Debt problems? Stop the Knock

[megilleland]

From Money Advice Trust - 28th January 2016

 

Stop the Knock

 

Local authorities refer 2.1 million debts to bailiffs in 12 months

 

• Debt charity’s research shows councils’ use of bailiffs up 16% in two years

• Rise comes despite repeated calls for debt collection practices to improve

• Added concern over postcode lottery in treatment of residents in arrears

 

Local authorities in England and Wales instructed bailiffs to collect debts on 2.1 million occasions last year, according to new research by the Money Advice Trust, the charity that runsNational Debtline.  The figure shows overall bailiff use by local authorities has risen by 16 percent in the last two years, despite calls for debt collection practices to improve and wide variations across the country.

 

The charity’s Stop The Knock research, based on Freedom of Information requests to local authorities, shows the readiness with which councils are instructing private bailiffs, despite the serious negative impact this can have on residents and businesses in financial difficulty. Councils that use bailiffs the most were also found to have had less success, on average, in collecting council tax arrears.

 

Bailiff use UP by 16 percent

Council tax debts were passed to bailiffs, now legally known as ‘enforcement agents’, on 1.27 million occasions during 2014/15. Parking-related debts were passed to bailiffs 715,000 times and Housing Benefit overpayments on 40,000 occasions.  In addition, private bailiffs were instructed to collect unpaid business rates 85,000 times and commercial rents on 2,700 occasions – as well as 32,000 sundry/other debts owed by individuals and businesses.

 

The total of 2.14 million bailiff referrals for 2014/15 is 16 percent higher than the 1.84 million figure revealed by the Money Advice Trust in 2013, despite repeated calls for councils to improve their debt collection practices since.

 

Council Tax arrears, which account for the majority of bailiff use by local authorities, is one of the fastest growing debt types that National Debtline helps people to resolve – with 24 percent of callers in arrears in 2014, up from just 14 percent in 2007.  The Money Advice Trust has this week written to all council leaders and local government minister Marcus Jones MP to highlight this growing problem, together with the need for a better approach to preventing and dealing with arrears.

 

Wide variations across the country

The research found a persistent postcode lottery in the treatment of residents and businesses who fall behind, with bailiff use varying from the equivalent of more than a third of properties in some areas to less than one in 100 in others. 

 

The London Borough of Barking & Dagenham was the heaviest user of bailiffs relative to its size, instructing them on 34,041 occasions during 2014/15 – equivalent to 43 percent of properties in the area.  Other London boroughs feature strongly in the top 10, with Hart District Council and Hyndburn Borough Council the highest ranked non-London councils in second and fourth place at 39 percent and 30 percent of properties respectively.

 

At the other end of the scale, 19 ‘lower-tier’ local authorities (which are responsible for collecting council tax) reported bailiff use equivalent to fewer than one percent of properties in their areas. Only three – Charnwood, Wyre and the Isles of Scilly – were found to have used no bailiffs at all during 2014/15.

 

Debt collection practices diverging

The research also reveals wide variations in the way that councils have responded to calls to improve their debt collection practices, made by the Money Advice Trust and other charities, in recent years.  Of the 292 authorities where direct comparisons can be made, more than half (54 percent) increased their use of bailiffs in the last two years, while 45 percent used bailiffs on fewer occasions.

 

Across the 159 councils that increased their reliance on bailiffs, the overall number of referrals rose by 52 percent – with the largest increase a 69-fold rise reported by Mid Devon District Council.  Conversely, bailiffs were instructed on 29 percent fewer overall occasions by the 132 authorities who reduced their use in the last two years – and Wyre Borough Council and Chanwood Borough Council ceased to use bailiffs completely.

 

Joanna Elson OBE, chief executive of the Money Advice Trust, the charity that runs National Debtline, said:

 

“Two years ago our original research on local authority bailiff use led to widespread calls for councils to improve their debt collection practices.  We had hoped the situation would have improved since then.  Instead, more than half of councils are using bailiffs even more than before to collect unpaid debts.

 

“Something is seriously wrong here.  On the front line of debt advice we know that sending the bailiffs in can deepen debt problems, rather than solve them – and it can also have a severe impact on the wellbeing of people who are often already in a vulnerable situation.

 

“Bailiff action is not only harmful to those in arrears – it is also a poor deal for the council taxpayer.  Our research shows that those local authorities that use bailiffs the most are actually less successful, on average, at collecting council tax arrears.  This is a lose-lose situation.

 

“Local authorities are facing significant funding pressures – and they of course have a duty to collect what they are owed.  In the case of council tax, this is particularly crucial in ensuring proper funding for the local services we all rely on.  Too many councils, however, are far too quick to escalate to bailiff action when better preventive work, earlier detection and support for people who fall behind are far better options for all concerned. 

 

“Our message is clear – bailiffs should only be used as an absolute last resort, and the earlier residents and business owners who are struggling can be signposted to free sources of advice such as National Debtline and Business Debtline, the better.â€

 

On those local authorities using bailiffs less than two years ago, Joanna added:

 

“I would like to congratulate the 132 councils we found to be leading the way by reducing their reliance on bailiffs in the last two years.  While there is much more work to do, their efforts to collect outstanding council tax and other debts without resorting to bailiffs shows that this can be done.â€

 

In 2014/15, Herefordshire Council instructed bailiffs to collect debts from individuals and businesses on 3404 occasions - up 10% in two years.

 

The number of debts passed to bailiffs was equivalent to 3.73% of properties in the area, ranking the council at 203 out of 326 for local authority bailiff use in England and Wales. 

 

I suppose this doesn't sound too bad comparing other parts of the country, but for those affected

each case can turn into a nightmare. Is the Citizens Advice still being funded by Herefordshire Council?

[Cambo]

Councils who use bailiffs,debt collectors or whatever you what to call them often have the council tax debt returned to them by these companies if they fail to collect the debt,makes you wonder why they both choose to go down this route if that's the case?