The system for collecting and enforcing council tax needs modernisation and there should be a fairer approach to supporting people who struggle to pay, councils have said.
The Commons’ levelling up, housing and communities committee has published written evidence for its inquiry into council tax.
The inquiry will look at whether there should be changes to the legislation on the recovery of council tax arrears, and how local council tax support schemes affect council tax collection rates.
In its submission the Local Government Association said: “There is considerable appetite within local government to further develop and improve local approaches to collecting council tax, and a great deal of work is already underway.”
However, the LGA also highlighted issues with “insufficient funding” as one challenge to supporting vulnerable people.
The LGA also called for council tax support schemes to be “fully funded” by government, as they were prior to 2013.
“The reduction of around £15bn in government support to councils from 2010 to 2019 has meant that some councils have had to take decisions on council tax support which they would rather not have taken,” the LGA said.
Mid Sussex DC said the whole system was outdated, and had failed to “keep up with a changing landscape”.
On the issue of support schemes, Mid Sussex said: “By the different schemes you are not measuring apples with apples. Some Local Authorities still offer 100% maximum council tax support to people of working age whereas others offer less than 50%. The schemes have become a postcode lottery.”
Norfolk CC’s submission also highlighted “significant variation in the council tax support schemes” with those offered by its districts varying from 75% to 100%.
Norfolk went on to warn of the possibility of “perverse incentives” due to where decisions are made.
“A particular issue is that the share of council tax income is weighted towards upper tier authorities. As a result, the financial impact of offering a more generous council tax support scheme may bear more heavily on upper tier authorities / other preceptors (who have limited opportunity to influence the decision) rather than the district council decision makers,” it said.
Elsewhere Southwark LBC called for changes to how council tax collection data is published to avoid ranking authorities by how much tax is collected.
“The focus on in year collection is financially irrelevant for councils but can create perverse incentives for councils to focus on ensuring that in year collection is maximised,” its submission said. “Regrettably, the published data has de facto become a local authority ‘league table’.”
The committee will begin taking oral evidence on 6 June.
