Council Tax debt in the UK has reached unparalleled levels in the five months following the outbreak of Covid-19. Debt relief charities Citizens Advice, StepChange and the Money Advice Trust have estimated that the number of households that have entered into Council Tax arrears since March is between 800,000 and 1.3 million. 

While it might be easy to write this off as another ill-fated consequence of the Covid-19 pandemic, on closer inspection Council Tax has been an ever-increasing driver UK household debt for a number of years. Between 2012-2018, the yearly total of Council Tax debt grew by 37% to £944 million. This brought the total household Council Tax debt in 2018 to a staggering £3 billion. Since 2008, the number of callers to the National Debt Helpline who were in Council Tax arrears grew from 15% to 30%, while callers reporting credit card debts fell from 67% to 35% over the same period. As has been found in many areas of our lives, the effects of the Covid-19 pandemic has merely exacerbated an already dire situation.

We believe that reform is needed and it is needed now. With bailiffs allowed to resume work from the 23rd August, it is crucial that Council Tax reform is high on the Government’s agenda this Autumn. 305 people received prison sentences and 6,278 suspended sentences for their failure to pay Council Tax between 2012-2018. With the scale of those recently falling into debt, charities fear that these figures will dramatically increase in the coming year as households struggle to manage falling household incomes, reduced local authority support, and ever-increasing Council Tax bills.     

Whilst reforms aimed solely at reducing the incidence of Council Tax debt would be more than welcome, we must go further. Fairer Share’s proposal, The Proportional Property Tax (PPT), reduces property tax bills for 75% of households (18 million), reducing the financial strain on millions across the country. Additionally, PPT includes a deferral mechanism, allowing outstanding bills to be paid when the household can afford it or at the sale of the property. PPT would also be paid exclusively by the property owner, meaning 8.7 million renters would be removed from the system, both easing their financial burden and greatly simplifying the collection process. A single flat rate charged nationwide on the value of property would also add far greater simplicity to a highly complicated and confusing banding process, with rates varying vastly across local authorities.

Council Tax is now one of the most significant drivers of British household debt. Reforming property taxes to establish a fairer system that doesn’t punish people for their changeable financial situation, should be a priority for the Government as it seeks to ‘Level Up’ the country.