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Policy in Practice
Why we all need flexible
collection policies for
council tax debt
Housekeeping
www.policyinpractice.co.uk
● Audio check
● Please ask questions throughout
● Download, polls and a survey
● A...
www.policyinpractice.co.uk
Give the best support
you can to help people
on their way
www.policyinpractice.co.uk
A team of professionals with extensive knowledge of the welfare
system. We’re passionate about ...
Today’s speakers
www.policyinpractice.co.uk
Paul Howarth
Policy Consultant
Policy in Practice
Dan Drillsma-Milgrom
Equalit...
Agenda
www.policyinpractice.co.uk/policy
● Understanding the context: debt in the UK
● The need for research into collecti...
www.policyinpractice.co.uk
Poll 1: How has the pandemic affected
your council tax collection policy?
www.policyinpractice.co.uk
Over to Paul
www.policyinpractice.co.uk
Source: The Money Charity
Extent of personal debt
www.policyinpractice.co.uk
Source: House of Common briefing paper Sept 2020
Public sector debt
www.policyinpractice.co.uk
StepChange says the top three reasons for debt are:
● Reduced income (18%)
● Unemployment / red...
www.policyinpractice.co.uk
Before the pandemic many households were unprepared for income shock
At the start of 2020:
● 10...
www.policyinpractice.co.uk
Evidence on the impact of collection policies on poverty includes:
● Rent and council tax arrea...
www.policyinpractice.co.uk
In London alone, in 2019/20:
● 19,367 council tax support claimants were referred to bailiffs, ...
www.policyinpractice.co.uk
● Treasury Select Committee described the debt collection practices of some
public authorities ...
www.policyinpractice.co.uk
Emerging models of best practice
● Citizens Advice and the Local Government Association - Counc...
www.policyinpractice.co.uk
BUT
2020, Cabinet Office call for evidence on Fairness in government debt
management:
“There re...
www.policyinpractice.co.uk
● Cabinet office Fairness Group
○ focus on looking cross-departmentally
○ visibility of whole d...
www.policyinpractice.co.uk
In May 2021, councils will be required to introduce the government’s ‘Breathing
Space initiativ...
www.policyinpractice.co.uk
Poll 2: Are you prepared for the
introduction of Breathing Space?
www.policyinpractice.co.uk
Over to Dan Drillsma-Milgrom, Greater
London Authority
Council Tax debt collection and low-
income Londoners:
Commissioning the research
Background
● GLA the main precepting body in London
● Since 2013 billing authorities have designed their own local council...
Concerns about the impact of council tax collection policies on the
lives of low-income Londoners:
● Significant numbers o...
Existing practice on collection practices
● Citizens Advice and the Local Government Association council tax
protocol
● St...
The aim of the project was to:
● Help build the evidence base and business case for specific borough
collection practices ...
www.policyinpractice.co.uk
Over to Paul
www.policyinpractice.co.uk
Desk-based research with one workshop - surveys interrupted by lockdown
● Around 67% of London ...
www.policyinpractice.co.uk
● Performance measures - the need to maintain in-year collection rates puts
pressure on council...
www.policyinpractice.co.uk
Using publicly available data across GB, we analysed the main factors commonly
deemed to influe...
www.policyinpractice.co.uk
The analysis sought to understand the impact on ability to pay of different levels of
council t...
www.policyinpractice.co.uk
Newham conducted a review of debt management
across the council to establish a single view of d...
www.policyinpractice.co.uk
● Help explain the outcome of the research undertaken in this project
● Support (and lobby for)...
www.policyinpractice.co.uk
1. Consider not adding costs to council tax debt for low-income households.
2. Identify CTR rec...
www.policyinpractice.co.uk
Poll 3: Which recommendations do you
think will best support financially
vulnerable people?
www.policyinpractice.co.uk
Poll 4: Will you implement these
recommendations?
www.policyinpractice.co.uk
Over to Dan Drillsma-Milgrom, Greater
London Authority
38
MAYOR OF LONDON
A ROBUST SAFETY NET
By 2025, every Londoner can
access the support they need
to prevent financial hards...
www.policyinpractice.co.uk
Over to Paul
The challenge for councils
www.policyinpractice.co.uk
Unavoidable tension between the cost to the council and supporting t...
Changing the CTR scheme with
economic uncertainty
www.policyinpractice.co.uk
Policy in Practice works with councils to hel...
Impact on CTR design, 2021 onwards
www.policyinpractice.co.uk
In-year collection rates are still key PFI for councils
● Pr...
Impact of scheme design: arrears
www.policyinpractice.co.uk
Arrears
● A recent analysis for a London Borough showed a clea...
www.policyinpractice.co.uk
Designing the right local scheme scheme for the future requires an understanding
of the wider c...
www.policyinpractice.co.uk
Questions and discussion
www.policyinpractice.co.uk
● Download our product brochure
● Download our handout on 10 factors influencing the design of ...
Thank you
www.policyinpractice.co.uk
Paul Howarth, Policy Consultant
Dan Drillsma-Milgrom, Greater London Authority
hello@...
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Why we all need flexible collection policies for council tax debt

Download to read offline

How council tax is collected can have an impact on the lives of low-income households. The handling of council tax arrears and the extra costs that can be incurred in the collection process can cause extreme poverty or destitution, and may increase levels of problem debt.

Local authorities in England can choose how to collect council tax, and different best practice models designed to collect from financially vulnerable citizens are emerging. Policy in Practice has reviewed different collection processes across London for the Greater London Authority and evaluated their impact on citizens and councils.

Listen back to hear:

- Barriers to the adoption of more flexible policies
- Empirical evidence of the factors influencing collection rates
- How councils can optimise collection rates whilst also protecting vulnerable citizens

For more information visit www.policyinpractice.co.uk, email hello@policyinpractice.co.uk or call 0330 088 9242.

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Why we all need flexible collection policies for council tax debt

  1. 1. Policy in Practice Why we all need flexible collection policies for council tax debt
  2. 2. Housekeeping www.policyinpractice.co.uk ● Audio check ● Please ask questions throughout ● Download, polls and a survey ● Aim to finish by 11:40 ● Slides and recording will automatically follow ● Follow us on Twitter via @policy_practice
  3. 3. www.policyinpractice.co.uk Give the best support you can to help people on their way
  4. 4. www.policyinpractice.co.uk A team of professionals with extensive knowledge of the welfare system. We’re passionate about making social policy work We help over 100 local authorities use their household level data to identify vulnerable households, target support and track their interventions Our benefit calculator engages over 10,000 people each day. We identify the steps people can take to increase their income, lower their costs and build their financial resilience Policy in Practice: What we do
  5. 5. Today’s speakers www.policyinpractice.co.uk Paul Howarth Policy Consultant Policy in Practice Dan Drillsma-Milgrom Equality and Fairness Team Manager, Communities & Social Policy Unit Greater London Authority @dandrillsma
  6. 6. Agenda www.policyinpractice.co.uk/policy ● Understanding the context: debt in the UK ● The need for research into collection practices ● Key findings of research ● The challenge for council tax support design ● Question and answers
  7. 7. www.policyinpractice.co.uk Poll 1: How has the pandemic affected your council tax collection policy?
  8. 8. www.policyinpractice.co.uk Over to Paul
  9. 9. www.policyinpractice.co.uk Source: The Money Charity Extent of personal debt
  10. 10. www.policyinpractice.co.uk Source: House of Common briefing paper Sept 2020 Public sector debt
  11. 11. www.policyinpractice.co.uk StepChange says the top three reasons for debt are: ● Reduced income (18%) ● Unemployment / redundancy (16%) ● Injury / illness (16%) ● 75% clients mention a life shock / income loss as cause of debt Citizens Advice estimate that at the close of 2020: ● 7.3 million UK adults were behind on their household bills (sample) ● 1 in 3 households have lost income because of coronavirus ● 36% of people who have lost income have run down their savings ● 45% of people with children have lost household income Source: Citizens Advice Debt at the close of 2020 Household problem debt
  12. 12. www.policyinpractice.co.uk Before the pandemic many households were unprepared for income shock At the start of 2020: ● 10% of households in the UK had no savings ● 30% of households had less than £600 savings ● 44% of those in debt found it burdensome ● 41% of households don’t have enough savings to live for a month without income Sources: Global Banking and Finance, Gov.uk, Money Advice Service, ONS Pre-Covid financial resilience
  13. 13. www.policyinpractice.co.uk Evidence on the impact of collection policies on poverty includes: ● Rent and council tax arrears are two prominent causes of destitution Destitution in the UK 2018, Joseph Rowntree Foundation, June 2018 ● Council tax arrears are now the most common debt problem presented to Citizens Advice Citizens Advice, April 2019 ● A third of StepChange clients had council tax arrears averaging £1,000 Stepchange 2018 ● Significant numbers of low-income households are being referred to bailiffs or pursued through the courts for non-payment of council tax arrears Child Poverty Action Group and Zaccheus 2000 Trust Impact of collection policies on poverty
  14. 14. www.policyinpractice.co.uk In London alone, in 2019/20: ● 19,367 council tax support claimants were referred to bailiffs, up from 16,444 in 2017/18 ● 76,475 council tax support claimants received a court summons, down from 89,929 in 2017/18 Child Poverty Action Group and Zaccheus 2000 Trust London’s collection policies and poverty
  15. 15. www.policyinpractice.co.uk ● Treasury Select Committee described the debt collection practices of some public authorities as ‘worst in class’ (2018) ● By 2020, the Joseph Rowntree Foundation (JRF), the New Policy Institute (NPI), and the debt charity StepChange have made representations to the Mayor of London around CT debt collection practices. ● The government established the Cabinet Office Fairness Group, bringing central and local government, the debt advice sector, and the debt collection industry together.(2016) ○ established Fairness Principles, together with the debt advice sector, which are aligned to FCA guidelines on Treating Customers Fairly. ● April 2019, MHCLG signalled an intention to engage with charities, debt advice organisations and local authorities on changes to improve the current council tax collection system Calls for action
  16. 16. www.policyinpractice.co.uk Emerging models of best practice ● Citizens Advice and the Local Government Association - Council Tax Protocol (60 local authorities) ● Money Advice Trust - ‘Stop the Knock’ campaign ● Guidance to collection practices - Money and Pensions Service ○ Signpost to debt advice ○ Reduce the use of bailiffs ○ Exempt CTRS claimants from bailiff action ○ Recognise vulnerability and ability to pay Responses to calls for action
  17. 17. www.policyinpractice.co.uk BUT 2020, Cabinet Office call for evidence on Fairness in government debt management: “There remain concerns about some central and local government organisation debt management practices.” However, more needs to be done
  18. 18. www.policyinpractice.co.uk ● Cabinet office Fairness Group ○ focus on looking cross-departmentally ○ visibility of whole debt ● Breathing Space ● The issue is not going away - the OBR predicts that unemployment will get worse through the Spring and possibly in the Summer 2021. Focus on public sector debt collection
  19. 19. www.policyinpractice.co.uk In May 2021, councils will be required to introduce the government’s ‘Breathing Space initiative for those with problem debt. The objectives are to: ● Encourage people to access timely debt advice ● Protect debtors from creditor action to give time and space to engage with debt advisors How it works ● 60 day protection from enforcement action with interest frozen ● A statutory debt repayment plan to repay debts in a mangeable timetable ● During the period of the plan they will have legal protection from creditors ● Additional protection for those with mental health issues Breathing Space
  20. 20. www.policyinpractice.co.uk Poll 2: Are you prepared for the introduction of Breathing Space?
  21. 21. www.policyinpractice.co.uk Over to Dan Drillsma-Milgrom, Greater London Authority
  22. 22. Council Tax debt collection and low- income Londoners: Commissioning the research
  23. 23. Background ● GLA the main precepting body in London ● Since 2013 billing authorities have designed their own local council tax support schemes (LCTS), with differing minimum payment levels and eligibility criteria ● Low-income households in equivalent situations liable for very different council tax sums depending on where they live in London ● Wanted to deepen our understanding of the business case for collection practices that more effectively support low-income households.
  24. 24. Concerns about the impact of council tax collection policies on the lives of low-income Londoners: ● Significant numbers of low-income Londoners are being referred to bailiffs or pursued through the courts for payment of council tax arrears. ● The debt collection practices of some public authorities are pushing people into destitution. ● Civil society bodies seeing increased demand for advice on council tax arrears. ● MPs critical of public authorities’ collection practices. ● Stakeholders called on the Mayor to take action.
  25. 25. Existing practice on collection practices ● Citizens Advice and the Local Government Association council tax protocol ● Stop the Knock’ campaign (Money Advice Trust) ● The Money and Pensions Service guidance Breathing Space ● Prepare for the introduction of these regulations
  26. 26. The aim of the project was to: ● Help build the evidence base and business case for specific borough collection practices that better protect low-income households
  27. 27. www.policyinpractice.co.uk Over to Paul
  28. 28. www.policyinpractice.co.uk Desk-based research with one workshop - surveys interrupted by lockdown ● Around 67% of London boroughs explicitly state that they take account of vulnerability, at some stage, in determining action on collection of arrears. ● Most (82%) London boroughs take account of ability to pay and undertake affordability assessments. ● 8 (out of 32) London boroughs had signed up to the Citizens Advice/Local Government Association voluntary protocol of good practice. ● All councils follow standard procedures for collection with about half having some form of breathing space arrangement. ● All but one London boroughs use bailiffs as part of their enforcement activities. Current council tax collection policies across London
  29. 29. www.policyinpractice.co.uk ● Performance measures - the need to maintain in-year collection rates puts pressure on councils to continue current enforcement practices and does not reflect cross-year payment arrangements. ● Data-sharing is needed to define vulnerability, but this is hindered by different IT systems, data protection policies, and the move to Universal Credit. ● Inflexible IT systems, built around the regulations, can be expensive to change ● Language - preferred the term ‘flexible’, or ‘customer-centric’ policies to ‘ethical collection’ which implied that those not adopting these practices were acting unethically. Barriers to more flexible collection and enforcement policies
  30. 30. www.policyinpractice.co.uk Using publicly available data across GB, we analysed the main factors commonly deemed to influence collection rates: the nature of the local Council Tax Reduction Scheme (CTRS), the council tax charge, the level of poverty, and the type of collection policy. ● Only CTRS generosity and local poverty levels were significantly associated with collection rates. ● Council tax rates and collection policies (e.g adherence to Citizens Advice/LGA Protocol), were not significantly associated with collection rates. ● Boroughs with higher levels of relative deprivation tended to report lower council tax collection rates. ● Boroughs with higher maximum award levels for their Council Tax Reduction Schemes tended to report higher council tax collection rates. Collection rates and collection policy
  31. 31. www.policyinpractice.co.uk The analysis sought to understand the impact on ability to pay of different levels of council tax debt recovery. Across the 17 London boroughs for whom data was available, 77% of households had income above their costs under the baseline scenario. ● Dividing repayment of one month’s council tax arrears across 12 subsequent months had an almost negligible impact on household financial vulnerability. ● Requiring immediate full payment of council tax after a single missed instalment reduced the 77% figure to 52% - so 25% more households experiencing an income shortfall. ● Adding recovery and enforcement fees to the debt reduced the 77% figure to 17% so an additional 60% of households would no longer be able to make ends meet under this scenario. Impact of collection policies on low income households
  32. 32. www.policyinpractice.co.uk Newham conducted a review of debt management across the council to establish a single view of debt. Southwark has introduced Step-by-Step, a service to consolidate debts to the council, agree a repayment plan, including a ‘recovery payment’, involving commitments on both sides. Waltham Forest has a 60 day breathing space before the summons stage for CTR recipients to allow consideration of a discretionary CTR award. Case studies
  33. 33. www.policyinpractice.co.uk ● Help explain the outcome of the research undertaken in this project ● Support (and lobby for) changes to the legislation to support more flexible collection policies ● Using the breathing space initiative as an impetus for change ● Promote the Citizens Advice and LGA protocol ● Support those boroughs who are urging DWP to share more Universal Credit data ● Lobby central government for changes to the key performance measures Recommendations for the GLA
  34. 34. www.policyinpractice.co.uk 1. Consider not adding costs to council tax debt for low-income households. 2. Identify CTR recipients in advance of the summons stage to allow them to seek debt advice and draw up a repayment plan. 3. Use the Standard Financial Statement as a means of assessing ability to pay. 4. Place more emphasis on allowing repayment of one instalment to be spread over 12 months. 5. Share more data internally between departments to help move towards a single view of household debt. 6. Ensure that Council Tax Reduction Schemes are as generous as possible. 7. Consider the introduction of more customer-friendly contact hours for people in difficulty. 8. Sign up for the Citizens Advice protocol for council tax debt. Recommendations for London Boroughs
  35. 35. www.policyinpractice.co.uk Poll 3: Which recommendations do you think will best support financially vulnerable people?
  36. 36. www.policyinpractice.co.uk Poll 4: Will you implement these recommendations?
  37. 37. www.policyinpractice.co.uk Over to Dan Drillsma-Milgrom, Greater London Authority
  38. 38. 38 MAYOR OF LONDON A ROBUST SAFETY NET By 2025, every Londoner can access the support they need to prevent financial hardship Mission co-leads: Fran Beasley (Chief Executive Hillingdon Council) and Jim Minton (Chief Executive Toynbee Hall) Lead organisations and partners: GLA and London Councils, boroughs, VCS, advice providers, funders, community anchor institutions (e.g. schools, faith/health settings)
  39. 39. www.policyinpractice.co.uk Over to Paul
  40. 40. The challenge for councils www.policyinpractice.co.uk Unavoidable tension between the cost to the council and supporting the increased number of residents in need of support
  41. 41. Changing the CTR scheme with economic uncertainty www.policyinpractice.co.uk Policy in Practice works with councils to help them meet their objectives for scheme design Data analysis to inform decisions using SHBE and CTR data ● The analysis councils require is changing ● Pre-COVID change was driven by: ○ Cost ○ Impact of UC ● Recent analysis has required greater contextual information to inform scheme design ○ the drivers of scheme redesign ○ the impact of scheme design
  42. 42. Impact on CTR design, 2021 onwards www.policyinpractice.co.uk In-year collection rates are still key PFI for councils ● Pressure to increase in-year collection at the same time as numbers with ability to pay reduces Is it time for councils to move towards more customer-focused collection practices? ● Income maximisation and targeted support ● CTR schemes that support the most vulnerable CTR scheme and levels of poverty are correlated with collection rates. We could find no correlation with moving towards customer-focused practices or CT charge
  43. 43. Impact of scheme design: arrears www.policyinpractice.co.uk Arrears ● A recent analysis for a London Borough showed a clear relationship between level of arrears and level of support: ○ Households receiving the most support under the current working-age CTR schemes (working households in receipt of Universal Credit and protected groups) are also those households with lowest CT arrears. ○ Households who see the greatest reduction in CTR support compared to the default scheme (working households in receipt of legacy benefits) are the group with the highest CT arrears.
  44. 44. www.policyinpractice.co.uk Designing the right local scheme scheme for the future requires an understanding of the wider context Firstly, the drivers of scheme design, particularly with Covid changes ● Will the emergency benefit changes be retained? ● What will happen to caseloads once the furlough scheme ends? ● Who are the new cohort, and how are they different? ● What is happening to poverty and ability to pay? Secondly, the impact of scheme design ● Poverty, debt, arrears ● Collections Data analysis can provide the required context A final word on the context for CTR
  45. 45. www.policyinpractice.co.uk Questions and discussion
  46. 46. www.policyinpractice.co.uk ● Download our product brochure ● Download our handout on 10 factors influencing the design of a CTR scheme ● Short survey to follow ○ Additional questions for our speakers ○ Request a follow up call to discuss your own CTR scheme ○ Auto register for our next webinar (Wed 24 Feb, How to use data to increase people’s income) ● Our report for the GLA, Council Tax debt collection and low-income Londoners, will be published this afternoon Next steps
  47. 47. Thank you www.policyinpractice.co.uk Paul Howarth, Policy Consultant Dan Drillsma-Milgrom, Greater London Authority hello@policyinpractice.co.uk www.policyinpractice.co.uk @policy_practice 0330 088 9242

How council tax is collected can have an impact on the lives of low-income households. The handling of council tax arrears and the extra costs that can be incurred in the collection process can cause extreme poverty or destitution, and may increase levels of problem debt. Local authorities in England can choose how to collect council tax, and different best practice models designed to collect from financially vulnerable citizens are emerging. Policy in Practice has reviewed different collection processes across London for the Greater London Authority and evaluated their impact on citizens and councils. Listen back to hear: - Barriers to the adoption of more flexible policies - Empirical evidence of the factors influencing collection rates - How councils can optimise collection rates whilst also protecting vulnerable citizens For more information visit www.policyinpractice.co.uk, email hello@policyinpractice.co.uk or call 0330 088 9242.

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