Covid in Scotland: Council tax pandemic debt 'explosion' feared

A charity has warned of an "explosion" in council tax debt in 2021, fearing the pandemic will worsen arrears.

Citizens Advice Scotland said payment breaks allowed by councils during the pandemic had led to council tax arrears building up.

The average debt owed is about £3,000, more than double the average annual council tax bill.

The Scottish government said they had allocated £25m to councils to top up the £351m Council Tax Reduction Scheme.

In 2019/20, 2,257 people sought help from the Citizens Advice network with a complex debt issue involving council tax, owing a cumulative £6.8m in arrears.

A complex debt issue is where someone owes multiple debts.

'Action required'

Citizens Advice Scotland's financial health spokesman Myles Fitt said: "Scotland is potentially facing an explosion of council tax debt in 2021.

"The figures before the pandemic are bad enough, but the real fear is that Covid-19 is going to make matters much worse.

"Councils across Scotland showed a real empathetic approach to those who found themselves in council tax payment difficulties, and the payment breaks in the first six months of the pandemic were extremely welcome.

"However, this has led to arrears building up, arrears that will be difficult to meet for the many people who have during that period experienced an income drop due to unemployment or reduced working hours."

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He said that for others, the problem was yet to come in 2021 when the furlough scheme and payment support measures stop at the end of April.

"Action is required to stop council tax debt - already the number one debt issue the Citizens Advice network sees - becoming an even bigger problem," Mr Fitt added.

He called for help for those who "have fallen into council tax debt solely because of an economic consequence of Covid-19", possibly through the government writing off such debt, the establishment of a council tax hardship fund, or through long-term support from local authorities.

The average debt owed is £3,020 - more than double the average council tax bill of £1,201.

Delay enforcement action

Mr Fitt urged people to check if they are entitled to council tax savings, reductions, discounts or exemptions - such as the Scottish government's council tax reduction scheme(CTR) - through the charity's online tool.

A Scottish government spokesman said: "The pandemic and the resulting economic hardship has led to an increase in CTR caseload, with just under 500,000 households now receiving some level of reduction.

"On average, recipients save over £700 a year. We have allocated £25m to councils to help them meet the increased costs of the CTR scheme in addition to the £351m we already provide.

"During the pandemic we have asked local authorities to use their powers to backdate CTR applications by up to six months and not to take enforcement action until they are satisfied that the household concerned has not had its income impacted by the pandemic, or would likely be entitled to a reduction."

Council tax helps fund local authority services including social care, environmental services including waste collection, cremation and burials, transport and highways, courts, cultural services like libraries, fire services and planning.