Council tax debt on the rise due to Universal Credit changes

Alec Doyle Local Democracy Reporter

Council tax debt is one of the top five issues facing one Welsh county’s residents on benefits – but not for the reason you might think.

And there are concerns that Rachel Reeves’ budget tomorrow could make things worse for those already struggling financially.

Earlier this month Cllr Stella Matthews told at Wrexham County Borough Council’s Executive Board she had seen statistics from Citizens Advice (CA) that showed two areas of Wrexham where council tax debt was one of the main causes of financial hardship – with 14.7% of all CA clients being behind on their council tax payments.

In the first half of this year already 125 CA clients in Wrexham have presented with council tax arrears while 90 have entered discussions about a council tax reduction.

But according to Citizens Advice Wrexham the problem is not the level of council tax – it is the Universal Credit system. Benefits claimants are now responsible for applying for their own credits and exemptions – but many are unaware until they receive a payment demand.

“Universal Credit has created a fundamental change in the benefits system,” said Robert Hughes-Mullock, development manager at Citizens Advice Wrexham.

“Previously people receiving benefits were automatically enrolled in council tax exemption if they qualified.

“Now each individual has to apply for that exemption themselves – and many are simply unaware or do not understand the process. As a result we are seeing more and more people fall into arrears with their council tax , which is causing stress and hardship that is wholly avoidable.

“So many people are finding themselves in this position now it’s the first thing we ask new clients.”

With the UK Government set to deliver a new budget tomorrow, Robert said there was fear among some lower-income families and individuals in Wrexham about what was to come.

“There’s a lot of anxiety among the people of Wrexham with regard the budget and what is coming for them next year with potential changes to PIP and things,” he said. “It’s a challenging time for people.

“Often our clients just hear the soundbites from politicians and it presents the worst possible situation for them when they are already struggling to make ends meet.”

Wrexham Council has acknowledged there is a growing problem around the cost of living and is working in partnership with the CA to raise awareness of the support on offer for people.

CA works with clients by liaising with the council, the Department for Work and Pensions and private credit providers to help people manage their situation and access the support they are entitled to.

At the same time it offers money-saving advice and signposts clients to cheaper tariffs for energy, mobile phones and even wi-fi.

“Although the council tax debts have seen a big increase there are services in place to minimise the impact.” said Robert.

Since April CA has helped clients in Wrexham improve their finances by over £9.3 million by ensuring they receive the benefits and tax credits they are entitled to, helping them manage or write off loans and debt and reorganising payment schedules.

“Old benefits had council tax reduction directly linked in with them, Universal Credit doesn’t,” said Robert.

“What is happening is an awful lot of people are not realising that and it’s automatically creating council tax arrears.

“In some cases the first people know that they have a debt is when they get a letter asking for payment.”

One anonymous example from CA Wrexham was of a client living with his wife in a council house. Both receive disability benefits and had a joint claim for Employment and Support Allowance and did not have to supply evidence of ill-health by way of fit notes.

The couple received a Managed Migration Notice (MMN) to move them on to Universal Credit and the client was asked by the Department for Work and Pensions (DWP) to provide fit notes and have a Work Capability Assessment (WCA). This made the client extremely stressed and anxious.

CA Wrexham liaised with the DWP on the client’s behalf to resolve the issue and during the case also offered advice on how the couple could save energy, move to cheaper utility tariffs and apply for Carer’s Element so they no longer needed a WCA.

Their annual income increased by £2,420.60 per year while they saved £514 per-year by switching to social tariffs and applying energy-saving advice.

“We are very fortunate that we work closely with the enforcement team at Wrexham Council and alongside the other departments there to minimise the impact of this change,” said Robert.

“An awful lot of people have been on legacy benefits for years and this is a whole new system. If you are digitally excluded or have other extra barriers we’re able, working with the council, to rectify that quite quickly.

“That helps reduce the cost to the council as well because they don’t have to go down the enforcement route to recover this debt.

“There’s definitely an increase in people presenting with council tax arrears but it’s certainly not the burden.

“Wrexham Council are very good at signposting people to us. We’ve been operating in Wrexham since 1939 so we’ve got a long-standing relationship with the people of Wrexham.

“They know to come to the city centre office on Grosvenor Road or our outreach services in the community for support.

“Last year we helped over 4,000 households who presented to us with over 20,000 issues. That was an uplift on the previous year.

“At the end of the last quarter in September we had already dealt with 12,000 issues from 2,100 households since April.

“We’re just one of a number of organisations out there that are providing support. We have projects working alongside Wrexham Foodbank where we go into their outreaches and chat to people to find out why people need free food parcels.

“We can offer free sessions with benefits advisers and free energy advice sessions to see whether there are any key things that can remove that dependence on foodbanks.

“The cost of living has fallen off the front pages but a whole industry has had to rise up to deliver the support that has been taken away and that people really need.

“In an ideal world people don’t want to be struggling or in a foodbank in 10 years time so we look at anything we can to support them.”

CA Wrexham holds community drop-in sessions – find out where and when at wrexhamcitizensadvice.com/outreaches.

You can also find an online contact form there. Alternatively you can call them on freephone 0800 7022 020.

If you need to contact Citizens Advice Wrexham for support you can leave a voicemail with your name, telephone number and postcode on 01978 800 548 and they will call you back.

You can also contact its Advicelink Cymru service on 0800 7022 020 or for text relay use 18001 08082 505720.