Regulation of Enforcement Agents (Collection of Council Tax Arrears)

Yvonne Fovargue Excerpts

Wednesday 28th October 2015 Commons Chamber

[Yvonne Fovargue (Makerfield) (Lab)]

I beg to move,

That leave be given to bring in a Bill to make provision about the use of bailiffs and other enforcement agents by local authorities to collect council tax arrears; to establish a code of practice for enforcement agents; to create an independent bailiffs ombudsman to administer the code and to investigate and adjudicate complaints; and for connected purposes.

This Bill deals with two interrelated problems which, taken together, are pushing too many people into a debt trap by forcing them to borrow more to pay council tax arrears and unaffordable bailiff fees. The first problem is that local councils are too ready to call in the bailiffs when people fall into arrears on their council tax bill. This is despite guidance that is meant to encourage local authorities to look towards establishing affordable repayment plans in such situations and thus avoid the bailiffs. The Bill gives people a stronger right to challenge councils to offer an affordable repayment option before instructing the bailiffs.

The second problem is that bailiffs, despite recent reforms, continue to use unreasonable methods such as aggressive behaviour and intimidation. They charge unreasonable fees and misrepresent their powers in order to gain entry to collect goods. The Bill would ensure that when bailiffs are instructed they conduct collection activities in a reasonable and fair way. Crucially, for the first time, it will give people access to an independent ombudsman to secure redress when the bailiffs fail in their duty. At present, there are extremely limited circumstances where a complaint can be made to an existing ombudsman or where action can be taken through complicated court processes, leaving many people who feel they have been treated unfairly completely unsatisfied.

The number of people contacting debt advice charities for help with council tax debt has increased rapidly in recent years. More than 63,000 people sought help from StepChange Debt Charity in 2014—a staggering 372% increase since 2010. Council tax arrears are the fastest-growing problem debt dealt with by National Debtline, and 24% of clients had this type of debt in 2014, up from 14% in 2007. It is the debt issue most commonly seen by local citizens advice bureaux. Too many cases are sent to the bailiffs, and sent too quickly, as the default option for many councils. A recent StepChange review found that half the clients who sought help from their council were instead referred to bailiffs—twice as many as were offered an affordable payment plan. Research by the Money Advice Trust in 2013 found that councils had referred debts to bailiffs on 1.8 million occasions in the course of a single year— a figure that rose to 2.1 million last year.

Sending in the bailiffs often makes a bad situation worse, tipping people much deeper into problem debt. Many bailiffs still fail to comply with the national standards for enforcement agents. The high fees mean that six in 10 StepChange clients paid at least £310 extra for bailiff collections, and 15% have paid more than £420. Most people fell behind on other bills—naturally—or borrowed money, often from payday lenders or friends and family, in order to pay these fees. The lack of help means that people are more likely to fall into debt. They are more than three times as likely to take out a payday loan, twice as likely to borrow money from friends and family, and 50% more likely to fall into debt on other bills to pay the council tax demand.

The previous Government committed to clamping down on aggressive bailiff behaviour, and last year a series of changes to their procedures was introduced. Those changes are a move in the right direction, but the light-touch approach does not seem to have had much effect. Recent Citizens Advice data showed that in the year since the regulations came into force there has been an extremely significant increase in the number of problems caused by bailiffs. Last year, Citizens Advice helped with 77,000 problems caused by bailiffs—an increase on the previous year’s figure of 45,000.

The evidence from Citizens Advice also shows that people are continually intimidated by bailiffs. For example, one of its clients was told that he was “looking at a prison sentence of up to 51 weeks” if he did not pay his debt in full by the end of the day. Another bailiff told a client that he was going to come round with a “gang of lads” if the debt was not paid—and that threat was made within 24 hours of the enforcement notice being issued. Evidence from StepChange echoes this. A bailiff called at one of its client’s houses—a single parent—to collect unpaid council tax. She was threatened with prison unless she allowed the bailiff into the house. The bailiff said, in front of the child, “Do you want your two-year-old son to be taken away from you when you go to prison?”

The ways in which bailiffs apply fees and charges cause huge numbers of problems for people facing bailiff action. One client had been paying a magistrates court fine of £600 via a deduction from her benefits while she was looking for work. When she found work, the deduction stopped. She had been paying for a considerable period, and she believed that she had paid off the fine. She received notice from a bailiff regarding an outstanding fine of £60. This was inflated to £370 by compliance and enforcement fees. The original documents asking for repayment had been given to her teenage daughter, who did not live at the property. The bailiff contacted the client by phone threatening to come round that day with a locksmith and a removal van if she could not pay in full. She offered £170 that day and £200 on the day she was paid, which was the following week, and the bailiff refused to accept that offer.

Another common issue is bailiffs misrepresenting their powers to force entry into people’s homes. The forcing of entry is restricted to certain debts, but last year 67% of Citizens Advice advisers saw cases where bailiffs had misrepresented their powers by saying that they could break in, use force, and take the goods.

This Bill will not solve everything, but it will help. It will put good practice guidance for councils and bailiffs issued by the Department for Communities and Local Government and the Ministry of Justice on to a statutory footing, and introduce an ombudsman scheme for bailiffs. Together, those measures will provide a stronger impetus for councils and bailiffs to offer sustainable repayment plans to people in arrears and thus avoid pushing them into the debt trap. It is no use asking somebody on a low income to pay £370 by the end of the day.

Problem debt costs the economy in the region of £8 billion, with councils picking up the bill for at least £2 billion through the cost of homelessness and additional demand for care, support and public health services. I fully recognise that councils are under huge pressure to balance their books in-year and are named and shamed based on collection rates, but it is counterproductive if their actions just add to people’s debt woes. They need to make more of a concerted effort to ensure that reasonable repayment plans are available and that debts are not simply passed on to bailiffs as a default position.

As I have seen, the reform and regulation of bailiffs is not working, with too many still believing that they can act like a heavy mob, pressurising people into repaying by using illegal tactics. I believe that this Bill would take a considerable step further towards remedying the situation.

Question put and agreed to.

Ordered,

That Yvonne Fovargue, Bill Esterson, Robert Flello, Graham Jones, Helen Jones, Andy McDonald, Anna Turley, Margaret Greenwood, Liz McInnes, Stella Creasy and Andrew Percy present the Bill.

Yvonne Fovargue accordingly presented the Bill.

Bill read the First time; to be read a Second time on Friday 20 November, and to be printed [Bill 87].