Z2K helps client win complaint against Hackney Council

A recent case demonstrates some of the hardships which homeless people can experience when in emergency accommodation.  Through an unfortunate set of circumstances they can find themselves accruing charges which they previously were unaware they had to pay.  The below case outlines how a client was suddenly expected to pay Council Tax, following a Valuation Office re-rating from Business Rates to Council Tax.  It also highlights the unreasonableness of some boroughs who don’t take clients’ financial circumstances properly into account when they are in arrears.

Mr “L”, his wife and their two children were made homeless in September 2014.  He made a homeless application and Westminster City Council placed the family in emergency accommodation in Hackney.  Their accommodation was in a hotel, but was self-contained with a bedroom, living room and separate bathroom and kitchen.  Westminster provided a charge sheet stating how much Housing Benefit the family would get, the amount of rent they would be charged and the amount of service charge they would have to pay.  Council Tax wasn’t mentioned as the property was rated for Business Rates.

In July 2015, the Valuation Office re-rated the flat in which Mr L’s family was staying in from Business Rates to Council Tax.  This was backdated until 2010.  The Valuation Office sent this report on to Hackney Council.  However, Mr L himself was not notified about the changes until March 2016 when he received a notice stating, “New introduction of client responsibility for council tax.”  Three weeks later, he received a Council Tax bill of £1791.15 for the years 2014/15 and 2015/16.

In July 2016, Mr L received an invoice for £162 a month for these “arrears” – an arrangement he had not agreed.  A month later, after receiving a first reminder letter, he contacted Hackney and was told that he had no option but to pay the £162 a month.  Payment arrangements could only be made if there was a liability order incurring additional costs added to the arrears.  Mr L said that the he could only afford to pay £5 a week towards the 2014/15 and 2015/16 arrears as he also had to pay full council tax for the current year (2016/17).  Hackney council did not ask him for a means statement or offer any flexibility.  Unable to afford this, he paid £20 a couple of weeks later.  Hackney issued a default notice the following day.  No Final Reminder was sent, but a court summons was issued at the start of 2017.

Z2K was concerned at Hackney’s attitude, and so I submitted a complaint on the grounds that it should have made more efforts to establish who was in the property in July 2015, which would have reduced Mr L’s arrears.  I also argued that liability orders should not have been sought for these arrears before any payment arrangements were made as claimants incur additional costs, and that the Summons had not been issued properly as no final reminder had been sent.  More broadly, as well as questioning its refusal to allowing flexibility in the payments, I submitted that Hackney needs to introduce statement of means form, so it can accurately assess people’s finances and set up affordable payment arrangements.

In response, Hackney accepted it had not issued the court summons properly and knocked £50 off Mr L’s arrears.  This did not go far enough, and so I referred the complaint to the Local Government Ombudsman.  The LGO’s decision has just been published.  It concludes, “I can see no reason why Hackney Council could not enter into a repayment arrangement when Mr L first contacted it.  In fact, I consider it should have made such an offer when sending backdated bills in March 2016.”  The LGO also agreed that Hackney should have made more effort to establish who was in the property in July 2015 and ordered it to write off Mr L’s debt between then and April 2016.  In addition, Hackney was instructed to reduce his arrears further by £250.  Disappointingly, although it criticised Hackney’s refusal to enter a payment arrangement, the Ombudsman didn’t rule it should change its policy.

This judgement goes some way for Mr L and others facing Council Tax arrears.  However, I would argue that it should have gone further.  Local authorities really ought to properly establish what people’s means are when asking for arrears to be paid.  How else are they going to know if a resident can actually afford to pay the amounts requested?  By establishing a claimant’s circumstances, a local authority can save money by reducing the number of people who default.  In addition, use of statement of means and flexible payment arrangements could ease the stress on low-income residents and avoid administration, court and bailiffs fees, thus enabling residents to get out of the cycle of debt from having to borrow money elsewhere to pay their Council Tax arrears.  Even though the LGO hasn’t ruled using statement of means form is necessary, I hope Hackney will in future follow the good practice elsewhere by those authorities who do listen to those in arrears and agree to affordable payment arrangements.

Z2K Submission to Hackney Council’s Council Tax Reduction Scheme Consultation

To what extent do you agree or disagree with the Council’s preferred option of updating the current scheme and increasing the minimum contribution required from working age recipients from 15% to 20%?

Strongly disagree

Please provide additional comments to support your response

Z2K strongly objects to the proposal to further reduce the support available under Hackney’s Council Tax Reduction (CTR) scheme. Our research shows this will simply serve to push some of the borough’s poorest residents further into poverty.

We understand the difficulties councils are facing in financing services such as council tax support and we are campaigning to national government for the restoration of a fully-funded national system of council tax benefit. However, while we recognise the financial strain councils are under, we are wholly opposed to pushing the burden of government cuts onto the nation’s poorest residents.

Eight London councils, including the neighbouring borough of Tower Hamlets, have maintained 100% support for claimants. A further 12 boroughs have kept their charges below 20%.

We therefore urge Hackney to stay in line with other councils and minimise the burden for the borough’s poorest residents.

Impacts on the Council

Freedom of information requests show that since 2013-14 there has been a continued decrease in the cost of Hackney’s CTR scheme, from £28,941,039 to £25,045,983. This means a reduction in costs of 13.5% over the last four years. Such a fall in expenditure is to be expected, as the number of working-age council tax support claimants has fallen by 12% (from 26,360 to 23,181) over the same period.

As the costs of the scheme are clearly declining despite the minimum payment remaining the same, there is little justification for the council to increase its charges. This is backed up by evidence from other councils such as Tower Hamlets, where the costs of the scheme have decreased by 9% whilst full support has been maintained.

We are therefore concerned that the information given in the consultation document may be misleading for residents, as it suggests the scheme has become increasingly expensive – when in fact the opposite is true.

In addition, the proposed changes will not necessarily lead to the expected rise in council revenues, as residents are already struggling to pay the existing amounts. Increasing the minimum payment is likely to lead to lower collection rates. This is the case in Hillingdon, where the collection rate fell from 91% in 2015-16 to 66.5% in 2016-17 after the council raised the minimum payment by a quarter (from 20% to 25%). The proposal to raise the minimum payment by a third (from 15% to 20%) in Hackney might well lead to a similar drop in collection rates.

Combined with the falling costs of the scheme overall, this means the proposed changes would not therefore generate the increased revenue the consultation document suggests.

In addition, using bailiffs to recover outstanding payments will not solve this issue, as any money collected goes first to paying off the bailiff fees rather than increasing council revenues. Further reasons for our opposition to the use of bailiffs are explained below.

Impacts on residents

Our research on the impact of the localisation of Council Tax Benefit has shown that where local authorities have chosen to increase minimum payments, the struggle to meet the higher rate serves to push the authorities’ most deprived residents even deeper into poverty.

Benefits are supposedly calculated on the basis of providing the minimum necessary to live on, yet they fall far short of Minimum Income Standards (the amount required for a minimum acceptable living standard, for more information see http://www.jrf.org.uk/topic/mis). For a couple with two children their benefits only provide 57% of what is required for an acceptable standard of living. For a single person over the age of 25 the £73.10 weekly Job Seekers Allowance is only 39% of their minimum income standard. Increasing the minimum council tax payment in Hackney to 20% will effectively place a tax on these benefits, bringing people further below the necessary level of income and pushing them into poverty.

For the vast majority of CTR claimants this minimum payment has to come out of benefits, which are already insufficient to provide for the basics of life, and in many cases have already been reduced by other welfare reforms. This will mean that thousands of Hackney residents will be placed in the impossible situation of having to cut down on their food, utility bills or other household essentials in order to pay for their council tax.

In our research and casework services we see the pressures residents are facing on a daily basis, with many people reporting they have had to cut back on essentials such as food and heating in order to pay the rising costs of these reforms.

Do you have any other comments on how you think the Council Tax Reduction Scheme should be set out and paid for?

One of our major concerns is Hackney’s use of bailiffs to recover payments from families in council tax arrears; in 2016-17 the council referred 870 council tax support claimants to bailiffs. This means that a total of around 5,000 households in receipt of CTR have been referred to bailiffs since 2013. We suspect many of these will be families with children, or vulnerable single people and couples. As our previous research has shown, this leads to a great deal of distress for residents. We are strongly opposed to the use of bailiffs due to the unwarranted trauma they cause. We urge Hackney to follow the example of boroughs such as Brent, Islington and Southwark in adopting a policy of not referring council tax support claimants to bailiffs.

We welcome Hackney’s provision of a discretionary hardship scheme for residents struggling to pay their council tax. We urge the council to make residents more aware of the scheme and to make it easier for people to apply for and receive support.  It is also important that funding for the scheme is ring-fenced, and that any money not spent one year is rolled over to fund support in the following year, rather than being subsumed into overall council budgets.

Crisis of confidence in Universal Credit

Yesterday’s Parliamentary double-header on Universal Credit amounted to the biggest challenge to the Government’s flagship “welfare reform” so far.  First, the Work & Pensions Secretary, David Gauke MP, and his officials were given an early-morning grilling by the Work & Pensions select committee.  After a brief respite during Prime Ministers Questions, when Mrs May took the flak herself, Mr Gauke was back under sustained fire during an Opposition Day Debate calling for the “roll-out” to be paused.  Under threat of widespread rebellion from its own ranks, Government Whips went for a collective abstention – handing victory to the Opposition parties. Continue reading

NextDoor Project – Five Years On

 

Z2K’s NextDoor Project was launched in July 2012, anticipating a surge in demand for decent, affordable housing in the private rented sector, a direct consequence of the Coalition Government’s “austerity measures”.

One of the first of the cuts to be announced was a reduction in Local Housing Allowance Rates of Housing Benefit in the private rented sector.  This had the effect of greatly constricting the supply of properties that low-income renters could afford; with the result that many quickly fell into arrears and ended up being evicted. Continue reading

Campaign for Council Tax Support goes to Labour Party Conference

Arriving at my first party conference, I was full of questions. Would our event run to plan, would the room be ready, would the speakers be any good and, most importantly of all, would anyone actually turn up to hear them?

Council tax doesn’t tend to draw in the crowds, and council tax support certainly doesn’t. Yet it’s something that affects us all, through the amount we pay and the revenues available for essential services. And sadly, as with so many current welfare reforms, government cuts are having a hugely damaging impact on the poorest members of our society. Continue reading