H&F Council to privatise Council Tax debt collection

A recent report entitled Stop the Knock from the Money Advice Trust. It says that:

“Council tax arrears were passed to bailiffs on 1.38 million occasions in 2016/17, with around 810,000 referrals for parking fines and around 50,000 for Housing Benefit over-payments. There were around 86,000 referrals to bailiffs for unpaid business rates, around 2,200 for commercial rents and more than 22,000 for sundry/other debts.”

From the data in the report we can see the figures for individual local authorities. For instance:

“In 2016/17, London Borough of Hammersmith & Fulham instructed bailiffs to collect debts from individuals and businesses on 20,697 occasions.”

That is likely to change from April this year. Hammersmith and Fulham Council will privatise debt collection for Council Tax. The firm that will be chasing the money, 1st Credit, will operate on Financial Conduct Authority standards to public debts – in the same way as when they pursue private sector debts.

Of course the proposal needs to be scrutinised. Will those who owe the Council money be made bankrupt even if the debt is below £5,000? The Council tells me:

“Other, appropriate and proportionate legal remedies remain available.”

So that sounds like a yes.

What about other payments being chased? The Council says that the use of bailiffs is a “medieval practice” as regards to collecting overdue Council Tax. So why continue with the practice for parking fines? There is some PR from the Council about how “ethical” 1st Credit is but in the past they have been criticised by the Office for Fair Trading for being too quick to threaten legal action.

Since April bailiffs have been used for Council Tax arrears alone by Hammersmith and Fulham Council 2,481 times.  If it is “medieval practice” why not stop using it now rather than waiting until 1st Credit are managing it?

Also since April the Council has used bailiffs for Business Rates debts 347 times and for Parking fines 9,247 – and intends to continue doing so. I’m told:

“The Council is committed to radically reducing the use of bailiffs for all Council debt recovery over time.”

It would also be welcome if Hammersmith and Fulham signed up to the Council Tax Protocol, produced by the Citizens Advice/Local Government Association to agree to basic standards of good conduct. The Council told me:

“The Revenue & Benefits service has been going through a service review over the last 6 months and we did not have the resources available to implement all the recommendations. However, this review will be complete in early 2018 and we will be reviewing this once the new teams are up and running.”

But the principle is welcome. The state is not good at debt collection – any more than it is at anything else. The lumbering, inflexible bureaucratic approach is both inefficient at gathering in the money and insensitive as to the human cost of how it is achieved. Often it is the Council that will have to deal with some of those human costs – if a family is made homeless or a child ends up in care. Going to court is a slow and expensive way to proceed. Often there are miscarriages of justice. Far better to intervene earlier – with well trained staff to negotiate payment of the sum owed on an affordable schedule.

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