Taking struggling residents out of Council Tax

by Councillor James Peters

Next week, I'll be asking Council finance officers about how we make sure that we, as a Council, aren't adding to Hackney residents' financial hardship during these tough economic times. If residents are genuinely too poor to pay Council Tax, there is a scheme to help them.

That scheme is called the Council Tax Reduction Scheme (or "CTRS").

This a matter that Hackney councillors have discussed on a number of occasions recently, particularly when deciding to increase rates of Council Tax in Hackney.  These are also matters that seem all the more pressing given that Council Tax is a regressive tax, hitting the poorest hardest, and the increase that we decided comes during a time when vulnerable residents face a significant reduction in other benefits (and ever-growing living costs - which seem likely to be about to accelerate as a result of the pound dropping in value because of the referendum result).

This is an issue that came to my attention last summer when I went to a joint briefing of the poverty-alleviation charity Z2K and the Child Poverty Action Group to promote this report:

It is also over 2 years since administration of the CTRS was devolved to Councils by central Government (along with a not-so-sneaky cut).

For all these reasons, it seems to me that this is an important time to take a closer look at how we collect Council Tax, to make sure that we're not aggravating financial hardship.

Other London Councils have reacted to growing financial pressures on households by recognising that they (the Councils) may be major creditors of those households, so should do more to support vulnerable debtors.  Put another way, we shouldn't be contributing to poverty in Hackney through our CTRS and Council Tax collection policies.

Examples of work done by other Labour-controlled Councils in this field include:

• Lambeth Council: development of an "Income and Debt Strategy" that saw Council services working together to identify and support vulnerable residents who are slipping into debt.  This strategy has led to a 75% reduction in summonses obtained by the Council (8933 to 2176) after one year and ZERO use of bailiffs to collect Council Tax from residents on CTRS.  Lambeth appears to have increased their Council Tax collection rates as a result of the strategy.
• Lewisham Council: brought their bailiff service in-house.  Why:
• improved debt collection;
• the introduction of a more sensitive approach to collection;
• better feedback from enforcement agents on debtors circumstances; and
• surplus income.

And it seems to have worked, as this paper shows.

Successes in the paper show better identification and support for vulnerable residents AND £200,000 more Council Tax than the cost of bringing the bailiffs back in-house.  That's £200,000 that Lewisham Council would not otherwise have collected and the Council predicts that that figure will increase by £600,000 by the end of this financial year.

On the basis of the above, I think we, in Hackney, should look into at CTRS and collection policies to check that they reflect our values.