Modernizing Council Tax Collection: Balancing Revenue and Resident Welfare

Tackling the Council Tax Debt Tightrope: Better Outcomes Without Fear

Intro

Welcome back to Debt Matters, the UK podcast for debt collection and credit control professionals. Today we’re looking at a challenge many councils are living with: how do you protect revenue for local services while avoiding collection practices that drive residents further into crisis?

What the article says

In The MJ, StepChange Debt Charity’s Emily Whitford argues council tax debt has become a “tightrope” for local authorities. The message is not “don’t collect”. It’s that the system needs modernising so people in difficulty are more likely to engage, repay sustainably, and avoid unnecessary escalation.

A key point is the unique status of council tax in England: it is the last remaining type of debt where non-payment can still be linked to imprisonment. Even though it’s largely a notional threat, Ministry of Justice figures cited in the piece show that 19 people received suspended sentences in 2024 for non-payment.

The scale of arrears

Whitford highlights how big the arrears problem has become. The article states that £6.2bn is owed in England alone in 2025, around 85% higher than in 2020. If you run an arrears book, that kind of growth changes everything: higher volumes, more complex cases, and a bigger proportion of customers who are genuinely struggling rather than simply choosing not to pay.

Why “fear first” can backfire

The article argues some council communications can carry an assumption of “won’t pay” instead of “can’t pay”. In practice, fear-based messaging often reduces engagement:

People avoid contact because they’re anxious or ashamed

They agree to unaffordable plans just to stop the pressure, then fall behind again

Problems multiply when enforcement fees and stress are added

For collections teams, that’s the expensive loop: more churn, more complaints, more re-default, and less sustainable cashflow.

A simple “better first contact” script

If you’re thinking about tone, here’s a practical opener that keeps authority but reduces fear:

“Thanks for getting in touch. If you’re struggling to pay, tell us early and we’ll look at affordable options. We can check eligibility for support, pause escalation while we assess, and agree a plan you can keep to.”

What a modern approach could look like

StepChange’s position in the article is that the option to imprison people for being in debt belongs in the past, and that council tax and wider government debt collection practices should be updated to reduce fear and deliver better outcomes.

Practical takeaways for councils and their partners

If you’re involved in local authority collections, outsourced recoveries, or policy, here are actions that align with the article’s direction:

Rework early-stage letters and SMS: lead with support routes, clear options, and affordability prompts

Make affordable plans easier than escalation: shorter, realistic arrangements that are reviewed, not set-and-forget

Treat vulnerability as operational, not exceptional: train staff, record it properly, and adapt tone and cadence

Use enforcement as a decision, not a step: document why, confirm support routes were offered, and check proportionality

Manage to outcomes, not just recoveries: track re-default, cost-to-collect, complaints, and customer harm indicators alongside cash

Council tax pays for the services communities rely on, but collections that rely on fear can create worse outcomes for residents and more work for everyone downstream. The tightrope is real, but modernising the approach can improve both engagement and recovery.

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