Martin Lewis welcomes plans to consult on fairer council tax debt collection

Consumer champion Martin Lewis and charities have welcomed a Government pledge to look into making council tax collection practices fairer.

Chancellor of the Duchy of Lancaster Pat McFadden told ITV’s Good Morning Britain on Wednesday that a consultation will take place.

On the programme, alongside presenter Susanna Reid, Mr Lewis contrasted council tax debts to situations where people owe money to financial firms.

He said: “When a financial services firm, a credit card firm, even a payday lender has debt, they have a Consumer Duty.

“The Consumer Duty says they must look at what’s in the consumers’ interests first.

“It means if they’re collecting debt, they have to signpost them towards help, go through it gradually, and it would take six months to a year before they could throw bailiffs in.

“When it comes to council debt collection, it would make banks blush, it is so aggressive, and so rapid.”

Mr McFadden said: “Well, we’re consulting on changing it, is the truth, and in particular this point of the system where, when somebody falls into arrears, they’re expected to pay the whole amount – that’s obviously very difficult for people.

“So we’re consulting on changing that, so that there can be a reasonable period of time over which people can pay their debt.

“I would hope that councils approach this with sympathy and understanding. They of course have a duty to try to collect the council tax because they need that to keep the services running, but when someone gets into difficulty I would hope that councils approach it with some sympathy.”

Mr McFadden said the consultation will be put out soon and local government minister Jim McMahon “will be in charge of this”.

Mr Lewis said he is “delighted” to hear about the consultation.

Speaking to co-host Ms Reid about how council debts can rapidly escalate, he said: “You miss a monthly payment and within three weeks they can ask for the year’s payment, which begs the question: How can someone who can’t afford a month’s payment pay for a year’s payment?”

Mr Lewis founded charity the Money and Mental Health Policy Institute which has been running a “council tax trap” campaign urging change on the issue, as well as consumer help website MoneySavingExpert.com.

Mr Lewis later posted a video on X, in which he said: “I’m a bit teary if I’m honest… I cannot tell you how many desperate people I have met whose lives have been ruined by this form of debt collection. It’s only a consultation, but I’m hoping that this could be the start of changing things.”

The consultation will cover England.

The Government will look at how the council tax collection system can be made fairer, more efficient and offer better support for people who need it and further detail will be set out by the Government in due course.

Helen Undy, chief executive of the Money and Mental Health Policy Institute, said: “We are absolutely delighted that the Government has listened to sense and is taking the first steps towards making council tax debt collection fairer.

“It’s our second campaign win on this in a month, as the Welsh Government just launched a consultation on the same issue.

“We will be responding robustly to both, and hope to see people given more time to pay, and an end to the unreasonable charges being piled on top of already unmanageable debts.

“If the consultation delivers the change that’s needed, this really has the potential to transform lives.”

StepChange Debt Charity also welcomed the announcement.

A YouGov survey of more than 2,200 people for StepChange found that more than four-fifths (84%) oppose households having to pay their annual council tax bill in full if they miss one month’s payment – a measure which the charity said is currently standard practice for many councils across England and Wales.

StepChange chief executive Vikki Brownridge said: “Our advisers hear day in, day out about the harmful impact of aggressive council tax debt collection, particularly on vulnerable households.

“As one of our core campaigns and key asks, we have been calling on the Government to review rules around imprisonment, rapid escalation of debt, and to ensure bailiffs are placed under proper regulation.”

She added: “We look forward to working closely with Government on this consultation, to ensure that people are protected from harmful debt collection which only serves to exacerbate hardship and worsen debt problems.”

Steve Vaid, chief executive of the Money Advice Trust, the charity that runs National Debtline said: “Council tax debts can cause huge issues for people. They escalate quickly and far too many people in financial difficulty are ending up with bailiffs at their door.

“We are pleased that the Government is listening to our concerns and looking to making council tax collection fairer, including ending the situation where people become liable to pay their entire annual bill after missing just one or two payments.

“This would make a huge difference to people struggling to pay and we look forward to seeing the full detail soon.”