Council Tax consultation for Derby and Derbyshire

Hundreds of thousands of households across Derby and Derbyshire may benefit from lower council tax payments in the future.

The Government has launched a new public consultation over possible changes to improve the council tax system after Derby councillors said changes were “desperately needed” and “deeply unfair” for the majority of its residents.

Proposed changes include making council tax billing 12 months a year (instead of 10) – therefore reducing people’s monthly payments, making the system “fairer for taxpayers”, giving households more time to pay debts and “capping the costs charged on households in seeking liability orders for debts”.

It comes after councillors of all political parties in Derby called for immediate change following a Freedom of Information (FOI) request that revealed bailiffs had collected up to £8 million of council tax debt over thousands of debt cases in the city over the last few years.

Councillors claim the main problem around the council tax system, as it stands, is that the property bands – on which the annual bill and monthly payment amount is based – are “outdated” and have not been reviewed since 1991.

As the majority of households in Derby are classed as the least expensive Bands (A or B), this limits how much revenue the council can generate to fund public services.

The system is not just hitting the council’s pockets but also those of residents too. Council tax bills continue to rise – which has been the case in recent years – at a time when the cost of living crisis is still affecting people’s daily lives, and Councillor Jonathan Smale said council tax now “creates a deeply unfair system where lower-income households pay a higher proportion of their income in tax than wealthier ones”.

Recently Derby City Council’s leader Nadine Peatfield told the Local Democracy Reporting Service (LDRS): “The council tax system was set up in 1991 as a quick fix to the troubling Poll Tax, but in 34 years it has never been updated. In this time, house prices have changed phenomenally so a re-evaluation of the bands is desperately needed.

“In Derby, we have a disproportionately high number of Band A properties, which affects how much council tax we receive while the demand on services remains high. The local government reorganisation proposed by this Labour government could go a long way to addressing this issue.”

Earlier this month the Labour Government ruled out plans to “reform” the banding system, however it said it was “exploring options to improve the way council tax is collected and enforced”.

A week later it published details of a new council tax consultation on its website. As part of the consultation the Government has set out what it is proposing to make improvements.

These include:

• The government intends to modernise the administration of council tax to deliver a fairer and more efficient system for taxpayers and local government. 
• The government proposes changing council tax billing from 10 months to 12 months by default. This will assist households in managing their finances. It proposes maintaining the ability for households to pay over 10 months where this is preferable.  
• The government is proposing changes to processes for collecting and enforcing council tax charges. It is right that councils have the power to recover debts owed to them and to tackle cases of avoidance. However, the government believes households should be free from concerns of disproportionate enforcement action. The government is proposing increasing the time before councils can request a full bill from households and capping the costs charged on households in seeking liability orders for debts.

The consultation document states: “It is not fair that overlooked and deprived places are punished by the funding system, and we are determined to create a fairer system across the country.

“Local taxes help pay for essential local services which people rely on, and so it is right that deliberate tax avoidance is not tolerated. By the same token, the government is well-aware of the real financial pressures still felt by households, and that there are examples of aggressive collection practices inflicting misery on residents across England.”

The consultation closes on September 12th and can be seen here.