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Published: December 5, 2017
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Councils should privatise debt collection By Harry Phibbs (https://www.conservativehome.com/author/harry-phibbs) Follow @harryph
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A recent report (https://www.payplan.com/partners/wp-content/uploads/2017/11/I-cant-believe-they-still-do-that_Council-TaxReport-Nov-2017_2nd-Edition.pdf) from PayPlan and the Institute of Money Advisers found that 62 people were sent to prison last year for Council Tax debt. 18 of them owed money to Bradford Council – which topped the league table. Ten had Council Tax arrears with Sheffield, five with Coventry. All three of these are Labour councils incidentally – always so quick to tell us how compassionate they are. Why should there be imprisonment for Council Tax debt but not for an electricity bill or being behind with the rent
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for.html) Next year, council tax increases of up to six per cent will be allowed without a referendum
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Councils named and shamed for delaying Business Rates relief (https://www.conservativehome.com/localgovernment/2017/12/councilsHighlights Latest Comments named-and-shamed-for-delayingbusiness-rates-relief.html)
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December 30, 2017
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(https://www.citizensadvice.org.uk/Global/Public/Education%20resources/Financial%20capability/Resource%20topics/Budgeting/BDD1%20Watch Hunt – now up to second in our final Cabinet League %20Bills%20and%20consequences%20of%20non-payment.pdf)? Table of 2017. Gove keeps the top spot. Non payment of Council Tax is a civil rather than a criminal offence – although that might not be a huge comfort to those who can’t pay and find themselves banged up. For instance, Melanie Woolcock who was sent to prison, although Mr Justice Lewis later said (http://www.bbc.co.uk/news/uk-wales-south-east-wales-38666030): “There was no evidential basis on which the magistrates’ court could conclude that there had been culpable neglect in non payment.”
(https://www.conservativehome.com/thetorydiary/2017/12/watchhunt-now-up-to-second-in-our-final-cabinet-league-table-of2017-gove-keeps-the-top-spot.html) December 29, 2017
Luke Springthorpe: This was not as bad a year for the
There have also been a significant number of people locked up for not paying the TV Licence – astonishingly this is a criminal
Conservatives as some claim. But 2018 must be much
offence. Why should the state give itself these draconian powers while denying them to others who are trying to get hold of the
better.
money they are owed?
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As Lord Denning said:
conservatives-as-some-claim-but-2018-must-be-muchbetter.html)
“Be you ever so high, the law is above you”. So these anomalies need to be sorted out. Most of us would agree that incarceration is a more severe punishment than bankruptcy. Yet the PayPlan and the Institute of Money Advisers report says: “In 2015, ministers changed the minimum threshold for bankruptcy to £5000. However, the law allows people with council tax debt to be threatened with imprisonment for less than this.”
December 29, 2017
Our survey. Support for May leading the Conservatives into the next election hits its highest total yet. (https://www.conservativehome.com/thetorydiary/2017/12/oursurvey-support-for-may-leading-the-conservatives-into-the-
The report adds that councils are positively encouraged to be litigious: “The litigious nature of council tax collection is out of step with the way that civil debts are dealt with in the civil court system. Local authorities have a choice about whether to use the courts, but council tax regulations encourage them to do so. Court
next-election-hits-its-highest-total-yet.html) December 28, 2017
action is permitted very early in the council tax collections process. There is an incentive in the regulations for councils to take people on benefits to court. People who are behind with their payments for utility bills are able to arrange payments directly from benefits to pay their water or energy supplier. But local authorities have to take someone to court to use the same process.” Citizens Advice has noted, in its analysis (https://www.citizensadvice.org.uk/Global/CitizensAdvice/Debt%20and%20Money%20Publications/Thestateofdebtcollection.pdf) on The State of Debt Collection:
Do you receive the ConservativeHome daily email? Each weekday – between 9am and 10am – we send
“Different creditors are bound by different rules in how they go about collecting debt….Industries which are regulated, in particular, financial services, energy and water companies are bound by stricter rules governing debt collection practices than non-regulated creditors….Local authorities have guidance from DWP on collecting housing benefit overpayments, but this
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guidance only very briefly mentions affordability. HMRC publishes some information about recovery of tax credit
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overpayments, but this does not include any high level principles about how debt is collected. It is clear that regulated industries lead the way in terms of rules and guidance governing their debt collection. The only exception is the Department for Communities and Local Government (DCLG) which provides relatively comprehensive guidance on how local authorities in England should collect council tax arrears. The guidance does not have the status that the rules issued by regulators have.” In 2013 the Government, when Sir Eric Pickles was the Communities and Local Government Secretary, issued some welcome
News Tweets
guidance (https://www.gov.uk/government/news/clampdown-on-councils-using-heavy-handed-bailiffs) on Councils being too keen to
A Twitter list by @PaulGoodmanCH
use bailiffs. It is clear that they need to go further. The rule of law should be applied evenly – the municipal debt collectors should
Andrew Adonis @Andrew_Adonis
not have special privileges. Another recent report – entitled Stop the Knock (https://www.stoptheknock.org/) came 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
‘Chris Grayling has done more than Jeremy Corbyn and Karl Marx combined to advance the cause of renationalising the railways’dailym.ai/2q0pMdD
rates, around 2,200 for commercial rents and more than 22,000 for sundry/other debts.” From the data (https://www.conservativehome.com/wp-content/uploads/2017/11/stop-the-knock-2017-research-data.xlsx) 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 next year. Hammersmith and Fulham Council will privatise debt collection for Council Tax (https://www.lbhf.gov.uk/articles/news/2017/11/ethical-debt-collection-hf-end-use-bailiffs). 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.
Lord Adonis slams Chris Grayling for 'bailing out' Vi… Lord Adonis has claimed Mr Grayling’s decision to 'ba…
Of course the proposal needs to be scrutinised. Will those who owe the Council money be made bankrupt even if the debt is below
dailymail.co.uk
£5,000? 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 (http://webarchive.nationalarchives.gov.uk/20100402132045/http://www.oft.gov.uk/news/press/2009/20-09) by the Office for Fair
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Trading for being too quick to threaten legal action.
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But the principle is welcome. The state is not good at debt collection – any more than it is at anything else. The lumbering,
(https://twitter.com/PaulGoodmanCH/news-tweets)
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
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intervene earlier – with well trained staff to negotiate payment of the sum owed on an affordable schedule.
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For obvious reasons there must be limits to how lenient those owed money can be. If paying Council Tax became effectively voluntary that would be problematic. Unfortunately the balance is wrong at the moment and nobody benefits. The Government should iron out the unfair discrepancies. But local authorities should improve their conduct. Signing up to the Council Tax Protocol (https://www.citizensadvice.org.uk/about-us/campaigns/current_campaigns/council-tax-protocol/), produced by the Citizens
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Advice/Local Government Association is a start. Yet legal changes and protocol signing still leave us with the woeful public sector culture, the big clunking fist. So contracting out the process is a bold and innovative idea. It need not be to a private firm – charities or social enterprises could get involved. With this radical privatisation proposal, Labour-run Hammersmith and Fulham Council is showing the way.
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10 comments for: Councils should privatise debt collection
Comments (10)
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Sort by: Date Rating Last Activity Login or signup (https://www.intensedebate.com/signup) now to comment. (https://www.intensedebate.com/people/formercon) formercon (https://www.intensedebate.com/people/formercon) · 3 weeks ago I had some friends in Norwich who refused to pay their poll tax.
Despite being a Labour council, so they thought they wouldn't be pursued so persistently as Labour were vehemently opposed to this form of taxation, it was not the çase. They paid up within a few months. 1 reply · active 3 weeks ago
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(https://www.intensedebate.com/people/SapphirePheonix) · 3 weeks ago SapphirePheonix (https://www.intensedebate.com/people/SapphirePheonix) Never trust politicians lol and the law is the law. Reply
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(https://www.intensedebate.com/people/Nige122) Nige122 (https://www.intensedebate.com/people/Nige122) · 3 weeks ago If only to help unblock the court system, making TV licence payment a civil rather than a criminal offence is a good first step. "There have also been a significant number of people locked up for not paying the TV Licence – astonishingly this is a criminal offence. " Reply
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(https://www.intensedebate.com/people/KonstabelEls) Caleyman (https://www.intensedebate.com/people/KonstabelEls) · 3 weeks ago and private debt collection agencies have such a good reputation
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(http://www.markgoodge.com) MarkGoodge (http://www.markgoodge.com) · 3 weeks ago Council tax is a statutory obligation, not a contractual debt. That means that non-payment can be pursued in the magistrates' courts rather than needing to use the county court, which in turn makes it a lot cheaper and simpler to enforce. Most councils
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have a collection rate of over 95% (or, to put it another way, a write-off rate of less then 5%). That's hugely better than the collection rates acheived by commercial debt collectors. There's no evidence, therefore, that outsourcing council tax collection to commercial debt collectors would either save administration costs or increase collection rates. There are, to be sure, a few councils that do seem to have problems collecting council tax. But these should not be taken as representative of the majority. Equally, privatising collection may work for some councils with non-standard circumstances. But a shift to commercial collection is unlikely to be beneficial in more than a handful of cases. 2 replies · active 3 weeks ago
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(https://www.intensedebate.com/people/astraman123) astraman123 (https://www.intensedebate.com/people/astraman123) · 3 weeks ago The voice of reason!
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(https://www.intensedebate.com/people/SapphirePheonix) · 3 weeks ago SapphirePheonix (https://www.intensedebate.com/people/SapphirePheonix) Additionally debt collection Agencys are a very mixed bag indeed and operate in curious ways when they pursue specific people...... Report
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(https://www.intensedebate.com/people/danash123) danash123 (https://www.intensedebate.com/people/danash123) · 3 weeks ago The most telling line in this piece reads "The state is not good at debt collection – any more than it is at anything else". Sub text
being, let's strip councils of yet another task until they become irrelevant. Report
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(https://www.intensedebate.com/people/GodfreyPl) GodfreyPl (https://www.intensedebate.com/people/GodfreyPl) · 3 weeks ago Stupid idea.
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(https://www.intensedebate.com/people/terry22justice) terry22justice (https://www.intensedebate.com/people/terry22justice) · 3 weeks ago What? Like they privatised council car parks?
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