Report of the Deputy Chief Executive and City Treasurer.

This report presents a feasibility study into whether the use of Enforcement Agents (EAs), also known as bailiffs, is an effective or proportionate method of collecting debt.

The committee considered a report of the Deputy Chief Executive and City Treasurer which presented a feasibility study into whether the use of Enforcement Agents (EAs), also known as bailiffs, was an effective or proportionate method of collecting debt, following representations made by ACORN and Debt Justice at the committee’s meeting on 7 September 2024.

Key points and themes within the report included:

• The use of EAs remained widespread across the UK, with all of the five most deprived Council areas in England, of which Manchester was one, referring cases to EAs where residents do not engage and all Greater Manchester Councils using EAs to recover Council Tax debt, with two GM authorities having an in-house team for this;
• Improved regulation of the EA industry since 2014;
• Considerable investment and improvements into debt collection practice and engagement with residents;
• Recovery processes prior to an EA visit;
• The importance of Council Tax to the Council;
• Representations from ACORN, with a response from the Council, and Debt Justice;
• Representation from the Civil Enforcement Association (CIVEA) in response to ACORN and Debt Justice;
• Representation from Citizens Advice Manchester; and
• Examples of the revised reminder and recovery letters sent to residents.

Some of the key points and queries that arose from the committee’s discussions included:

• Welcoming the recommendations;
• Recognising the impact that losing 1% of council tax had on the Council’s overall budget, but also recognising the cost of stress and health concerns arising from an EA visit;
• Acknowledging the dialogue between the Council, ACORN and Debt Justice; and
• If residents were still able to apply for Discretionary Council Tax Payments if they had a case passed to EAs in the past.

The Executive Member for Finance and Resources introduced the report and explained that the use of EAs was a last resort. He stated that the report highlighted the Council’s work over the last 18 years to ensure a reduction in the number of cases passed onto EAs and that the feasibility study had provided an opportunity to learn the experiences of other authorities and to examine the code of conduct for EAs. He thanked the organisations that provided representations and stated that council tax amounted to 30% of the Council’s revenue budget and funded key services such as Children’s and Adults Social Care. He stated that a 1% reduction in the amount of council tax collected would equate to a loss of £2.73m in revenue, which the Council could not afford against a backdrop of government budget cuts. 

The Chair acknowledged the cooperation of ACORN, Debt Justice and Citizens' Advice in the preparation of the report and stated that their contributions had influenced the Council's approach to the collection of Council Tax, for example, in the rewording of the various letters that were sent to residents where Council Tax was overdue.

The Head of Revenues, Benefits and Customer Services echoed thanks to ACORN and Debt Justice and stated that reducing the number of cases passed to EAs was a key priority and achievement of the service. He highlighted policy changes and work to encourage residents to contact the Council as soon as possible if they struggled to pay their council tax. This included writing off costs for those who engaged with the Council, creating longer payment arrangements, allowing breathing space for arrears payment and the Discretionary Council Tax Payment scheme.

The Chair invited Richard Dunbar of Debt Justice to address the committee. Richard advised that his organisation welcomed the recommendation before the committee and acknowledged the financial challenges facing local authorities like Manchester. However, he stated that the knock-on effect of receiving a visit from an enforcement agent equated to costs of £6m to mental health services. He stated that the Ministry of Justice planned to increase enforcement fees by 5% which he believed would create a commercial incentive for EAs to collect debt to the detriment of residents. He called on the committee to amend the motion before them to recommend that it was not appropriate for any case where the resident was eligible for any level CTS to be referred to EAs and agrees that recovery via an attachment of benefits is more appropriate, including for those currently in receipt of maximum CTS.

The Chair sought officers’ views on the suggested recommendation. The Head of Corporate Revenues stated that he was largely in agreement with the amendment but that it would need to be looked at in more detail. The Deputy Chief Executive and City Treasurer concurred with this and stated that a final approval could be sought through the budget-setting.

The committee also received a verbal representation from Alison Aitken of ACORN.

In response to a comment regarding the lateness of the report, the City Solicitor agreed that it was important for reports to be received promptly and she advised that this report was being finalised up until the point of publication. The Executive Member for Finance and Resources highlighted that late reports were not out of the ordinary and that this report had been impacted by the lateness of the Provisional Local Government Finance Settlement, which meant that additional work was required to ensure the figures in the report were accurate.

Confirmation was also provided that a person was still able to apply for Discretionary Council Tax Payments if they had a case passed to EAs against them in the past.

The Head of Corporate Revenues emphasised the need for residents who may be struggling to pay to engage with the Council, who could signpost to any available support. He stated that leaflets had been created to promote this and were available for members of the committee to take away and share with their communities.

The committee was also advised that the Council monitored complaints about EAs closely and a mapping exercise of enforcement agents’ behaviour against the Council’s code of practice had been implemented. The Head of Corporate Revenues also asked ACORN to encourage their members to report any instances of poor conduct amongst EAs as this would drive improvement.

In response to comments regarding rising enforcement fees, members were informed that fees were to be increased for the first time since 2014.

The Deputy Chief Executive and City Treasurer welcomed the ongoing dialogue with ACORN and Debt Justice and expressed her thanks to officers for their valuable work. She emphasised the importance of revenue generated through council tax and highlighted that some of those refusing to pay council tax could afford to do so.

The Chair stated the recommendation before the Committee was to continue with the use of EAs, which he felt only fair to the vast majority of Manchester residents who paid their Council Tax bills without the need for any enforcement. He highlighted that the Council's use of enforcement agents had reduced significantly over the last few years and that there was extensive support available for those least able to pay. He also stated that EAs mainly focused on those residents who simply refused to engage in any discussion regarding payment of their Council Tax, which included a significant number of residents on salaries in excess of £40k per annum.

Decision:

That the committee

1. notes the contents of the report and thanks ACORN, Debt Justice and Citizens Advice Manchester (CAM) for their challenge and contributions;
2. notes 1% drop in the in-year collection rate of Council Tax represents a reduction of £2.73 million in the Council’s revenue;
3. the committee recommends that the City Council continues to use EAs in the collection of Council Tax against individual residents;
4. recommends that it is not appropriate for any case where the resident is eligible for CTS to be referred to EAs and agrees that recovery via an attachment of benefits is more appropriate, including for those currently in receipt of maximum CTS;
5. recommends that further consideration is given to implementing the recommendations made by CAM;
6. recommends that the Council continues to review its use of Enforcement Agents in the recovery of Council Tax debt and monitors any other solutions employed by other authorities; and
7. recommends that the Council continues to participate in any consultation undertaken with regards to the regulations governing Council Tax.