stephanie Cryan. I am the cabinet member for finance, democracy and digital at the London Borough of Southwark. Council tax collection and welfare support sit in my portfolio.

Kevin Stewart: Good afternoon. I am Kevin Stewart. I am the business unit leader for revenues and benefits at Mid Sussex District Council, covering revenues, council tax and benefits.

Q2                Chair: Thank you all very much for coming. Council tax arrears is something that is important to both councils, which need the money that is collected to fund their services, and individuals, who sometimes may struggle with the bills that they are sent. In the last decade, the total level of arrears has just about doubled. What are the underlying issues that have caused these real challenges? I will come, first of all, to the two local government representatives.

Stephanie Cryan: There are several factors to take into account. We look at the universal credit roll-out and the delay of payments. That five-week delay makes it really hard for people to make ends meet. Once you are starting to play catch-up, it is really hard. Therefore, you see a cycle of arrears.

In Southwark we have done some very good research with the Smith Institute. We did a report called “Safe as houses”, which looked at the impact of universal credit on rent arrears. Although it was not about council tax, that report found that, after 12 months, people on universal credit found it harder to get out of arrears than people who were not on universal credit. It is the same for council tax.

Chair: That first five-week delay gets people into arrears, and then they do not recover from that.

Stephanie Cryan: Yes, it is a cycle of arrears. It is playing catch-up. You never recover from it. The actual waiting period is punitive for people. People are waiting five weeks to receive any income at all and then all their bills are going into arrears, whether it is rent or council tax, which may be covered by universal credit. It goes into arrears then, before you receive it.

There are also precepts. We are having to raise money through precepts, especially for social care. If you are struggling to pay your council tax, an additional precept on top is going to make it even harder to meet your council tax payments. I feel—this is me speaking personally—that precepts on council tax are not the right way to fund things like social care. There needs to be sustainable Government funding around that as well.

We are also seeing that council tax is increasing at a faster rate than incomes. The amount you are paying in council tax as a percentage of your income is increasing year on year. Since 2016, we have seen increases that have not kept up with wage increases. Recently, we saw more people going into council tax arrears when the universal credit uplift of £20 was withdrawn as well. That has started to put people into trouble and into a situation that is quite precarious as well.

Chair: Kevin Stewart, you are an officer in a district council. What is your perception of this?

Kevin Stewart: I would agree with a number of those comments, but I would also say that, during the pandemic, a lot of my staff have been dealing with additional covid duties as well, which has taken them away from the day-to-day job of collecting. I know you are going to cover energy rebates later, but we have done business grants and council tax support reduction schemes. Those are very varied. I know you are going to question that later, but, all in all, all of them had an impact.

There have also been a lot of changes with people. People have changed jobs during the last two and a half years. They are finding that their council tax spend is a lot more than it used to be, and they are struggling to pay. The system they are applying through, in terms of benefits and help, is quite a complex one. There is universal credit, the DWP and the Jobcentre and there is also council tax reduction from the local authority. We probably need to look at making things simpler.

Chair: Russell Hamblin-Boone, from the point of view of getting the money in, how do you see it?

Russell Hamblin-Boone: It has certainly been the case that councils have had to rely on enforcement agents more as a result of changes in benefits and the austerity cuts going back. They have needed to maximise their revenue and ensure that all those people who were due to pay their council tax were paying their council tax.

The enforcement agent industry has had to respond to those changing circumstances not just in terms of austerity and benefits changes, but also by becoming more sophisticated in supporting councils in being able to discern those people who were vulnerable and those people who were able to pay but, for one reason or another, have chosen not to pay. This is the challenge that we have. Although we are trying to recover as much revenue, particularly to support vulnerable people, at the same time we are looking to collect debt from people who are vulnerable in the first place.

Chair: We will probably come on to some of the enforcement issues a little bit later.

Paul Whyte: I would agree very much with what has been said. We are here to talk about it from an enforcement perspective. I wonder whether there is some merit in me bringing to the Committee a perspective of how the landscape of enforcement has changed over the years, particularly since the reforms we had in 2014.

In 2014, the enforcement industry was revolutionised by a new set of instructions, which really changed the face of how we operated. If you were to have given me a liability order to action pre-2014, my only option would have been to go and knock on the door. There would have been no letter; there would have been no email, phone call or SMS. There would have been no communication, just simply the knock on the door. Worse still, there would have been no in-depth appreciation, via a data cleanse, of exactly what was behind that door. What was their ability to pay? Could they pay? Did they need help? Were they going to really struggle?

In 2014, we had reforms that brought in three distinct stages of enforcement: the compliance stage, which I have to say is a breath of fresh air; the enforcement stage; and the sale stage. In the compliance stage, we now send a statutory notice of enforcement that clearly defines exactly what is owing and how to remedy it. Enforcement agents generally go on to do additional reach-outs by way of phone calls, texts or emails. It is any kind of communication that we can make, ideally to reach people’s phones, which today is the best way to talk to people, to try to establish what the problem behind the payment is. Is there an issue? Is there potential vulnerability?

Most importantly, we are now able to do exempt data cleanses in respect of council tax. We can really understand someone’s ability to pay. When an enforcement agent goes to knock on the door or even when we have posted the notice of enforcement, we have an understanding of whether we are perhaps dealing with someone who has the money and can pay this quite quickly, whether they might struggle a little bit and will need a little bit of time or whether they might have real issues dealing with this liability. Within that segment is the potential for vulnerability. That comes in lots of guises: mental, physical, financial or even temporary. Some people may be in a spot for a moment and need some understanding just to get them through that moment in time.

I just wanted to try to bring some understanding on how things have changed. The enforcement stage follows the compliance stage, if our reaching out has not managed to make that contact and ideally set an arrangement. Bear in mind that we are working towards 50% of people who pay doing so at compliance, without the need of an enforcement visit.

Q3                Chair: We will come back to some of those particular details in the later questioning. That is helpful. Just coming back to the local authorities, how far do the level of arrears and the concerns you may have about some people’s ability to pay affect your budgetary decisions when you come to set your budget at the beginning of the year? Do you think, “I cannot quite go down that route, because it is going to put the bills up for people who are going to struggle with them”?

Stephanie Cryan: It is always a struggle, and it is quite a moral struggle as well. As I said previously, the amount that council tax has gone up by has exceeded the increase in earnings or benefits. We have to be really mindful that we are not putting too much financial pressure on our residents. Ideally, most people want to pay their council tax; some people just cannot. We are supporting one in six of our residents through our council tax support scheme.

Chair: We will come to that in just a second.

Stephanie Cryan: You are right. If you go back to 2010, a third of council revenue was from council tax; it is now 44%. That is because Government funding and Government grants have been increasingly eroded over the last decade. We are reliant more and more on council tax, but, at the same time, because of the issues that people are facing, we have to be really mindful of what we can and cannot do. We always set a balanced budget, but it is a real struggle to try to get there and make sure we are not putting the onus unduly on those who can least afford it. We are very mindful of that.

We help and support wherever we can. We have a Southwark emergency support scheme, which helps to support those people who need it the most. It could always do with more money, like everything else. We have a discretionary housing fund, which again helps to support people with their rents who are finding difficulty there. We spend the amount we get from that by Christmas, so there are four months of the year where we have nothing to give people. It is a real struggle.

We manage to get our services done in Southwark. I am really proud of the budgets that we set. We have set budgets that help and support those who need it the most without calling on those demands, but we have to do it with what we have. It is beginning to be a bit like a plaster over a severed artery in some ways.

Q4                Chair: Let me come back to Kevin Stewart. People might think Mid Sussex is a wealthy type of area and that you do not have those sorts of problems there—that if you levy the money, people will pay it and off you go.

Kevin Stewart: That is wishful thinking. We do have arrears as well. Even though a major part of our people pay by direct debit, there are still arrears going back. Just as the councillor said, we strike a balanced budget, but we have arrears of council tax going back. The longer you leave collecting those arrears, the harder it is to collect.

I know you will focus on in-year collection later on in this meeting today, but we have to decide how we recover from them—in some cases, you will probably have to consider whether to write off—and what help you can give. Basically, you cannot backdate any benefit or help beyond a certain period. There are some very tough decisions to make to balance the budget while also looking after individuals in respect of their circumstances. Despite being, as you say, in leafy Mid Sussex, we still do have our issues, I can assure you.

Q5                Chair: To come back briefly to the enforcement agencies, during the pandemic there was effectively a moratorium on enforcement action. Have you simply now picked up where you left off before the pandemic and carried on after that interim lull? Have things changed in any way?

Russell Hamblin-Boone: The moratorium was something we introduced voluntarily. It was later something that the MOJ made compulsory, but we had already made that decision. During the lockdown period, we introduced what we called our post-lockdown support plan, which anticipated the challenges we would have when we came back into the workplace, not just with social distancing but in understanding how people’s circumstances had changed, realising that the whole collection process would be very different.

These changes were not just as a result of the pandemic. We have been on a path of reform. Since the regulations were introduced in 2014, we have reviewed our code of conduct and we have put in independent monitoring around that. Most recently, we were instrumental in helping to establish the Enforcement Conduct Board. I know you will be hearing from the chair of that later on. The industry has continued to respond to changes in economic and social circumstances. The pandemic has just been a part of that, which has meant that we have had to continue to support councils in meeting some of the challenges they have had. It is an ongoing process. We are very optimistic that the Enforcement Conduct Board is going to help us be even more responsive and even more sophisticated in our debt recovery actions.

Paul Whyte: I would agree very much with that; although things have relaxed a little bit in terms of work on the street, there are still lots of sensitivities around enforcement and how you take action against people. It is all about dealing with people on an individual basis. As I was saying earlier, we are now more aware of people’s financial circumstances and whether they could be leading to other issues. We bear that very much in mind when we are on the street.

The whole point of modern day enforcement is that it is not a sausage meat factory where you deal with everyone in the same way; you try to curtail your processes to match the individual and their ability to pay. You react to that on the doorstep. Sometimes the enforcement agent is the first person to make contact on the local authority’s behalf in respect of that debt. That first experience of talking to someone and seeing what their situation and circumstances are like can actually raise an alarm.

All enforcement agents now will have vulnerability teams that they will refer people to. Enforcement action is ceased; the costs of that visit are rolled back. Their case is looked at in more detail to see exactly what kind of vulnerability they are suffering from so that allowances can be made to treat people as you find them on an individual basis and not in a standard enforcement process that fits all.

Q6                Chair: Let us move on to the issue of council tax support. It has been mentioned already. Until 2013 there was a standard scheme across the country—council tax benefit. That has now changed and councils can, if they wish, bring in their own tailored support scheme. First of all, going back to the two council representatives—I will start with Kevin Stewart—has doing away with the universal council tax benefit scheme had an impact on the number of people who struggle to pay? Have you seen, in particular, people who are now having to pay some council tax who previously paid nothing? Has that posed real difficulties?

Kevin Stewart: Yes, it has done. As you know, in England every authority can design their own council tax support scheme. For example, in Mid Sussex, we have varied the last scheme slightly; we amended it in April 2020. Unless you are in a vulnerable group, you have to pay 40% towards your council tax. Some people who were previously on council tax benefit and who were getting to pay nothing suddenly had to make a contribution.

As others have said, we have dealt very sympathetically with them, to see whether we can give them help; we have seen whether they can be pushed into any of the vulnerable groups. Our collection rates for those people are probably less than what other taxpayers are paying. I know you will cover hardship later, but we have developed across the county a hardship scheme beyond what the Government did in 2021. Certainly, we are having to do extra to help those people pay their council tax and deal with that. Yes, it is an issue.

Stephanie Cryan: The ending of ring-fenced Government funding has really impacted us, but we have kept our scheme the same since 2013. It is getting harder to maintain it. I do worry. We are really adamant that we want to keep it, but there may come a time when we just have to revise it. The people who are eligible for the council tax reduction scheme or council tax support will pay 15% of the council tax bill.

As I said earlier, one in six of our residents are eligible, which is a large chunk of our community. As council tax increases, that 15% increases. As I keep saying, it is getting harder for people to keep up with that 15% as well. We benefited from the hardship scheme. That really did help during the pandemic. As I said, we used to have ring-fenced funding; we do not anymore. We have to find it ourselves. We are finding imaginative ways to do it and we are committed to doing it, but council tax in itself is a scheme that has not been looked at or amended in any way for over 30 years now. It is something that should be reviewed on a regular basis to make sure it is still the right scheme or whether there are other ways you can get the money in to help support local authorities in that way. It is overdue a refresh or a review. We are still looking at a scheme that was devised in 1991. It was the result of the poll tax.

Q7                Chair: Yes, absolutely. Coming on to the enforcement agents, what have you seen following the removal of the council tax benefit scheme and the support schemes that required people to pay, in some cases, nothing before?

Russell Hamblin-Boone: It is clearly the case that the role of enforcement agents has changed as more and more people have become liable for even part of their council tax, which means enforcement agents have evolved from being debt collectors to having a much more discerning role and trying to identify people’s individual circumstances.

The challenge we have, working in support of local authorities that have an obligation to collect 100% of tax, is to identify those individuals who need support. We would be very happy if there was some sort of reinstatement of a universal council tax benefit scheme. It would take a whole lot of people out of that enforcement process very quickly, because they would be getting the benefits they needed.

Many local authorities do not use enforcement agents for people who are on council tax reduction schemes currently. Our job would be a lot easier if that were extended, because we would be enforcing against those people who were due that sort of action as opposed to having to take a wider population and then trying to make decisions about whether they need to go down the enforcement route or whether they need to go back to the council for additional welfare support.

Paul Whyte: The enforcement industry does not want to enforce on people who genuinely cannot pay. We are commercial organisations. To put it bluntly, it is not cost-effective to be sending people out to knock on doors when there is little chance of recovery. It is all about what I said before: it is about understanding and knowing what is behind the door. Who are you dealing with? What are their circumstances? It is about trying to understand truly what is going on in their lives so you can adapt your process to get the best result for them and the local authority.

Q8                Chair: Just coming back to Councillor Cryan, you mentioned the hardship fund during covid. What was your experience of that? Was it helpful? Instead of having the universal benefit scheme that we used to have, is there some merit in councils designing their own support? Does that better enable councils to target where the help is needed?

Stephanie Cryan: I agree, yes. First of all, yes, we received £3 million from the hardship fund, which really did help people, especially during the pandemic when times were so hard for people. I do agree: the situation is unsustainable as it is. The longer it continues like this, the more unsustainable it will become for local authorities and by default also for residents, for the people that I am elected to serve.

In terms of having a local scheme, we know our residents, but we do need to be supported by central Government in terms of funding to be able to do that, because we just do not have that funding at the moment. If we were able to be adequately funded, if we could return to council tax support from central Government, we could devise schemes that would really help get to the—

Q9                Chair: You are basically asking the Government to put some money into the schemes, but you want to be able to design how they are implemented at local level.

Stephanie Cryan: Yes, because we are stretched as well. We continue to run our scheme and we continue to give additional support to residents as well, but it is getting harder and harder to maintain it. How far can you stretch an elastic band before it snaps?

Q10            Chair: I will come to Kevin Stewart to pick up the point about the hardship fund as well. Did that work for you during covid?

Kevin Stewart: Yes it did. As an authority, we upped the £150 Government support to £200 for taxpayers who qualified in respect of the council tax support in 2021. We are a two-tier authority. In collaboration with West Sussex County Council, all the West Sussex district councils have extended that scheme for both 2021-22 and 2022-23, for £150 each. We have used the county council funding and the district council funding to continue that scheme from there, which has been a great help to us in collaboration.

I would also just point out that the council tax support schemes are very rigid. They have to be set by 11 March each year. Authorities did that very well during covid, but it gave very little scope for the changes that came about certainly through covid, such as the additional universal credit support, the £20 per week, and the other additional amounts. The rigidity of those schemes did not really help.

Q11            Kate Hollern: There have been some reports of enforcement agencies being over-zealous in their approach. Certainly through constituency offices we pick up situations like that. How well do local authorities and enforcement agencies identify those who are vulnerable?

Stephanie Cryan: We always use enforcement as a last resort. We always treat vulnerability very differently when it comes to enforcement as well, which includes taking a very flexible approach to it. We have been instrumental in setting up a scheme called Step-by-Step, where we can consolidate all debts with the council into one debt, so you are not paying off a little bit of your council tax, your rent arrears, your garage arrears or whatever it may be. It is all consolidated into one, and there is no timeframe for repayment for it. We try to help support people and make it an affordable repayment for them. It has worked really well, having that one consolidation with one ownership of it in the council as well.

There are some issues, because sometimes you do not know somebody is vulnerable until the last minute, until you get to that enforcement stage. Not all people who are vulnerable will self-identify. You do not know the extent of the issues or their problems until it gets to that stage. We work really closely with a lot of voluntary sector organisations like Citizens Advice and local law centres to provide that help, support and guidance for people as well.

We have a financial inclusion forum in Southwark that we are a member of. We work really closely with our third sector partners to help provide as much support and signposting for people as we possibly can, because we know there are vulnerable people that we may not know about. People sometimes find it hard to reach council services, because of the nature of their lives and their vulnerabilities, but there are other organisations and charities in the borough who will be able to provide that help and support to them. We work side by side with them to try to help, support and get to people as early as possible. For us, enforcement is always the issue of last resort.

Q12            Kate Hollern: Paul, you mentioned that you do not know what is behind the door. How do you gather your information?

Paul Whyte: First, I would agree with what the local authority is saying there. They take quite a bit of time looking at the cases that they refer to enforcement. When we get a case, we are now able to apply for specific data enquiries around financial capability, which gives us an in-depth understanding of someone’s financial position. It allows us to have an understanding of whether someone probably has the finances to pay their council tax immediately, whether they might need a few months or whether they might really be struggling because of how they are running their finances. That is a real alarm bell for us. While it is not the guide to everything—as I said earlier, vulnerability hides in various forms, and I agree with everything that was said about some people not wanting to come forward—we try to push a lot of buttons to make people put their hand up and talk to us before it goes to the next stage of enforcement, where we will be visiting them.

We launched a chatbot on our website recently, which is open 24/7 and allows people to get basic information, set up an arrangement and make a payment. At the end of it, we put a little survey out that says, “How did you find the service?” Although a lot of people will not respond, we do get some responses. There was one last week or a couple of weeks ago that particularly caught my attention, because the lady in question said, “I really appreciated the service. I was able to resolve my problem with you and—do you know what?—I did not have to talk to anyone”. That is not because we are unpleasant people to talk to. We are very open and happy to talk to people, but there are some people out there that really do not want to engage for whatever reason. It is personal; it is private. They do not want to talk about their personal circumstances.

We are always looking for new ways to reach out and try to make that contact. The biggest frustration we have as enforcement agents is when we do not make that contact with someone. We can go to visits and not get a response. It is all about somehow managing to do the right things that make someone pick up the phone or go online and say, “Yes, I have this problem. What can I do about it?” Yes, of course we want to get collections, but we want to do it in a way that is fair to everyone based on their particular situation.

Q13            Kate Hollern: Is there dialogue between yourselves and the council? If vulnerable people slip through the net and get to enforcement, does enforcement feed that back?

Paul Whyte: Most definitely so, yes. If a case is highlighted at enforcement either through a phone call through to the call centre or an enforcement agent visiting, it will go through to the vulnerability team, who are liaising with local authority clients and the advice sector all the time. They are making signposts where help can be sought from the advice sector and, in extreme cases, they are liaising with the local authority for additional assistance and perhaps sending the case back to them.

Q14            Kate Hollern: To come back to the original point, there have been numerous claims of very bad behaviour by enforcement agencies. How do councils deal with the reports of bad behaviour?

Stephanie Cryan: We take them very seriously, because for us it is the last resort. We would hope to be able to get to a position where we do not have to go through enforcement. As much as we have enforcement people here, it is one of those things that you really do not want to put people through. The vast majority of people want to pay; they just cannot pay. It is a very small percentage of people who decide not to pay, who have the means to pay. You have to separate that. We take it very seriously.

I cannot remember any instances in Southwark, I must admit, since I have been a councillor. If there were any, I would be all over it as a cabinet member as well. I would be finding out why we got to that stage, because we should not get to that stage at all. We should be helping and supporting as much as possible. We have our local support team, who can offer a wraparound service around benefits advice and support as well. There is a lot of work we do up front as a local authority around that. I would be very upset and disappointed if it got to that. I would absolutely be personally all over it to find out why that had happened, to make sure it did not happen again.

Kevin Stewart: I would agree with the councillor that we take any complaint seriously, but we tend to work very well with our enforcement agents.

On vulnerability, a lot of people think that you set the council tax, people are entitled to benefits and then there is a small amount that you will enforce. Council tax is quite involved, because there are a lot of discounts. A lot of people are aware of the single person discount, but there are other reliefs: disabled relief, band reduction and exemptions and discounts for the severely mentally impaired. We invested in a tool to help signpost people towards extra help. As a result of that, there was an instance in which we awarded someone a severe mentally impairment exemption going back a number of years. When we saw them, they thought, “You are going to collect our money”, and we literally had to sit them down and say, “No, we are here to help. We are here to try to give you help on that”. We extended that to the family.

We do take vulnerability very seriously. If we get a complaint against an enforcement agent, they will deal with it internally first. If it is extended, it will go into our complaints process. As yet we have not had one regarding that. It is not just about passing a debt, whether it is someone who is vulnerable or not, to the enforcement agent. You have to do your homework first to try to protect them. Once you pass to the enforcement agent, while we work them very closely, when they do their actual first bit of work it adds to the fees. You have your summons costs first, you have your liability order costs, and then you have additional costs. That all adds to the existing debt. If you can try to negate that by giving people help at an early stage, that helps the customer.

Q15            Kate Hollern: It is very important that there is a lot of evidence-gathering before enforcement is taken. It should certainly be a last resort. Russell may be able to help on this one. Are there any practices in the private sector on debt collection that perhaps we could learn lessons from or that could give advice on how things should change?

Russell Hamblin-Boone: Yes, absolutely. It is an ongoing learning process, but many of the practices that you see in the private sector—in private debt collection—you will see enforcement agents employing as well. We partner with debt charities. The vulnerability training is the same type of training that private debt collectors would undertake. The firms have welfare teams. Paul has mentioned technology and the use of technology. In the same way, debt collectors will use things like behavioural analytics and nudge techniques to try to encourage people to engage.

The whole process of getting early engagement with people and getting people to talk is integral to what we do in the enforcement industry. That is critical, because, going to your previous point about bad behaviour and things like that, we need to ensure we do not create a bad impression of the entire industry. That will do two things: either we will create an impression that the industry is bad and therefore people on principle will not want to pay their council tax; or we will frighten people, particularly vulnerable people, into not engaging and then getting themselves into more problem debt.

It is important that we are careful to recognise that, if there are complaints, they are complaints. In terms of the enforcement process, it is not a very pleasant experience to have someone knocking on your door. It is quite unusual. We have to make sure that enforcement agents are following the procedure. It may not be a procedure that somebody likes, but it is the procedure. We voluntarily introduced body-worn video cameras so that there is close control of enforcement agents on the doorstep. Their interactions with members of the public are all filmed so we can make sure that standards are maintained.

Most recently, we have been instrumental in setting up the Enforcement Conduct Board. We have encouraged and invited scrutiny of our industry—some of the anecdotes perhaps present a broader picture of the industry that we would consider to be not entirely accurate—so we can have an independent review of our sector. We can have somebody independently looking at those complaints to see whether those are justified complaints and to identify whether there may be systemic problems or even to identify where there are individual pinch-points that we might need to address that perhaps we are not aware of ourselves.

It is important that we understand what the reality of the situation is as opposed to perhaps always seeing things through the prism of a small number of complaints and using that to make an assessment of the entire industry.

Paul Whyte: I would just add that local authorities take a very dim view of complaints. As an enforcement agent, you do not want them. Yes, someone will complain purely because you have knocked on the door. That is a complaint we will have to live with, but there should never be a complaint for bad or aggressive behaviour. That needs to be stamped out. I can safely say that, from my experience, I am not seeing that in this industry. I have been in it now for over 30 years. Local authorities would comment that the level of complaints, certainly since the 2014 reforms, have pretty much disappeared. Even the Local Government and Social Care Ombudsman has made a comment in the same sort of area.

The ECB, which is coming now, is a fantastic independent entity. It is fine for CIVEA to sit here and tell you that this is not happening, but I am really excited to see what happens with the ECB when it is up and running. It will independently look at what we are doing and comment on the situation with regards to complaints.

Q16            Chair: Just to come back to Russell Hamblin-Boone, how many of the agents operating in this field are members of your organisation?

Russell Hamblin-Boone: We represent 95% or more of the market. There are about 2,000 enforcement agents registered and probably about 1,700 that are active. We pretty much cover the market.

Q17            Chair: How many are part of the new enforcement board that is being set up?

Russell Hamblin-Boone: All of my members are committed to scrutiny. There are conversations going on with other enforcement agent associations as well.

Q18            Ben Everitt: I have a number of questions about working together to improve collection rates, specifically around the support offered and given by central Government. Paul, I will start with you, because one of the answers that you gave to Kate referenced using data from other agencies. There have been a number of pilots launched to trial greater data sharing. I wondered whether you had been involved in any of those.

Paul Whyte: We have not been involved in the examples here. A lot of those are liaisons directly with the local authority. It has not really got to the enforcement stage.

Yes, the enforcement industry has invested a lot following the reforms to improve its knowledge through data harvesting, so that it can now, in many ways, follow what the debt recovery sector has done. It has turned the compliance stage into almost a traditional debt recovery process, in terms of trying to understand who you are dealing with and creating different stages in your process flow to work on those particular segments. If you think someone is really going to struggle with this, you introduce more letters, you change the wording, you offer more help, and you give more facilities to encourage that all-important engagement that I mentioned earlier so that you have that conversation.

The biggest frustration for all enforcement agents is when they return something nulla bona in respect of council tax, where you have been able to establish nothing and the case is being referred back as unsuccessful for the council to take additional action. It is all about trying to get the best data you can and reach out as best you can innovatively.

There are a lot of techniques now with the use of mobile phones and what-have-you, where you can really try to communicate with someone on an instant level; you can get them to push a button and phone you back to discuss the situation. When you do that, it is quite often a relief; people are saying, “Actually, that was not so bad. I am glad I have now sorted that out. That is fantastic”. It avoids the next stage—the visit—which nobody particularly enjoys.

Q19            Ben Everitt: Where do you get the data to do that from?

Paul Whyte: There are various agencies. It is very similar to most of the finance houses, which will do a search if you are looking to gain a mortgage or that kind of thing. There are a number of different entities out there that will provide this kind of information. Then it is a matter of assimilating it and understanding what it means, because the data can be quite complex.

You really need to pick out from there the nuances that allow you to understand whether this is someone who is running their finances well, who actually seems to have the means to pay this and should be able to pay very quickly, as opposed to someone else who may be in a loan situation and who you can see from the facts is having a hard time. They are going to be the ones who are going to struggle when it comes to perhaps facing a whole year’s worth of council tax. They are the ones that you also want to bear in mind may be vulnerable. You have to take that into consideration and have protracted arrangements, or liaise with the local authority if need be.

Q20            Ben Everitt: Paul, you have given me a very good idea of how it works quite well with the private sector data set. I am now going to turn to Stephanie and Kevin to talk about the potential challenges of working with central Government. Certainly, I mentioned those pilots earlier to do with DWP and HMRC data. I wonder whether either of you have any experience of working with those.

Kevin Stewart: Mid Sussex is not part of those pilots. I am aware of part of those pilots. One of them is about attachments of earnings and getting information from that particular aspect. I would greatly welcome being involved with or extending those particular pilots. To add to that, for an attachment of earnings for council tax, you have to seek liability and add on cost before you can seek an attachment or take further action from there. That is an issue with that.

Like with our enforcement agents, we try to use data ourselves wherever possible. Privacy, GDPR and data protection are all very important. We have our own legal and data protection officers, who, probably rightly, are cautious in respect of the use of data. These pilots with central Government Departments are very good, but, although it is improving, there is still further work to do to improve the exchange of data. From our position in local government, it does sometimes appear that doing our job is a one-way process rather than a two-way process. Yes, there are improvements being made. This has been a pilot. I know we have gone through covid, but please roll it out.

Ben Everitt: That was very diplomatically put.

Stephanie Cryan: We are part of the pilot, especially around the HMRC payroll data and the attachment of earnings orders. I will be totally honest: we have not really heard anything back from HMRC on how it is going. We are doing it on our end. Asking your colleagues in Treasury to speed up the feedback and the data from it would be really helpful. I absolutely echo that we would like it to be accelerated and we would like to expand the pilot actively, because we do feel that data sharing is really important.

Again, with the DWP, to give an example of some data sharing that we are doing, we are working with the Guy’s and St Thomas’ Foundation Impact on Urban Health to offer additional support to households that have problem debt and multiple health issues or long-term health conditions through a financial shield programme. That entails data sharing between us, creditors, debt advisers and GP surgeries, while still respecting confidentiality. That is working really well, because it helps to get people into arrangements where they can be supported to repay in a way that works for them.

With any data sharing, it is only as good as the data you get back and the speed with which it is done. There is a willingness on our end, but I would urge HMRC to get their skates on a little bit so we can really see the impact it is having.

Q21            Ben Everitt: Data sharing being a one-way street is something we have heard before on this Committee. Thank you very much; it all helps. I just have a few more questions about barriers. Kevin, you mentioned GDPR. Stephanie, you mentioned confidentiality there. Are there any other barriers to greater data sharing that we need to flag up in order to increase revenue collection?

I am thinking specifically about a point that you made earlier, Kevin. You are already a bit thin on the ground in terms of the people you have to do that. That is where it shunts over to the enforcement side. Authorities, and particularly lower-tier authorities, are quite light on people but high on transactional services. Is that something that is a significant barrier when it comes to increasing data collection?

Kevin Stewart: In council tax, you are relying on the individual to give you as much data as possible, but experience tells you that not everyone does that. You are relying on getting your information from a range of different sources. We have certain powers under council legislation to get it off a number of bodies, owners or managing agents. If managing agents and council tax payers fail to give us the information, we have a penalty system that we can use as well, should we need to use it. Once again, though, you are adding to costs and things like that.

Yes, there are other data challenges, but, as I mentioned, the resource has been doing the additional duties during the last two and a half years. First there was covid and the business grants—local authorities have done a fantastic job—and then there was the energy rebate as well, which I hope you will come to later. That has had an impact on the ability to chase people up and get information.

As a result of that, for example, at the moment we have had to cancel a May reminder run, a final run in June and a court in July, because we are still coping with the covid stuff. I know that has gone slightly beyond the question you asked, but that stops us from getting the information and challenging the data we have, and from doing the day-to-day job.

Stephanie Cryan: We absolutely have to respect people’s privacy and comply with that, but there is some data sharing that could help support us in identifying vulnerable residents as well. As I said earlier, we do not always know somebody is vulnerable until it is too late. It would be really helpful to get data that respects people’s privacy and confidentiality, but allows us to identify particular vulnerabilities or potential issues that may cause problems in the future and map those out.

We are very limited in the data we have as local authorities. We go by that data, but we should think about what we could do if we had much more data to work with.

Russell Hamblin-Boone: The Committee might want to look at the work the Cabinet Office is doing around the Digital Economy Act. It is being very open and encouraging people to come to it, particularly local authorities, to suggest ways in which the Digital Economy Act might be better used. There is a lot of work going on behind the scenes on that.

Paul Whyte: The more that can be done to share data between entities, the better. At the end of the day, as I said earlier, it is all about the individual. The more you can appreciate of that person through data, the more successful we will all be in doing the job in a way that is right and proper.

Q22            Ben Everitt: Finally, does it help that the Government produce these league tables in terms of data collection?

Kevin Stewart: The next one, for the last financial year, is due at the end of June. A result of that is that it slightly distorts things. Local authorities—not always, but generally—try to collect in-year to try to get their collection rates high in-year. That causes a little bit of a false economy and does not help the arrears situation overall. As I said, not all authorities do that, but I know that a number do.

Stephanie Cryan: I agree. Just focusing on in-year collection means that it becomes a league table. Our performance and how we collect our council tax absolutely needs to be looked at, but league tables by default can sometimes drive bad practices as well, if you are so focused on that in-year collection.

Going after that debt and in-year collection is not always the best thing for either the local authority or the person themselves. As I said, the Step-by-Step approach that we take, in which you consolidate debt and work with people to pay it over a sustainable period of time, is a fairer and more compassionate approach.

Q23            Kate Hollern: We are all aware of the £150 council tax rebate. To the local authorities, what sort of support have you had from Government Departments on implementation? It sounded quite easy at the time, did it not? It is actually a very complex process.

Stephanie Cryan: It is very tricky and complex trying to identify people. We have had to buy in new technology to be able to do it, so there has been a cost to us around that. We are working through it. In Southwark—most inner London local authorities will be in the same position—not everybody pays by direct debit. Only about 50% of our residents pay their council tax by direct debit. You cannot pay the refund into people’s bank accounts; you have to find different ways of doing it.

We are working with the Post Office to issue a voucher, but you have to find people and invite them to apply. When about 50% of your council tax base is on that scheme, it is very time consuming. We have done really well. On the direct debits, we are there, and the money is more or less out of the door. We are sending vouchers to people to be able to go and collect it from their post office, but it is about trying to identify those people, which then comes back to data sharing. If we had better data, we could work through it quicker.

There are a lot of complexities around it. There is a bit of a misconception. People think, “Everyone pays their council tax by direct debit”. They do not, because they do not have that facility. People who are financially excluded do not have that, and they are the people who need it the most. They are the people who need this rebate more than some other people may do. There is that around it as well.

It was also rolled out during the pre-election period for local elections. Therefore, in terms of the purdah rules, you were restricted in what you could do and say. In that respect, the timing of it was not very helpful. When you have people who find it hard to reach the council, the council tax account has to match the bank account. There are all of those types of administrative things that you find as you come across them.

There is also another issue, which, Chair, you wrote to the Secretary of State about, which is the fact that there are people who pay council tax within their rents but they are not the council tax payer. These are people who live in houses in multiple occupation or who rent a room. Part of their rent may cover the council tax payment, but they are not the council tax payer. They are not going to be eligible for the rebate, and yet they are still going to be suffering from the energy crisis and the cost of living crisis. There is a cohort of people that we need to look at in terms of how we can support them as well.

Kevin Stewart: I wholeheartedly agree with that. Can I just add one thing? During the pandemic, I worked quite closely with civil servants in central Government Departments. There are many positives that have come out of that and that will help greatly going forward, if that can actually go forward, but the complexity of the energy rebate scheme, as the councillor has just said, is huge.

As the Chair has mentioned, we are a little different from Southwark; 80% of ours are on direct debit, and that has increased as well. I can report that, as of now, we have paid 30,757 out of 40,500, which is something to the tune of 75%. They are mainly direct debits—the easy ones. We have refused to pay some of them directly, because, as we found with the grants, we worried about the reconciliation and assurance process at the end of it, and we worried about protecting the public purse and fraud. We wanted to put controls in place.

What we also found is that, when we wrote out to get those that were not on direct debit to apply, our telephone switchboards were swamped. I know of an authority in Sussex where the telephone system crashed due to all the inquiries that came in. We are having to limit the number of letters that go out at a particular time encouraging people to apply. We have an online system. We are using the same system as we used on the grants, which gave us a heads-up on how to do it. It really has helped us in respect of that.

We also have the issue—I know there is a separate question about this—of the harder-to-reach groups. We are offering telephone surgeries; we are offering surgeries. We also have a hard-copy form. We have started paying those. We have paid about 2,500 people who are not on direct debit, but we still have about 7,000 letters to go out. I already mentioned the impact on our frontline. It is the revenues and benefits service that is taking those inquiries, and it is stopping us from doing the day-to-day job.

You will probably be calling us back later in the year to ask, “Why have you not collected so much this year?” That is simply because of all the additional work. For us, the additional covid work has not stopped. It is still ongoing. The covid and energy rebate stuff is still ongoing in respect of the impact on our frontline.

Q24            Kate Hollern: On the point about working with Government Departments, I presume the issues you have raised have been fed back in.

Kevin Stewart: Yes. I did a jig when it was announced that we were not going to pay a second energy rebate, which was the last announcement the Chancellor made.

Chair: It is down to you, is it? You are taking personal credit for that.

Kevin Stewart: I did a jig when that was announced. Despite the excellent work local authorities have done, we would have struggled with that.

Q25            Kate Hollern: It was a huge task that sounded so simple, did it not? How long will it take to complete? How long will it take to get everybody’s £150 to them?

Kevin Stewart: There are two parts to that. One is that we have until 31 September to pay the main scheme. I want to try to pay as soon as possible, taking into account the impact of those harder-to-reach groups. We will do whatever we can. Stephanie mentioned purdah. We have done radio campaigns and publicity. We have gone out to local organisations and to Citizens Advice, who we work very well with. We have done that. I would say you are probably going to be talking about another two or three months for us.

Please note that we are not a Southwark or a Manchester; we are very different. We only have 10,500 that do not pay by direct debit. For a small authority, managing that and dealing with that is a huge impact on our resources.

Q26            Kate Hollern: Stephanie, Southwark is much bigger. What has been your experience?

Stephanie Cryan: First of all, I just want to pay credit to all of our officers in the team. I am sitting here as a politician, but it is the officers who are making this work. Throughout the pandemic, they really pulled out all the stops to make sure the money goes out of the door and reaches people as soon as possible, while still doing the checks and balances that you have to do—because it is the public purse—around that as well.

I would like to talk a little bit about the discretionary fund. The council tax rebate is only for households in bands A to D. We have some vulnerable and low-income residents in bands E to H as well, so we have taken the decision that part of our discretionary fund will also pay the £150 to low-income families in higher council tax bands as well. That is basically for fairness and to ensure that the money goes to the people who need it the most. We are also using it to provide additional support for low-income families across the piece, between £75 and £150 on a sliding scale. Again, it is time-intensive to find people.

Across the country, local authority officers are working their socks off to make sure this money gets out of the door and goes to the people who need it. We really need to give them the credit they deserve.

Q27            Kate Hollern: How successful have you been with the hard-to-reach groups?

Stephanie Cryan: We are getting there. The direct debits are fine. We have identified those. The money has been paid or is on its way to being paid. We have done it by postcode. We know who we know, and we do work with our partner organisations around that. We send out letters of invitation asking people to contact us. Some people we already know, so we will send out a voucher that is valid for a month. They can go to the post office, and there is a barcode that is specific to that person. They can get their £150 that way. We are getting them out of the door.

We are weekly inviting batches of people by postcode. We have found that is the easiest way to do it. You start with SE1 0AA and you work your way through the postcodes in numerical order. We are there, but it is going to be tough. There will be people who slip through the net; it is just the nature of it.

If we have to close it by 30 September, I would like there to be additional leeway to have some funding for people out there who we have not been able to reach, but who come in October or November and say, “I really did not know about this, but I am eligible”. I would like to have the flexibility to allow them to benefit from it as well, because they are entitled to it.

Q28            Kate Hollern: Is there anything Departments can do to assist over these next few months? We are still dealing with covid. There are still huge challenges both in the system, and particularly on this council tax rebate.

Stephanie Cryan: It comes back to things like data sharing so that we know where people are. There may be people in the system—for example, in the healthcare system—who we do not know about. We could say, “You are vulnerable and you are eligible”, whether that is in the rebate scheme across bands A to D or in our discretionary scheme. That would give us the confidence to know that there are people out there that we can write to about that.

Again, in the discretionary part of it, there will be people living in HMOs or renting rooms who we do not know about. We do not have that relationship with them, because they do not pay council tax to us. They are the people who are really going to slip through the net. If you are renting a room in a house in multiple occupation and you still have your energy costs to pay but you are not the council tax payer, the local authority may not know who you are, because you are renting through a private landlord; you are not a council tenant. These are the people who are going to slip through the net on this and who absolutely need that help and support.

The cost of living crisis is going to get worse, and the money is there. The money has been allocated for people. It is about how we find them. Some more data sharing would help.

Kevin Stewart: Can I just come in there? I concur that the teams, and my team, have done brilliantly. On the discretionary scheme, we agree. We are putting additional money towards it, but I can only make 1,337 £150 payments towards that. It is a very limited pot of only £250,000 for payments of £150. Yet the main scheme, which includes band D with disabled reduction, is nearly £6 million. It is a very limited pot.

The authority is quite stretched. The closing date for the main scheme is 30 September. The closing scheme for the discretionary scheme is 30 November. It is very stretched, as they are finite resources. That pot is not going to be increased. This is first about publicity, and secondly about whether there is any more money in the pot for the discretionary scheme.

Chair: Thank you all very much for coming to share information with the Committee. It has been really useful for us to understand the practical challenges that you are all facing both inside local councils and from the outside as well. Thank you for that.

Examination of witnesses

Witnesses: Catherine Brown, Alistair Townsend and Rachel Beddow.

Q29            Chair: Thank you all very much for coming. As with the first panel, I will ask you to each introduce yourself—say who you are and the organisation you are representing.

Alistair Townsend: I am Alistair Townsend. I am the president of the Institute of Revenues Rating and Valuation. We are a professional body that provides qualifications and training in revenues and benefits within local government.

Rachel Beddow: I am Rachel Beddow. I am policy manager for debt and money at Citizens Advice. I imagine most people are familiar with the organisation, but we are the national membership body for the 270 local Citizens Advice organisations.

Catherine Brown: I am Catherine Brown. I am chair of the Enforcement Conduct Board, which is an organisation that is in formation at the moment but is designed to be an independent regulator for the growing enforcement industry, with a very clear mandate to ensure that everyone facing enforcement action is treated fairly.

Q30            Chair: To begin with, similar to the first panel, looking at the amount of debt that there is around from council tax arrears and the number of people who are behind with their council tax, Citizens Advice estimated that at the beginning of last year 3.5 million people were behind. About half of those were not behind before the pandemic. The pandemic has had a big impact and a knock-on effect. How do you see the situation? Is it a historical long-term problem or one that was going along at not too bad a rate that the pandemic has really boosted?

Rachel Beddow: Certainly, we would see it as a long-term problem, but it is fair to say that the numbers went up significantly in the pandemic and have done since then. We estimate a growth of about 20% on the figure that you cited. We are seeing certain groups being disproportionately impacted. Women are more likely to be behind on their council tax, according to our data, as are people with long-term health conditions. We also see that lone parents with children under five are disproportionately represented.

As you said, this is a long-standing issue for us. Council tax debt has been the most common debt that people have come to us with since 2013. It has very recently been superseded by energy debt, unsurprisingly given the current situation. Other than that, since 2013 it is consistently the most common issue, far ahead of other debts. Compared to credit card debt, for example, it is 56% ahead; there are about three times the number that we see with overdraft issues.

What we see on council tax debt is both people coming to us in high numbers about being behind on their bills, and concerns about the collection practices used. A quarter of the people who we see with problems with council tax debt also have a problem with bailiffs. This is compared to about 7% if you look at credit card debt, for example.

Our concern about that is that we see a really strong correlation between council tax arrears and other signs of financial distress. Across the piece, about 45% of our debt clients are in what we call a negative budget. This is where our debt advisers assess that they do not have enough money coming in each month to cover even basic expenses.

If we look at council tax debt, it is 53%, which is higher than the average, and there is also a strong correlation with other areas. A third of the people who we help with council tax debt are also behind on their water bills; a third are behind on energy; and 15%—and this number is rising fast—need help with food banks. At the minute, as costs rise, we expect these figures to grow.

Certainly, there are questions around council tax support, as has been raised, but we also need to think about what fair and compassionate debt recovery practices can look like in that context.

Q31            Chair: I will just pick up on that point, before I come to the other two witnesses to see whether they have anything to add. You are saying that the experience you get back from the various people you talk to and the members of the public who come to you for assistance is that the collection practices and processes for council tax are more challenging and more difficult for them to deal with than for other debt. Is that the case?

Rachel Beddow: Yes. We certainly see disproportionate issues with bailiff practice, for example, compared to other forms of debt. I know that a comparison has been made with private sector collection, but we see about half the level of issues with collection when we look at the private sector, where there may be more of a focus on looking at affordable repayment plans over time versus moving so swiftly to enforcement practices. Yes, that certainly shows up clearly in the data.

Alistair Townsend: It is important to note that council tax is a tax, first. The process for recovering it is based on it being a tax, which makes it fundamentally different from private sector debt in many ways. The key part is that local authorities cannot choose their customers in the same way as the private sector can choose their customers.

Equally, it is a constantly accruing debt. What might appear very often to be a rush to recovery or enforcement is very often a local authority looking at ensuring that we do not get into a cycle of debt, because come next April another bill will arrive at that person’s door. The swift approach that many local authorities take is trying to avoid a cycle of debt that people simply cannot get out of.

Chair: Is that a reasonable point?

Rachel Beddow: One of the key challenges with council tax debt is the pace at which the debt itself escalates. Two weeks after the original notice goes out, people become liable for the whole year’s—

Chair: We will come onto the whole year point in just a second.

Rachel Beddow: That also makes for significant challenges.

Q32            Chair: If councils do not pursue it, exactly that is going to happen, is it not? Next year you are just going to have a bigger debt.

Rachel Beddow: Yes. The challenge is not about saying, “How do we make sure people do not pay their council tax?” Local authorities need to get council tax debt recovered; that is for certain. There are things we can learn from the private sector in terms of a manageable repayment plan over time being a more effective way to get that money back in a way that both recovers the money and also allows people to continue to make their ongoing financial commitments as well as pay back arrears.

One of the challenges that we find is that, while people are dealing with council tax arrears, they then find they are getting behind on other bills and future council tax payments. Looking at how we balance the two is really important.

Q33            Chair: I would like you to comment on the council tax support system as well, which we raised with the previous panel. At one time, you would have a council tax benefit and some residents on low incomes paid nothing at all. Now in virtually every authority most people pay something. Is that an additional issue now? Is it challenging to help people get their entitlements? Are some people being asked to pay sums that are higher than they would have been before and very difficult for them to pay? Are you seeing different experiences in different authorities?

Rachel Beddow: There is definitely variation between different local authorities, but it is the case that in most places working-age people will have to make a minimum payment of 15% or 20%. This was mentioned by the previous panel. For people on the lowest income, that can simply be unaffordable. You are then in a position where local authorities are having to waste time and resources trying to collect a debt that people are simply unable to pay. We would certainly see that as part of the picture. For some people, it is an amount that, while it may not seem huge, is not manageable. As council tax increases, that becomes a growing proportion of people’s income.

Alistair Townsend: I would agree wholeheartedly. Reading through the written evidence that was provided, it is fair to say there was pretty general agreement that council tax reduction schemes are one of the issues that are creating arrears.

Different councils are different sizes and have different levels of collectible debit. In the evidence we provided, we used the proportion of collectible debit as our measure against it. That indicates that those authorities that have higher minimum payment requirements are carrying higher arrears. It is not really rocket science to predict that this would occur. That is the reality.

Local authorities do not particularly want to be in the situation of billing what are, almost by definition, financially vulnerable people. That is a structural issue with local government funding that is causing local authorities to balance their books by billing financially vulnerable people for council tax.

Q34            Andrew Lewer: As we have just touched upon, the current system means that a missed payment of one month of council tax quickly escalates into a debt of thousands of pounds due to the way in which individuals then, as a result of missing that one month, become immediately liable for the full year’s amount. I would like to ask all three of you how you feel that could be alleviated or changed in some way.

Alistair Townsend: We need to be accurate about what the legislation requires, first of all. It states that somebody will get a demand notice at the beginning of the year for the whole amount. That is then divided by 10 or 12 instalments, and they are required to pay. If they fail to pay one of those instalments, the law requires that the council issues a reminder notice. If they bring that up to date within the 14 days, they can continue to pay by instalments. However, if they do not bring it up to date, they can lose the right to instalments and the whole amount for the year becomes due.

The principle behind that is to ensure that the local authority has sufficient time over the rest of the year for the same reason that I alluded to in my previous answer: it is an accruing liability. For any action that is taken or any arrangement that is made that is non-statutory, there needs to be time within the year to achieve an outcome of no council tax outstanding in order to avoid an accruing debt situation in the following year.

It appears to many to be terribly harsh. It is a system designed to allow people a number of opportunities to stick to their instalments. They only forfeit those instalments if they then do not bring them up to date. It is only on a third occasion of doing that, after they have had a reminder and paid the missing instalment and then had another reminder and paid the missing instalment, they will then forfeit the right to instalments entirely. It is designed to give the local authority time to engage with the customer at that point in order to attempt to get the money paid within the financial year to avoid accruing debt.

Andrew Lewer: You do not believe it should be alleviated or changed.

Alistair Townsend: I am explaining what the legislation says. It is entirely open to the legislators to change that, and they could change it in many different ways. For instance, as I mentioned, you get three opportunities and then you lose the right entirely. You could change it so that you never lose the right. If you pay on your reminder, the instalments could remain in place.

Alternatively, you could require further notices such as a final notice before court action is taken. There are many things that could be done. It is not for me to say whether they should or should not be, because that is a decision for legislators, but it is not entirely accurate to say that the whole amount becomes due when you miss a payment.

Rachel Beddow: We would support a change in the system so it is not the case that people who are struggling to repay become subject to the whole fee, partly because it makes it so much harder for people to get back on track and also because at that point they can be subject to the liability order fees. That is a further £84 on top of the debt they started off with.

In terms of how that could be alleviated, there are things that could be learned from, for example, the utilities sector. This is also an ongoing bill, but manageable repayment plans are put in place so that people can continue to make their ongoing monthly payments while also paying back the debt that they have accrued.

Yes, we certainly see that the sudden escalation causes challenges. The other thing to mention is, when we speak to advisers, often what they will say is that in certain local authorities it can be quite challenging to get hold of the local authority in that two-week period to arrange a repayment plan. Although there can be very good practice around putting repayment plans in place, there is not always the time available for that before you see the bill escalate.

Q35            Andrew Lewer: Why would it be hard to get hold of a local authority in two weeks?

Rachel Beddow: Lines are engaged and you cannot get through; you speak to one person and then you find that a plan has not been put in place. There can be operational challenges. That can be quite a short time period to get it sorted.

Q36            Andrew Lewer: I would just add this question to you, Rachel. According to a Civil Enforcement Association survey, most of that annual debt is repaid in the monthly payment plans that Alistair just described. In practice, it becomes a monthly debt. In the experience of Citizens Advice, does that escalation from monthly to annual debt affect individuals’ behaviour anyway?

Rachel Beddow: Yes, often what happens is the liability order fee is then added on top. If people have fallen behind, it may be that they are not able to afford that full monthly fee in the first place. We would want to see a manageable repayment plan put in place that considers affordability and uses things like the standard financial statement to look at what people might be able to pay. In doing that, we need to learn lessons from what we see done often very successfully in the private sector.

Catherine Brown: We do not have a lot to add at this stage, but, clearly, in order to have effective enforcement and collection you need to have affordable arrangements. As you imply, if this all becomes due at the same time, it is going to place more reliance on the process of agreeing affordable repayment than in the enforcement process.

Q37            Andrew Lewer: Just administratively, if council tax were changed outright to a monthly rather than an annual debt, would that add to the administrative burden for councils? Councils would be having to chase each monthly payment rather than a single annual amount.

Alistair Townsend: It would add to the burden significantly. The thing to bear in mind is that the costs of the action taken by the local authority are the same irrespective of the value of the debt. If you are taking action to recover £100, it costs you the same as taking action to recover £1,000. Theoretically, if each month was an individual debt, you could be talking about a 10-fold increase in the administration cost.

Q38            Mary Robinson: We have heard how obtaining liability orders to allow local authorities to pursue debt can be costly and time-consuming. How could this process be improved?

Rachel Beddow: We do not have anything particularly to add on the process. We would certainly support more pre-action before a liability order is obtained to look at whether a repayment plan could be put in place and more time given to that before that liability order fee is incurred.

Q39            Mary Robinson: Would that be in the form of the pre-action debt claim protocol, similar to the private sector?

Rachel Beddow: Yes, we think something like that could be effective.

Alistair Townsend: In order to understand where the liability order process fits in, you have to understand a little bit of the background to it. I will try not to get too nerdy, but I do have a habit.

In the old general rates days—I realise I do not look old enough, but I do remember the old general rates days—there was a situation where defences against liability were part of the magistrates court process. There was a greater reason to defend an application for what was then a distress warrant, because that was the point at which you were able to put a defence in.

Since 1991, when the community charge and then council tax came along, all those defences were lifted and put into the valuation tribunal. The only matter really that is now left with the magistrates is a defence against non-payment. It is quite an expensive use of resources to deal with a system that is assumed to be based on attendance when very few people attend. That is the reality. There are lots of other systems that might be considered appropriate. The access to justice is still there, because the main cruxes of the defences are in the valuation tribunal already. They are there under section 16 of the 1992 Act.

There are other examples that we would use that might be considered more appropriate to be examined as a comparator, such as the Traffic Enforcement Centre, which uses a bulk process. It enables people to defend that they should not have to pay it, but equally it is a much more advanced process for dealing with bulk applications. One of the benefits of making the liability order process more efficient is that it would enable councils to put more time and effort into some of the pre-action work. It may even reduce the costs, which would assist all debtors in that situation.

Q40            Mary Robinson: From what you are saying, it is simply a wasteful and resource-intensive rubber-stamping exercise.

Alistair Townsend: I would never want to disrespect the courts by saying it is a rubber-stamping exercise, but it could be done far more efficiently than it is currently done.

Q41            Mary Robinson: During the pandemic, of course, the courts were virtual. Is that wasteful too?

Alistair Townsend: That worked quite well. It was more similar to the traffic enforcement court system, because people had to write in to say they wanted to defend it. You found that they were then set aside to a special court to allow them to attend in that situation. The bulk cases, which are the vast majority of cases, were able to flow through the system.

There were initial delays in setting that process up, and you saw that across the board. The first panel alluded to that as well. There were delays for all organisations in setting themselves up to deal with the new world of lockdown. Once that occurred, the remote hearings worked quite successfully.

Q42            Mary Robinson: We have heard from Rachel about the contrast with the process in the private sector. Is there a way forward for this to be something that could be used in this forum? It would involve an exchange of information and seeking to resolve the matter without going through the courts. Would that be a way forward to deal with council tax debt? What would be the downsides?

Alistair Townsend: To understand whether the pre-action protocol could work for council tax, you have to understand the purpose of the pre-action protocol, which is mainly to avoid court proceedings and deal with disputes in civil debt. For the reasons I have said, there are very few disputes other than people’s inability to pay. In order to secure its position, even if the council were to make an arrangement, they are still likely to want to obtain the liability order so that, if that arrangement failed, they could immediately take action with a view to collecting the money in before the end of the financial year.

Q43            Mary Robinson: What about a mixture of the two? There could be more powers ceded from the court towards the local authorities, combined with a protocol that pushed a way forward for people to work together to get some agreement. Would that be a taster of what could happen?

Alistair Townsend: It could be argued that a pre-action protocol already exists in the legislation, with the reminder process and the final notice process that I have already mentioned. In terms of whether an additional one on top of that is necessary or helpful, it would probably create delays in the process. It would increase the cost and, on the basis that the cost is generally transferred to the debtor, that would not sit comfortably with most local authorities. I am not entirely sure it would help the situation particularly.

Rachel Beddow: This has already been drawn attention to, but there is also an important challenge to raise about the in-year collection targets and how they might make this more challenging. When we are talking about the period in which the debt is collected, that is certainly something we see being applied differently in other places. A move towards multi-year repayment would be helpful and potentially help to alleviate some of the challenges around the timeliness of collection.

Chair: One of the very controversial aspects of council tax collection is the possibility in the end that people can be committed to prison. Mohammad Yasin is going to explore this issue.

Q44            Mohammad Yasin: In England, wilful non-payment of council tax can still lead to a prison sentence of up to 90 days. Is this a proportionate measure?

Catherine Brown: I would adopt a view a bit like the one Alistair was just describing, which is that this is clearly a matter for legislators. Any level of penalty that is life-changing—and this would certainly be an example of that—places a premium on high-quality and consistent enforcement activity. Whether that particular penalty is in play or whether other material life-altering penalties are in play, it makes it absolutely critical that the conduct of enforcement officers is of the highest and most consistent nature.

Rachel Beddow: It is important to stress that we know it is used very rarely in practice. What we see is that, while that is the case, that is not always understood by people who are in council tax debt. We often hear that people have been threatened with the risk of imprisonment, even though we know it is very unlikely to happen. We have heard that there are certain bailiffs, for example, that have threatened people by saying they might be recommended for imprisonment. They have used this as a way of getting people to pay a larger amount up front versus through a repayment plan.

Whether it should exist as a penalty for wilful non-payment is a separate question. We see that wilful non-payment is very rarely an issue. The issue is people who cannot afford to pay, which is not what the imprisonment is intended for. Its existence does create that risk of abuse. Although certainly not in all cases, we have come across communications that mention imprisonment on the first outreach. That can cause real anxiety for people, unnecessarily.

Q45            Mohammad Yasin: I have noticed that between 2016 and 2021 the number of people sent to prison has come down very sharply. In the last couple of years, nobody has been sent to prison. What does that mean? Is it good news that more people are willing to pay council tax? Are there some other measures that have been taken?

Rachel Beddow: My understanding is that the numbers have remained fairly low. It has always been nominal. It may point to fewer people wilfully not paying, but certainly that is not the challenge we see. We see people being unable to pay and growing numbers of people struggling to make their repayments.

Alistair Townsend: First, it is important to note that the numbers are so tiny that they are not really data—

Mohammad Yasin: It is 692 over those five years.

Alistair Townsend: That is over five years. That is about 100 a year. Compared to the number of people who are liable for council tax, statistically, it is a tiny number. As I understand it, quite a large number were from one specific authority, which means they are probably pushing that as a remedy more than most other authorities.

The other thing that is really important to understand about the whole committal to prison process is that it is only one option. The summons that people receive to get them to court is an inquiry into their conduct and means. It is only if they are found guilty of either wilful refusal or culpable neglect that they would actually be committed to prison. In the vast majority of cases even then it would be suspended on terms of payment based on their income and expenditure.

The original question was, “If somebody wilfully refuses to pay, is it proportionate?” Is that proportionate for any tax? I would throw the question back at you. Council tax is a tax. It is a wilful refusal to pay a tax. Is it appropriate for a society to commit people to prison for non-payment? The institute as a whole is fairly agnostic. You have to bear in mind that we cover the whole UK. It has already been abolished in Wales. It has not particularly moved the needle one way or another collection-wise, but it went a couple of years ago in Wales.

Over the years of community charge and then council tax, there is probably more case law around local taxation committal than there is any other part of local taxation. It is really clear from the higher courts that the purpose is coercive, not punitive. There was quite a famous case in Cannock—ex parte Ireland—in which Lord Justice Henry said that there must come a time when the court “can and should resort to the punitive approach, because if the coercive regime is seen to have no teeth, it will lose its coercive power”. That was the approach of the Court of Appeal at the time.

Q46            Mohammad Yasin: Rachel, in your view or experience, how does the threat of imprisonment affect the behaviour of those who are in debt already?

Rachel Beddow: As mentioned, though not in all cases, we see that the threat of imprisonment is wrongly represented to people in debt. It contributes to a sense that the aim here is not to arrange repayment, to understand someone’s situation and to ensure a payment plan is put in place that they are able to manage, but that this is a punitive system.

I totally agree that the aim of this is not people who are unable to pay, but, given that that is the majority of the people who we see and given that the majority of cases are people who are not able to pay, it feels like this is not an appropriate measure to have in place.

Q47            Mohammad Yasin: What happens once someone is in prison, let us say for up to 90 days? What would happen to those people who have not paid? Do they have to pay?

Rachel Beddow: That is not something we have come across.

Alistair Townsend: In the legislation, it says that the amount that is due from somebody is reduced pro rata based on any time served. Theoretically, if they served the whole of the time, the debt is no longer payable.

Q48            Darren Henry: Catherine Brown, how responsive have the enforcement agencies been to the establishment of this Enforcement Conduct Board? What sort of engagement have you had with them?

Catherine Brown: As you know, the Enforcement Conduct Board has been established or is in the process of being established as a result of collaboration between the enforcement agencies and the debt advice sector. The enforcement sector, as part of that joint working, committed to funding a new independent regulator through a levy. They joined the debt advice sector in calling for a statutory underpinning for the ECB. It is fair to say that they have been very supportive of our establishment.

In terms of engagement, in the last couple of months I have met with very many of the enforcement agencies, both large and small, around the country, as well as with the agencies that provide debt advice and support to people with problem debt. I have been out on the doorstep with enforcement agents. I have listened to calls to the Money Advice Trust from people who are experiencing problems with enforcement. Everyone I have spoken to in the industry and across the debt advice sector has been very positive about our establishment and open about areas where they think we should be able to make a difference.

I have been particularly pleased that so far the industry has been very open to my suggestions and questions about data. One of the key issues we have in this sector is the lack of an agreed evidence base. It is very positive that both the businesses and indeed the debt advice sector are being very open to my early request to share data on a regular basis so we can start to understand where there may be problems and the scale of those problems.

These are very early days. We have not yet recommended or required any changes to practice. I am sure that is something we will do over the months and years ahead. That will really be when the proof of the pudding materialises. We have certainly had very strong positive early engagement.

Q49            Darren Henry: How would you describe your priorities? You talked about the collection of data. That is clearly one of them. Could you tell us about the others?

Catherine Brown: Starting the organisation from scratch is taking a fair bit of time and energy. We are recruiting a board, we are agreeing our first slug of funding and soon I hope we will be appointing some staff to enable us to start doing the things we exist to do. My other immediate priority has been meeting people, listening and learning about debt, its enforcement, its impact on local authorities and other creditors as well as people in debt.

We are on the verge of appointing the board, which I am very pleased about. Once I have them in place, over the next couple of months we will be able to focus, subject to what they think, on two or three key areas. We need to pull together an evidence base. Someone earlier referred to understanding the reality of the situation. That is critical. It is absolutely critical to maximise the coverage that we have as a regulator to make sure that everyone who needs the protection of regulation gets it. How we think about that and what we do to make sure we get full coverage is critical.

The third area that we might want to do something about in the near term is complaints. You heard a little bit in the first panel about how there were not very many complaints. Until you are confident that you have a robust and accessible complaints system, we should not take a huge amount of reassurance from the current low level of complaints. I am keen for us to review the process for complaints and feedback and give some guidance on what we would expect in a fair and accessible complaints system.

Those are some of the urgent priorities—the things I would like us to do sooner rather than later. There is then a high priority in terms of scale and impact that is around agreeing, in wide consultation with all the relevant stakeholders, a robust code of practice that we expect everybody to comply with. That code of practice absolutely needs to include rules on how you both identify and deal with particularly vulnerable people in debt and affordability, which has started to emerge in your discussions today. Affordability is absolutely critical. We need to have clear and strong guidance on how enforcement agents are to deal with those issues. There is quite a lot to do, but hopefully we can push on and start to do it.

Q50            Darren Henry: That is quite a lot to do. I know one of your ambitions is to have people comply with your code of practice, as you just mentioned. Signing up to the ECB is voluntary for enforcement agencies. How will that affect the work of the ECB?

Catherine Brown: What is essential is that we have the widest possible coverage. No enforcement agent or business should be able to avoid complying with the rules we put in place to protect people who need protection, and to ensure responsible and effective enforcement. Given the pressures of the cost of living crisis, it is really urgent that we find ways to achieve that coverage as quickly as we possibly can.

Statutory underpinning would be an excellent way of achieving that. The Government have committed to reviewing the need for statutory underpinning within two years. A lot of water will have flowed under the bridge in two years. Meanwhile a lot of vulnerable people may have suffered from the lack of protection that regulation should give them. I am very interested in how we can work with local authorities and other responsible creditors and ask them to commit to only working with enforcement agents that have accepted regulation, be that through external commissioning arrangements or indeed through their own in-house functions.

If all local authorities and indeed Government Departments made that commitment, we could achieve a high level of coverage and deliver significant benefits even while we worked to achieve statutory underpinning for any bits around the margins that we had not got that way. Clearly, any support the Committee can give us in that will potentially make a material difference to our ability to do the job we have been set up to do.

Q51            Mary Robinson: I just have one question about funding and finance. It is a new body; you have just been set up. You have lots of ambitions and things that you want to do. How are you funded presently? Did you get any set-up funding? Are you going to be funded entirely by the bodies that sign up? What do you estimate your budget to be?

Catherine Brown: That is quite a big bundle of questions. In terms of funding, the body was set up on the basis that it would be levy-funded; it would be funded by the industry. Clearly, it has also been set up to be an independent regulator. As you will be aware, there are other independent regulators that are funded by levy. That is not a problem per se. Indeed, there is a strong argument to say that the people who make profit from enforcement are the people who should pay the costs of regulation and ensuring that enforcement is consistently done properly.

It means that you need to have a very clear and transparent way of doing business that demonstrates to everybody that you are indeed that independent regulator. We will be appointing a board that is thoroughly independent. We will be working in a public and transparent way so that everybody, all the different stakeholders, can look at it and go, “Yes, we may or may not like what the ECB has said, but we understand where it has come from”. Getting an evidence base and getting firms and others to contribute on a regular basis to a transparent evidence base will also help with that clarity. It will show that we are an independent body that is taking decisions based on evidence.

In terms of the budget, it is quite difficult at this stage to establish clearly what the medium and long-term budget will need to be. The report of the enforcement working group, from which our establishment came, talked about a number of the core activities that you need a regulator to do: pulling together an evidence base; agreeing, with an appropriate and full consultation, a proper code of practice, protocols for vulnerability and a level of surveillance to ensure the code of practice is indeed being applied; some significant work on complaints, which they had also identified as being an issue; and then some potential work to ensure compliance with the code.

However frugal and fleet of foot we are, that adds up to potentially a significant slug of money. We are in discussion about how that is funded. We are not in a position to use it all in the first year, because we do not have any staff. As we build our capability, the funding requirement will build and the levy will therefore also build. We are two or three months into our existence, and we are having those discussions.

That is one of the reasons I am placing a lot of emphasis on the evidence base. Fundamentally, the industry is not currently very large, but there is quite a significant prospect for growth. That is not primarily from the council tax point of view but from some of the other things it does. There is a sense in the industry that there used to be problems before 2014 but there are not so many problems now. Until we start to have a little bit more evidence available to us, it is harder to agree on what will be required as a regulatory response. I anticipate that we will generate that evidence in the next little while and be able to have an ongoing discussion about funding requirements.

Q52            Chair: I just want to ask Rachel and Alistair whether you have any comments about the agenda for action that Catherine has set out.

Rachel Beddow: We really welcome the creation of the ECB. The focus on complaints and getting a sense of the landscape feels right to us. We do hear things from our advisers about poor practice from some bailiffs. Getting a clear sense of that is really welcome. We would also agree, of course, that putting it on a statutory footing would be really welcome so that we can be sure that all bailiffs that people come into contact with are being held to the same standards.

Alistair Townsend: The institute is also very supportive of it. As a professional body, the institute is very positive about anything that elevates professional standards. We see that this will do that. The key will be that it is not only independent, but is perceived to be independent. That will be the key part of it.

It is important to understand how complaints currently work for the enforcement industry. They are seen as agents of the local authority so the complaint is about the local authority. This really supports Catherine’s point about data, but one of the benefits of this is that it will allow a central collection of data so that trends and analysis of those complaints and the areas of complaint can be dealt with.

There is also the question about it being voluntary and whether it should be put on a statutory footing. We also have to bear in mind that there are a number of local authorities that run internal enforcement organisations. A decision would have to be made as to whether they are treated differently or whether they are also subject to this statutory burden. With a burden comes a cost for local government that would probably require some new burdens funding. It would perhaps not be massive, but it is worth considering.

We are very supportive of it in principle. It needs to engage with creditors. Even if it were voluntary, if the creditors issuing contracts to enforcement agents required it in their tenders, it would virtually become statutory anyway, because you do not win a contract unless you are signed up to it.

Q53            Chair: Finally, I have one point in passing to Catherine. Have you had discussions with the Local Government Ombudsman about complaints and whether there may be some overlap with the work you do?

Catherine Brown: We have a slot-in with the Local Government Ombudsman. I am looking forward to that. I am also keen to make sure we have a high level of representation on our board from people who really understand the local government space and the creditor experience, so yes.

Chair: Thank you, all three of you, for coming to give evidence to the Committee this afternoon. That has been very helpful. You have given us a lot of information to think about when we come to write our report on these matters.