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Money Saving Expert Martin Lewis joins James O'Brien to discuss a 'monumental improvement' to council tax debt collection. Martin's Money and Mental Health Policy Institute have been campaigning to put an end to damaging flaws in the UK's council tax system. As it currently stands, if a monthly payment is missed, many councils can demand payment for the entire year within three weeks. If a payment is not made within another three weeks, constituents are often taken to court and have 'admin costs' added. After that bailiffs are sent in. New rules from next April mean councils must wait two months, instead of three weeks, to ask for a year's money. The 'admin costs' will also be capped at £100, which Martin says is a 'welcome change' to the 33-year-old system. Listen to the full show on the all-new LBC App: https://app.af.lbc.co.uk/btnc/thenewlbcapp #jamesobrien #martinlewis #moneysavingexpert #council #counciltax #tax #money #budget #LBC LBC is the home of live debate around news and current affairs in the UK. Join in the conversation and listen at https://www.lbc.co.uk/ Sign up to LBC’s weekly newsletter here: https://l-bc.co/signup
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0:00
So we had a win today and I'm actually very happy
0:02
It's not often in this current environment you get some good news coming out. For the last 18 months via my charity, the Money and Mental Health Policy Institute
0:09
we've been campaigning about council tax debt collection. Council tax debt collection is the most pernicious and aggressive and rapid form of debt collection
0:20
It would make banks blush. No commercial company would be able to get anywhere close
0:24
Here's how it works right now. if you miss a monthly payment within three weeks the council is allowed to say and the vast majority
0:35
of them do say you now need to pay for the whole year whoa how someone who can't pay for the month
0:41
can pay for the whole year is beyond me but what do i know about money then within three weeks of
0:47
that they can take you to court add an admin charge typically 150 pounds and send the bailiffs
0:54
for the year's debt plus the admin fee on top. There are 3.3 million people in the country
1:01
we think, in arrears on council tax. In 2024-25, the last year we have stats on
1:06
bailiffs were sent in 1.7 million times. This is a hidden, under-talked-about issue
1:12
that affects a whole class of people in society who have never been protected
1:17
And because of... You heard mental health in the name of our charity that we do on this. It is particularly dangerous for those people with mental health problems
1:24
because you're three times more likely to be in crisis debt anyway if you have a mental health problem than everyone else
1:29
But today, we got good news. That's incredible. Before we go on to the good news
1:35
how did this come to your attention in the first place? So, I mean, so many case studies
1:41
When I set up the Money and Mental Health Policy Institute, which is a brilliant charity, we have a lot of success
1:45
we do lots of good work. This is an extraordinary thing. And we have, you know, there's amazing 30 full-time staff
1:50
One of the things I wanted to do that was a bit different is, our team are really clever people
1:55
who've got great education and they come up with incredible policy solutions but there is an issue with people who work in policy
2:01
that they can sometimes be in an ivory tower and not understand how it works practically on the ground
2:05
so I recruited at the start a lived experience panel so we now, and we still have it, as over 5,000 people
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by the way, as I'm on if you've had mental health problems we'd love you to join the panel
2:16
just go onto the website Money and Mental Health Policy Institute but we under index especially on
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younger men and men from ethnic minorities. And so we would love more of you, we would love more of everyone, but we'd especially
2:27
love more of you to come and all you do is you feed into what we're doing
2:31
And this came from our lived experience panel. We got over 5 people and they were saying this is one of the biggest problems we face So we then looked into it started campaigning and doing policy on it So this has come from our people who have money and mental health problems telling us this is one of the things we need to prioritise fixing
2:45
And give us an idea of, if not the worst case scenario, but a relatively commonplace, catastrophic set of circumstances
2:53
I had a case study this morning of a man who had a motorbike accident, was in hospital
2:57
and he had his move from one month to a year while he was in hospital because he hadn't been home
3:04
and he hadn't paid his cancer tax, funnily enough, because he was in hospital having had a serious motorbike accident
3:08
We had a woman who, due to the postal delays, got her notification about having to pay for a year on Christmas Eve
3:14
And she needed to pay by Christmas Day because of postal delays
3:18
because it's only a three-week window. There's no breathing space. And these are demands for a significant chunk of change
3:23
Yeah, yeah, grants. Obviously that these people won't be able to find. And then, so she went and got credit card debt at 40% interest, catastrophised the finances
3:32
And guess who has to bail you out when you're in trouble? The councils. It's counterproductive
3:36
So what has been announced today? We had a consultation last year. This is the good news bit
3:42
And I met Angela Rayner about it first, and she was brilliant. She got it
3:45
And then we got a live on Good Morning Britain, and then Steve Reid, who's the minister, now they've got it
3:51
That three weeks is to become 63 days. So if you miss a monthly payment, a council cannot, and they can go longer if they want
3:59
a council cannot ask you to pay for a year within until 63 days
4:03
So you've got two months. Now, two months is similar to the breathing space scheme that you have for consumer debt
4:10
which means if you're having a problem, three weeks is not long enough to sort it out for most people
4:14
Listen, let's be honest. My phrasing in my press quote on this is, this is a great first step
4:20
I'm not saying this is a solution or what I would have done if I was in charge, but this is a monumental improvement
4:25
and they're capping the admin costs that can be added to £100. I'd have liked to see it at £70
4:30
but currently many charge £150. And this is the first change in council tax debt processes
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for 33 years. And when you speak to the debt counselling agencies
4:42
your citizens' advice, your national debt line, your step changes and you talk to them about debt
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they say we always prioritise council tax because it is the most dangerous
4:49
council tax debt collecting, way worse than normal consumer debt. Do you know who's second worst after council tax
4:55
No. Central Government debt collection. Really? Yeah. Do we know why? Yeah, because they don't have any of the consumer protections in place
5:02
Because they're not regulated like the FCA regulations, and there's no consumer duty like consumer lenders have
5:07
And also, when you start to talk to governments about it, and they go, oh, well, that might reduce the amount that we collect
5:12
But I was wondering about that because this is revenue as well as It is Now my argument on the council tax thing is actually we don believe this is going to cost councils any money
5:24
because ultimately if you're asking people to pay for a year and they don't have the money to pay for a year
5:28
you're not getting it. And the end result on people's finances and well-being, which leaves people in a worse state
5:34
I mean, it has really hardcore impacts. You will have lots of people this has happened to who can't deal with it
5:40
actually puts burdens on councils. and there are councils out there who've tried to go a different way
5:46
The vast majority just go as hard and fast as they can, who've employed their own debt collectors
5:51
and put in different places where their bailiffs go in and offer help
5:56
And one of the other things changes that's going in here is in those 63 days, and we're still talking about the mechanics of this
6:01
with the government, the councils will have to signpost people for help with their debts
6:05
So rather than going, three weeks want all the money, it'll be, just so you know
6:10
if you don't pay this in time, you're going to have to give us all the money
6:14
but here's somewhere you can go to help to get your finances in order so you can pay. It's off on the way, isn't it, with debt
6:20
Those of us lucky enough never to have fallen into these sort of holes presume that it's like a sort of mandibles that they get you and they grab
6:28
But usually, if you phone the right people or if you contact the right organisations
6:33
they're keen to help you get through it because of the reason that you've just highlighted. Within the consumer sector, yes, but not within the council sector
6:39
and that's why we're raising it. Yeah, because ultimately, demanding people to pay when they can't pay doesn't work
6:45
Right? So what you actually have to do is you have to put... So there's a difference between won't pay and can't pay
6:51
And most of these cases are can't pay. And so what you actually do is get people into a position
6:55
where they're quite... So another thing Money in Mental Health has done, which is now being piloted
6:59
and this is one of our other big campaigns, is within mental health counselling centres
7:03
they're now going to embed debt counsellors because the link is so strong
7:07
And over 70%... You know, forgive me, but I'd have hoped that was already in place
7:11
No, no, it's not. Clearly not. But it's the pilot it is. Yes. And I'm semi-making this stat up
7:17
It could be 60, it could be 80. I'm going with 70 because I can't remember. It's three years ago I read the document
7:21
Yes. 70%, slightly made up, of mental health caseworkers and counsellors are spending a significant portion of time
7:30
of filling in financial forms for their clients. And they're not professionals at it. No. So our idea was, why don't we get the mental health people
7:36
to do the mental health? and let's get the debt and money professionals who actually cost less generally to do debt and money help in the same place at the same time
7:43
And also, if you've got financial problems, the treatment time for clinical depression is thought to take 18 months longer, right
7:50
And if you got mental health problems you three times more likely to be in debt The idea that these two are discreet they not discreet they completely interdependent on each other and sorting out people finances helps their mental health
8:03
and sorting out people's mental health helps their finances, and stopping coming in and using a blunder dust
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if you can't pay a monthly council tax, that you'll have to pay a year, and treating constituents worse than customers
8:14
seems to be quite a sensible way to go for me. A few people pointing out you've clearly had your Weetabix this morning, Martin
8:20
Well, I did mention I was meant to be on my way to the gym before I came, and I had my performance-enhancing caffeine
8:25
which I don't normally have when I'm on air. So forgive me, I'm wired. It's absolutely lovely to see you with your dander up
8:31
but it's lovely to see you all the time. And while I have you, because people will have picked up on your..
8:35
You are close to euphoric about this. The report that the Money and Mental Health Policy Institute published
8:43
was only in 2024, and you now have government action on something that is... 18 months is amazing
8:47
I mean, that is absolutely incredible, And it explains in part your joyous demeanour this morning
8:53
And I've asked you this before, but I want other people to hear your answer to this question
8:57
Why do you care? Sorry, you got me there. I meet people walking in the street, James
9:09
And there is a sense of desperation for many people. And especially on this counter-tax issue
9:17
I can't tell you how many desperate people I met. It's why I burst into tears when we first said they'd do the consultation
9:24
I've met so many desperate people that this has just ruined their lives
9:28
And you can't not have that rub off on you. You can't
9:32
And I have spent my whole career trying to help people with their money. I've been incredibly financially successful on the back of it
9:38
Some of that is talent. Some of that is hard work. Some of that is skill. But a lot of that was luck
9:43
And I think there comes a responsibility when you've been successful. and which will always be due to an element of luck
9:50
that you need to pay it back. And I'm in this bizarre, highly pressured and stressful
9:55
and it makes me ill with it at times, position that if I start a campaign in my area
10:00
please beat everybody note, it doesn't work outside my area, in my area, I probably
10:05
and I hope this isn't self-aggrandising, I probably have, I'm the person who can deliver it
10:09
most quickly and most effectively. So I can't do every campaign and lots of people want me to do things that I can't
10:14
but we took this one on and we've delivered it within 18 months and that makes me really happy
10:19
because I have met so many people. It won't change their lives because it starts in April 2027
10:25
But I know the soft impact on millions of voiceless people that this will have and that's why I care
10:32
I don't know if that's a proper answer or not. I wasn't expecting the question. It's an absolutely perfect answer
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