by Myles Fitt, Strategic Lead for Financial Health policy.
This article first appeared in the Herald on 10 March 2020.
One year, one week and one day ago I was standing in my native Dundee with a troupe of Citizens Advice colleagues alongside a statue of Desperate Dan. No, we weren’t offering official advice on the proper baking of cow pies. We were launching a new online tool that helps people to make savings on their Council Tax.
Why Desperate Dan? Well, why not? It seemed like a good idea at the time - and it got our picture in the papers.
Another question is why Council Tax? Of all the different types of debt that people get into, why single that out for special attention? Well, two reasons. One, Council Tax debt is actually the single most common type of debt that the Scottish CAB network sees. And secondly, you’d be surprised how many ways you can reduce your Council Tax payments - and cut your bill.
Since our tool was launched on that day, 62,000 people have used it. And many have made significant savings. So today - as our new Council Tax bills are set to arrive – I’m here to have another go at urging you to check out the tool for yourself.
Because Council Tax debt is a real problem in Scotland. Last financial year, 2,257 people in Scotland sought our help with a multiple debt situation which included Council Tax debts. Those clients owed a total of £6.8 million in Council Tax arrears alone.
Worryingly, the average of these debts was over £3,000 – almost three times the average Council Tax bill of £1,201. So it’s a significant problem for thousands of people across the country.
But like I say, the good news is that you may be entitled to reductions or even exemptions in your Council Tax. In fact, last year our advice helped clients save an average of £380 on Council Tax payments.
The problem is that many people don’t realise they’re entitled to a Council Tax reduction. Or they think that because they’re already getting one – say the single household discount - they wouldn’t qualify for others. But it doesn’t work like that. There’s a whole range of discount and exemptions. However, if you don’t claim them, you won’t get them.
That’s why we launched our tool last year, and why we’re still urging people to use it.
During the pandemic we’ve worked with the Diffley Partnership to track people’s concerns around income and bills. Our polling found that 39% of people in Scotland were concerned about their income during the pandemic, including 24% who were worried about Council Tax payments.
These figures demonstrate the financial hit that many families have taken over the past year. And the figures would have been worse without the fast action from policymakers in the early weeks of the pandemic, such as the Scottish Government moving to increase funding for the Council Tax Reduction scheme.
The increased awareness of this scheme has seen a welcome uptick in the numbers of people claiming it, to around 496,000 households according to the latest figures. While that’s still lower than the around 550,000 when the scheme was first introduced in 1993. it’s still a move in the right direction and something we will hopefully continue to see rise after the pandemic.
Credit is also due to Local Authorities across Scotland, who showed a really empathetic approach to those who found themselves in Council Tax payment difficulties, offering payment deferrals or allowing payments to be spread over twelve months instead of ten.
However, arrears have built up; arrears that will be difficult to repay for the many people who have experienced an income drop due to furlough, unemployment or reduced working hours.
For others, the problem is yet to come as the furlough scheme ends in September and payment support measures close. Our fear is that this could be a real crisis moment for tens of thousands of households.
There is a potential Council Tax freeze for some households next year, depending on whether your Local Authority makes use of a Scottish Government fund to hold it to existing levels.
For those who do receive a freeze this will be welcome, but in itself it’s not a silver bullet because many households are already in debt over their Council Tax.
We would like to see some sort of assistance given to those who have fallen into Council Tax debt solely because of an economic consequence of Covid-19. For example the Scottish Government could meet the costs of writing off such debt, or establish a Council Tax Hardship Fund, or Local Authorities could extend their supportive forbearance for longer.
We are making that case to Scotland’s political parties ahead of the Holyrood elections. We’ll also be launching a debt campaign in the spring, encouraging people to seek advice early rather than let their arrears build up to an unsustainable level.
On the day I stood with Desperate Dan on that chilly Dundee morning just over a year ago, we were just beginning to hear about this thing called Covid-19. Now we are nearing the first anniversary of the initial lockdown. Over that time people’s finances have been stretched to and beyond breaking point. Even with furlough being extended for a further five months for many, it may not be enough to prevent people falling into financial difficulties.
Council Tax is admittedly just one part of the jigsaw. But as it is a clear example of where many people can make significant savings. It’s worth checking out whether you are one of them.
Go to www.checkmycounciltax.scot. Or if you prefer, contact your local CAB or call our Money Talk Team on 0800 085 7145.