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Debt Talk: Council finance, tax & debt recovery

Birmingham Council went bankrupt and accelerated its debt recovery to collect council tax and other fines by 500% between 2022 and 2023. It was revealed under the Freedom of Information Request. Other councils throughout the United Kingdom also use enforcement agents to recover unpaid debts since many are overstretched with their finances. To highlight the severity of this issue in this month's podcast on Debt Talk, Ripon Ray explored: 'Council finance, tax & debt recovery’.

To assist him with the subject, Helen Ganney from Christians Against Poverty explained the challenges the debt advice sector faces in negotiating with some councils when many clients have insufficient funds to pay council tax debts and are in a deficit budget. Yet, there have been challenges with them and their agents to accept minimal payment or to hold enforcement action. She emphasised that many of these agents focus on collecting debts whilst not considering whether some residents can afford to pay.

Russell Hamblin-Boone from the Civil Enforcement Association (CIVEA) looked at the causes of the intensification of recovery of many councils and, most importantly, the causes of the Birmingham Council going bankrupt and its debt recovery. He explained that as part of the commercial agreements with councils with private enforcement agents, enforcement agents are required to identify client vulnerability and provide welfare support as part of the agreement. He emphasised that enforcement agents don’t get a commission from council tax recovery but only a set fee. To standardise the behaviour of the enforcement sector, however, CIVEA proactively funded the set up of an independent regulatory body to make sure the enforcement sector works for all.

Chris Nichols recently joined the newly founded Enforcement Conduct Board as CEO to make sure the Board works for the public interest. As part of developing a framework to ensure the enforcement market is fit for purpose, it creates a robust and accountable governance structure and complaints system to ensure any complaints against an enforcement agent are investigated fairly. He emphasised that input from the debt advice, enforcement agents, vulnerable communities and other stakeholders is crucial to keep the enforcement sector accountable.

They also provided TOP TIPS to assist Debt Talk listeners in conversing on such a charged and tense subject. On the next Debt Talk podcast, Ripon Ray will cover: 'Consumer duty & debt updates’.

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