A fair and effective system of local taxation underpins good public services and maintains trust between local taxpayers and elected councils. Council tax plays a vital role in funding the services that communities rely on every day and is paid by approximately 25 million households in England.
After 14 years of cuts and mismanagement, this Government have taken decisive action to stabilise councils’ finances, increasing investment by more than £5.6 billion over the next three years and providing the first multi-year settlement in a decade. As well as boosting funding, we have reformed how money is distributed around the country, reconnecting funding to need and deprivation—ending the unfair, irrational system that kept deprived places poor. We have taken the hard decisions dodged by previous Governments. But we know there is more to do.
Last year, the Government launched a consultation on proposals to improve and modernise the administration of council tax. Council tax plays a vital role, funding over 800 vital public services on which communities rely. It is therefore right that taxpayers expect a system that is clear, accessible and simple to navigate that supports people to pay what is due and helps them access support when it is needed. However, the system we inherited, introduced in 1993, has been largely unchanged over the last three decades. Over time, this has left parts of the system outdated, to the detriment of taxpayers and councils alike.
Councils must have reasonable powers to recover unpaid council tax and tackle avoidance. However, at its worst, the current arrangements can operate as one of the harshest enforcement regimes in the country, treating those who are unable to pay in the same way as those who wilfully choose not to. Missing payments can lead to immediate demands for large lump sum payments, liability orders, and the use of bailiffs.
Those in debt are often among the most vulnerable in society, including people on low incomes, those experiencing ill health, or households facing sudden financial shocks. Rapid escalation to aggressive enforcement action on council tax can push people deeper into hardship, compounding debt rather than resolving it. Under this Government, it will end.
Enforcement must be proportionate and treat people fairly and with dignity, particularly at a time when they are grappling with significant cost of living pressures. At the same time, the system must be fair and clamp down on deliberate tax avoidance.
This is why we consulted on a range of proposals and sought evidence on options to make the administration of council tax fairer for both taxpayers and councils. The consultation received over 3,000 responses from the public, local government and interest groups. I am grateful to all who took the time to share their views. I would also like to use this opportunity to put on record my gratitude to Martin Lewis and Money Saving Expert, and Martin’s charity, Money and Mental Health, for their tireless campaigning on these issues. Their work has been instrumental in shining a light on the real-world impact of council tax debt and the harm that poor administration and aggressive enforcement can cause, informed by the experiences of people who turn to them for help.