New council tax - more bailiffs.
Council Tax benefit abolished and replaced by local authorities reinventing council tax, means enquiries and CT benefits. A substantial risk of millions of costly visits by bailiffs to citizens in arrears.
Dear Baroness Hanham,
I have now had an opportunity fully to study your reply to Baroness Meacher’s amendment to the Local Government Finance Bill . I have included my comments in the relevant selected texts from your speech below this introduction followed by my comments
The debates in the House of Lords about the localisation of council tax have been marred by the Department of Communities and Local Government’s confusion about the procedures for the enforcement of arrears.
The random nature of council tax enforcement involving block applications in computer printouts by local authorities to magistrates courts for liability orders will catch thousands of local authority constituents in arrears, who are working poor or not quite poor. They will not be able to carry the burden of tax from the new locally devised support schemes because the pensioners are excluded, there will be a CT benefit system which may or may not be adequate, other social security payments are increasingly incompatible with the minimum prices and quantities of necessities in the market and the CT bands create a regressive tax.
The bailiffs will by the nature of their job create social unrest.
All that in addition to the increase in, and costly, calls to the local GPs and hospitals when inevitable mental health problems arise from unmanageable debt.
Hansard 24 July 2012 : Column GC283
The discussion, as I would have expected, has gone widely into the problems that bring in bailiffs, but it is the bailiffs on whom we are concentrating today. That is what the amendment is about, although I understand that it has triggered much concern about the general situation.
The Zacchaeus 2000 amendment was emphatically not about the bailiffs but about the local authorities who contract the bailiffs’ companies. The opening sentence of the amendment read;
All local authorities shall include procedures in their contracts with bailiff companies covering the enforcement of council tax which allows for the return of a warrant by the bailiffs to the local authority for reconsideration.
I should explain that the amendment does not accurately reflect the way that bailiffs are authorised to take enforcement action in respect of council tax, because no warrant issued by the local authority is involved in the process. Under the Council Tax (Administration and Enforcement) Regulations 1992, bailiffs can be used to recover unpaid council tax-that is, levy distress-only where a magistrates' court has made a liability order.
The procedure is as follows; the local authority applies to the magistrates for a liability order; when that has been received by the local authorities they “may” (it is not “shall” so is not compulsory) execute a distress warrant by employing bailiffs or chose a number of other enforcement procedures.
The local authority is allowed to apply for only reasonable costs, and those are capped at £70.
We remain puzzled having researched the charges of 10 local authorities.
Liability Order Court Summons Total
Canterbury City Council £50 £50 £100
London Borough of Brent £30 £90 £120
Newcastle Upon Tyne Cityl £42 £42 £84
London Borough of Bromley £20 £75 £95
Powys County Council £50 £10 £70
Baintree District Council £30 £65 £95
Sheffield City Council £28 £46 £74
Wolverhampton City £40 £36 £76
Dover District Council £50 £50 £100
Rother District Council £20 £80 £100
The totals are all paid to the councils by the defaulters
There will be further costs only after distress from the bailiffs is levied. I agree with the noble Lord, Lord Smith, that a great deal of work is involved before schedules are produced before the court-I used to deal with them frequently, and magistrates do not just wipe them through; a lot of questions are asked.
This is not the case. The Councils send a summons to the council tax defaulters and the requests for liability orders are presented to the magistrates on computer printouts in 100s or sometimes 1000s; they are passed on the nod by the magistrates to such an extent that it is sometimes impossible for the council to produce a properly authorised liability order after the bailiffs have visited. (I have dealt with such a case myself; the court dismissed the bankruptcy application against a terminally ill defaulter because the council did not produce a valid liability order.)
The following extract from the Solicitors Journal is relevant – 22 October 2004.
"Errors in local taxation cases are nothing new, but the bulk-issuing of thousands of liability orders in magistrates’ courts in the taxpayers’ absence has resulted in numerous innocent people being caught in the system. Often the first notice of a liability order comes in a bailiff’s letter demanding payment, sometimes weeks or months after the order was granted, but where the taxpayer has never been informed of the original proceedings.
Section 82 of the Local Government Act 2003 The government has enabled local authorities to apply to magistrates’ courts to quash liability orders. The drawback with this measure is, of course, that the right to quash the order is wholly reliant on the local authority being willing to act. Naturally, many authorities will be reluctant to commence proceedings since this will result in potential revenue loss."
A freedom of information request shows that Calderdale Magistrates Court granted 1,467 liability orders to Calderdale Council on the 24th February 2012, for example.
If defaulters respond to the summons by visiting the court on the day of their liability order hearing they will find an official of the local authority willing to make an arrangement for the payment of the arrears. The magistrates never see these people. It is entirely the responsibility of the council to recognise and respond to vulnerable and impoverished claimants.
Everyone should obviously connect with the council on receipt of a letter advising them of council tax arrears and respond to a summons, and many people who should and can do that do not.
But vulnerable and impoverished defaulters, and others may who have had no notice of a visit from the bailiffs, often have a very good reason for not contacting the council and for not paying council tax arrears.
Council officials often do not know the circumstances of their fellow citizens and constituents; so they despatch the bailiffs who are the first people to meet any vulnerable situation; that is why the amendment is so important.
The councils should insert a clause in their contracts with the bailiff companies to ensure cases are returned to them by the bailiffs from the doorsteps of their vulnerable and impoverished constituents for further consideration rather than press on with enforcement to profit from their fees.
That was a slight diversion.
It was not a diversion. It was the heart of the problems associated with the enforcement of council tax arrears against vulnerable and impoverished defaulters.
24 July 2012 : Column GC284
However, whether enforcement action is justified is a matter for local authorities and, finally, the courts, having taken account of all the relevant information on a case-by-case basis.
Liability orders are mostly issued by the magistrates in total ignorance of the circumstances of the council tax defaulter against whom a council seeks to enforce arrears; the only other contact will be if a council seeks to imprison the defaulters; at that point the magistrates may remit the debt in all or in part, or imprison.
Of course it is the local authority's responsibility to ensure that it is taken only after all the procedures and all efforts have been made to have the matter dealt with in another way.
In many cases no other effort is made other than sending a letter, which the defaulter might not be able to read. Short staffed councils waste time and money trying to enforce against people who cannot pay their arrears by creating further council and liability order costs which can never be recovered but create misery in the process.
Although the Government have no plans to make changes to the enforcement regime for council tax, which is what we are talking about in particular, as my noble friend Lord Lucas mentioned, we are looking at bailiff reform.
To repeat Baroness Meacher’s amendment was about local authorities. Dangers of unrest due to local authorities failures to properly control their bailiffs or mistakes in sending them out ignorant of the circumstances of the household they are visiting to enforce unpayable council tax arrears, unpayable for the reasons I have given, is not a buck that should be passed to the MOJ.
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