Croydon Council restarts recovery of unpaid council tax from benefit claimants

Croydon Town Hall Pic: Ray Bonsall

Croydon Council is bringing back measures to chase unpaid council tax from some of the borough’s poorest residents after enforcement was paused during the pandemic.

At a meeting last week, the Conservative-run council agreed to seek legal orders to have the benefits of those on council tax support schemes docked to pay their council tax arrears.

The announcement comes as Croydon residents expect to see a nearly 20 per cent increase in their council tax in two years, following a 15 per cent rise in March this year and a further proposed rise of 4.99 per cent for 2024-25.

South Norwood Community Kitchen said: “This is beyond outrageous from Croydon Council. Draconian measures to impoverish people already suffering from cuts to Local Authority hardship schemes. You couldn’t make it up.”

Residents on a low income or who receive benefits can apply for council tax support to help pay the council tax. Those on the support schemes have not been chased for council tax arrears since Covid-19.

Now “benefit attachment” orders can require the Department of Work and Pensions to pay a percentage of a claimant’s Universal Credit towards council tax debt.

The council estimates this could help recover around £400,000 in the next twelve months by requesting up to 200 orders a month, according to the Evening Standard.

The Croydon Council website states that residents facing council tax debt must bring their payments up to date, or contact the council for support, within seven days of receiving a reminder to avoid being issued with a court summons and lose the right to paying by instalments.

If the balance is not settled before the court hearing date, a liability order may be issued allowing the council to take money directly from benefits, including Universal Credit. Bailiffs may also be used to collect the debt.

Mayor Jason Perry, who approved the measures on October 25, said: “We are committed to supporting residents in breaking the cycles of debt they face.”

Perry continued: “The council must clearly take every feasible step to collect council tax that is due in order to secure our financial sustainability for the future.”

Conservative Councillor Jason Cummings said that the pausing of debt recovery during the pandemic was a temporary measure and that the delay in return to normal recovery has cost the council £3.6 million.

The council, which is in £1.6bn of debt, says that the recovery of unpaid tax is necessary to balance its budget for the next financial year.

But Croydon Labour criticised the council’s decision to sanction residents’ benefits, saying: “Residents receiving Council Tax Support are amongst the poorest in Croydon. We’re very concerned with Mayor Perry’s proposals to sanction their benefits in a Cost of Living Crisis. Focus should be on improving access to the Council’s Hardship Fund instead.”

The council’s hardship fund, which provides council tax reductions of up to seven per cent for eligible residents, has been recommended to remain in place for next year. Scrutiny of the hardship fund showed that as of August 2023, 134 applications had been awarded out of 359. 43 were pending.

Croydon Council faces a budget deficit of £75 million for 2024-25 if they do not make further budget cuts or receive additional government support. 

Residents can apply for council tax support through the edit.

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