Councils have just received a huge boost from the government. Yesterday, in recognition of how councils are struggling financially, the government pledged a £500million package to support spending pressures and lost income throughout the country.
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As coronavirus continued to wreak havoc on the economy, councils struggled to cover their debts just as much as consumers did.
The wider government has now committed to fixing this problem, as they confirmed yesterday: “Recognising that councils are best placed to decide how to meet pressures in their local area, this funding has not been ring-fenced.
“In addition to this funding, a major new scheme introduced by the government today will help to reimburse lost income during the pandemic and boost cash flow.
“Where losses are more than five percent of a council’s planned income from sales, fees and charges, the government will cover them for 75p in every pound lost.
“Additionally, to enable them to get on the front foot and build much-needed breathing space into their budgets, the government is also bringing in changes so that they can spread their tax deficits over three years rather than the usual one.”
With this easing of pressure that councils will soon experience, there could be a knock on effect for residents.
Richard Lane, the Director of External Affairs at StepChange, explained how this package could help people struggling with their council tax: “This welcome new funding will help to ease the burden on council finances and enable them to provide more support to financially vulnerable residents.
“We hope the news that local authorities will have three years to repay any council tax revenue deficits will feed through to their approach to recouping arrears from local residents.
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“Both central and local government should confirm that this is the expectation.
“Heavy-handed and unrealistic repayment demands for council tax arrears in the post-pandemic period are pointless and unnecessarily frightening given the situation many people find themselves in – and the resumption of bailiff visits to enforce them from the end of August is particularly worrying.
“We look forward to confirmation that the increased flexibility given to councils will feed through to a similarly empathetic approach to their debt management.”
Legislation that came into effect last month revealed that from August 23, physical visits from bailiffs would be unbanned.
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Various charities, including StepChange, warned about this and detailed that it could bring forward a council tax debt “D-Day”.
Dame Gillian Guy, the Chief Executive of Citizens Advice, warned that getting bailiffs involved again will not be beneficial for anyone involved: “Using bailiffs to collect debts is a blunt tool that’s extraordinarily damaging to those on the receiving end, and economically ineffective for councils.
“Former government ministers, backbenchers, charities, campaigners and councils themselves are lining up to call for change on this issue.
“People struggling with their council tax bills could now face a nervous summer waiting for the knock at the door.
“The government must take the opportunity to act to help people avoid this.”
Anyone who falls behind on their council tax bills will be sent a maximum of two reminders from a council.
If these are not addressed, the council will then send a final notice saying they must pay the whole year’s council tax if the payment is missed for a third time.
Eventually, councils may employ bailiffs and legal professionals to retrieve the debt and deductions can even be made from wages or benefits to cover the cost.
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