It’s that time of year again when everyone’s favourite household bill- Council Tax- starts landing on the doormat. However, what was missing from George’s budget last week (or the preceding Autumn Statement) was any reference to the coalition’s policy of capping Council Tax increases at 2%. This means that council tax rises are no longer capped- which doesn’t bode well given new numbers that show council tax as the bill most of us struggle to pay most.
Until 2015/16, if councils wanted to push the cost up by more than 2%, they had to hold a ‘referendum’ to show why they needed the extra money. Without Governmental continuation of that policy, councils are once again free to charge what they want to- as an example, some areas of Birmingham are looking at increases of almost 8% just for this year. However, with people already struggling- now council tax has overtaken credit cards as the most common debt problem- this is only likely to make things worse.
Research by the Debt Advisory Centre found that around 13% of people have council tax arrears. Just over half of those with arrears are in the red by up to two months and a further 5% are three months up the creek or more.
This ties in with Citizens Advice figures, which reported a 14% increase in cases related to council tax arrears in the year to September 2015.
But the study of 2,000 people also showed that young people aged between 18-24 are most likely to have fallen into arrears with their council tax bill with a quarter of under 25s questioned admitting to having fallen behind with council tax payments.
So why are people not managing to pay their council tax? More than a third of those in arrears said that they failed to pay their bill because they needed to use the money to cover their rent or mortgage, which is understandable. A further fifth said they needed to pay utility bills and 14% claimed they had to keep money to buy food. In fact it was only one in six who failed to pay council tax bills because they needed to cover unsecured debt repayments such as a credit card bill.
Melanie Taylor, a debt expert at Debt Advisory Centre, said: “Before the credit crunch, when we talked about rising numbers of people in financial difficulties, it was mainly to do with people struggling to make payments on their personal debt – such as credit cards, loans or catalogue debt.”
“Fast-forward to today and things look quite different. While we still help lots of people who are having difficulty repaying credit, we have seen a rise in the number of who are struggling to pay their household bills, and in particular, their council tax.”
One reason for the increase in people struggling generally, and specifically with council tax may be that many councils have cut back on the Council Tax discounts or relief that they offer low-income residents during their period of enforced capped increases. It remains to be seen whether the additional percentages whacked on to this years’ bills will have included provision for some reinstatement of reliefs.
