Written Statement: Fairer Council Tax Enforcement Practices

Today, I am launching a consultation on proposals to improve the administration and enforcement of council tax in Wales, building on a list of past reforms in this area, and delivering our Programme for Government commitment to a fairer council tax.

Council tax provides a significant source of funding, over £2.8bn, for local services such as schools and social care from which we all benefit day-in day-out. Without it, local councils could not provide essential services or help those in need. Everyone has an obligation to pay council tax as part of civil society, and the stable and efficient system we have means over 96% of council tax is routinely collected. There are significant support schemes, discounts and exemptions available to reduce council tax for those less able to contribute. Our Council Tax Reduction Scheme in particular, is crucial in helping low-income households meet their obligations. 

However, the ongoing cost of living challenges mean that more people are falling behind on household bills. This is not unique to council tax but the evidence from a range of organisations is clear: the impact of persistent debts on the wellbeing of individuals and their families can be negative and long-lasting. The impacts are also disproportionate for single parents, renters and those with mental health conditions.

In Wales, we continue to lead the way in making council tax fairer and I am proud of past achievements regularly recognised by key campaigners. In 2011 we capped the court fees associated with council tax enforcement, and in 2013 we delivered a nationalised Council Tax Reduction Scheme for low-income households, which has been maintained and uprated every year since to keep pace with the cost of living. In 2018 in partnership with local government, we focussed our efforts on assisting vulnerable groups by exempting care leavers and standardising support for people with severe mental impairments. Then in 2019 we ended the threat of imprisonment for non-payment of council tax and published a Protocol, raising collection standards right across Wales. 

To tackle the root causes of an unfair tax system which currently places a higher burden relatively on those with lower wealth, last year we delivered the Local Government Finance (Wales) Act 2024. This crucial legislation paves the way for a revaluation of homes in 2028 to create a fairer design of council tax, and then to ensure the system tracks economic conditions. From April 2025 we have made further improvements to the Council Tax Reduction Scheme, enabling local councils to use Universal Credit data to automate applications for council tax support. Recently, I launched an experimental Debt Rescue Scheme pilot in Merthyr Tydfil, Blaenau Gwent and Newport to test new ways of working. Our consistent focus and long list of actions demonstrates delivery of fairer taxation in Wales.

The Council Tax Protocol recognised long ago that some enforcement actions should always be a last resort. I believe local councils want to help support people who are struggling with their financial commitments by helping them to get independent advice. The Welsh Government is proud of its long-standing commitment to funding free, quality assured advice services. Through our Single Advice Fund and Claim What’s Yours campaign, people are helped to deal with their financial problems along with any other problems they may have, for example, with benefits or housing.

Alongside these actions, we are committed to making further improvements to the council tax enforcement framework. We recognise that when a household misses a council tax instalment, the person can quickly become liable for the full annual bill and face enforcement action in a relatively short timeframe, if they haven’t paid within 7 days. While many local councils don’t follow the short timeframe set out in regulations, the possibility remains unhelpfully on the statute book. It is unlikely that someone struggling financially will be able to pay the annual amount within such a  short timeframe, leading to escalating debt and its associated challenges.

The consultation proposes changes that focus on prevention and earlier communication between households and councils. This includes making the steps in the billing process clearer and fostering best practice that we know is already happening in Wales. Our proposed changes provide local councils with additional time to engage with residents who have missed an instalment, to understand their circumstances and offer support before proceeding with enforcement action. This helps council differentiate between people who are struggling and those who are persistently disengaging. A longer timeframe before escalation also enables households to recover from unexpected events or circumstances that may have contributed to their financial struggles, providing them with a chance to get advice and stabilise their situation. These changes aim to foster better communication between councils and communities, ensuring that enforcement action is a last resort or where people don’t engage. Anyone struggling to pay council tax should contact their council and advice services as soon as possible, as this is the best route to preventing spiralling debts.

Alongside legislative changes and the existing Protocol we will also provide guidance to local councils to ensure best practice is further embedded in the treatment of households struggling to pay their council tax, while ensuring everyone who can contribute to the costs of public services does so in the fairest way. 

There remains a place for local councils to take proportionate action against the small number of people who try to avoid paying council tax, which only serves to increase the tax burden on those who do pay. I have already set out to local government leaders that I will continue to work with them to address any avoidance in the system, ideas which include smarter use of data and focussed expertise.

I am grateful to local government, Citizens Advice Cymru and the Council Tax Collection Coalition – a working group of charities and policy institutes – for sharing their ideas ahead of this consultation. I am also interested in piloting further practical ideas alongside legislation before rolling these out in the future if they demonstrate success. The consultation will run for 12 weeks from today.