Council tax debt hits 26-year high

There has been a sharp rise in council tax arrears as UK households continue to struggle to make ends meet.

Figures from the Money Advice Trust reveal that the National Debtline dealt with over 36,000 calls in 2012, which is the highest figure in the organisation's 26-year history and represents a 40 per cent year-on-year hike.

Indeed, one-fifth of all calls made to the service in 2012 were related to issues with the payment of council tax and the increased use in bailiffs is believed to be one of the main reasons behind this. In 2008, there were only 26,250 calls, which means this figure has increased by around 10,000 in a five-year period.

Joanna Elson, chief executive of the Money Advice Trust, said: "Local authorities are behind the curve when it comes to debt collection. Over the last five years many commercial creditors have come to understand that helping people who are struggling to repay debts find a sustainable repayment plan makes good business sense. In what are difficult times for local authorities, they could benefit from taking a more considered approach to debt collection."

She added appointing bailiffs to collect debts can cause severe financial and psychological distress for people up and down the country and so local authorities should look to use other methods when trying to recover their money.

The number of people in council tax arrears points to the fact that they are struggling to make their monthly budget last. If this is the case, then they should take action to being their situation under control.

Burying their head in the sand is not a good option, as this will only make the problem worse. Instead, they should consider taking out a debt management plan, as this would reduce their monthly repayments and free up some extra money to cover living costs.

By Amy White