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Council tax arrears 'number one debt problem' created by welfare reforms

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Council tax arrears 'number one debt problem' created by welfare reforms

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Published by Jon Land for 24dash.com in Central Government and also in Bill Payments, Housing, Local Government

Council tax arrears 'number one debt problem' created by welfare reforms Council tax arrears 'number one debt problem' created by welfare reforms

Council tax arrears are the number one debt problem created by the government's welfare reforms, it has been revealed.

While the bedroom tax has created the biggest public outcry, due to its perceived unfairness, the number of people struggling with council tax payments has rocketed since council tax benefit was replaced by localised council tax support schemes in April 2013.

In the first three months of this year, 27,000 people with a council tax arrears problem got help from Citizens Advice - a 17% increase on the same period last year.

The charity said one in five people who contacted it with a debt problem reported issues with paying their council tax.

Previously, credit card and unsecured personal loans were the most common types of debt people approached Citizens Advice about.

Council tax arrears are a serious problem for in-work households. Between January and March 2014, 42% of those approaching Citizens Advice for help with council tax arrears were employed, compared to 28% unemployed.

Gillian Guy, Citizens Advice Chief Executive, said: “For some households council tax bills can be the tipping point that plunges them into debt. Last year over 90,000 people came to Citizens Advice looking for help with council tax arrears as they struggle in the face of low incomes, rising prices and reduced financial support.

“Consumer debts like credit cards and personal loans have traditionally been the most common debt problems that come through our doors, but since the end of council tax benefit we’ve seen council tax arrears problems go through the roof.

“As their budgets shrink local authorities are increasingly stretched, but they must ensure that the resources available for their local council tax support scheme are focused on those who are most in need.”

The analysis carried out by the charity found that people coming in with council tax issues are struggling with other debts too:

•1 in 6 (16%) had a credit, store & charge card issue

•1 in 5 (21%) had also had an unsecured personal loan issue

•1 in 20 (5%) had a mortgage & secured loan arrears issue

•1 in 5 (18%) had a fuel debt issue

In April 2013 council tax Benefit was abolished and replaced by localised council tax support. The support is available to people in and out of work, but levels now vary from one council to the next.

As of March 2014, 244 councils out of 325 councils in England require all working age households to pay at least some council tax, regardless of income.

In Wales most people who received council tax Benefit now receive help via the council tax reduction scheme, though for many this may not continue beyond March 2015.

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