Council tax arrears and court costs increase most in areas cutting Council Tax Support

  • Sep 25, 2014

New research by the New Policy Institute (NPI) shows that English local authorities who made the deepest cuts to Council Tax Support were most likely to see the biggest increases in council tax arrears and court and administration costs.

Following the replacement of Council Tax Benefit with Council Tax Support (CTS) in April 2013, English local authorities collected £1bn more in council tax than a year earlier. However, council tax arrears rose by £145 million (20%) to £836m, court and administration costs rose by £24 million (11%) to £233 million, while the overall council tax collection rate fell by 0.4 percentage points. This is only the second time the collection rate has fallen since council tax was introduced 20 years ago.

The research, funded by the Joseph Rowntree Foundation, found that councils that introduced a requirement for all working-age adults to pay at least some council tax regardless of income (a ‘minimum payment’) were more likely to see arrears and court and administration costs rise and collection rates fall.

The size of these changes was clearly linked to the level of minimum payment: higher minimum payments were associated with bigger increases in arrears and court costs and a falling collection rate.

  • Arrears increased by at least a quarter in 84% of councils with a high minimum payment, compared with 32% of councils with a low minimum payment.

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  • Court and administration costs increased in 40% of councils with no minimum payment compared to in 64% of councils with a minimum payment. These costs increased in 73% of councils with a high minimum payment.
  • The collection rate fell in 15% of councils that introduced low minimum payments and in 63% of councils with high minimum payments.

Commenting on the findings, Director of NPI, Dr Peter Kenway said:

“The fall in the council tax collection rate in 2013-14 was only the second such fall since the tax came in 20 years ago. Our research shows that the bigger the cut in council tax support, the bigger the fall tended to be. Councils should consider the implications for the collection rate when setting council tax support for next April”.

Notes to editors

  1. For more information contact Sabrina Bushe, NPI Communications Officer:  020 7613 5397, sabrina.bushe(at)npi.org.uk.
  2. The report ‘The impacts of Council Tax Support reduction on arrears, collection rates and court and administration costs’ is available online at: http://www.npi.org.uk/publications/council-tax/impacts-council-tax-support-reduction-arrears/
  3. In April 2013, Council Tax Benefit (CTB) was abolished and replaced by Council Tax Support (CTS). In England, 326 local authorities had to devise their own local CTS schemes, but with 10 per cent less funding. For more information on the changes visit: http://counciltaxsupport.org/about