£19 billion owed in everyday bills, as Citizens Advice reveals it helps 1 person every 3 minutes with bailiff issues
Citizens Advice is calling for better regulation of unaccountable bailiff firms as it reveals households have fallen behind on their essential bills, such as council tax and utilities, by an estimated £18.9 billion.
Last year, the charity helped one person every 3 minutes with bailiff issues. In 2014, the government introduced reforms which were meant to protect people from unfair practices. Yet since then, Citizens Advice has seen a 24% rise in bailiff problems.
In July, MPs on the Treasury Select Committee said government and local authorities were "worst in class" for debt collection, and that bailiff use can cause additional problems.
Falling behind on household bills typically has more severe consequences than missing consumer credit repayments, like overdrafts and personal loans. People can face having their essential services cut off, can be kicked out of their home due to rent arrears or even face prison if they get behind on their council tax. Citizens Advice is concerned that aggressive tactics are also having serious knock-on effects, leading to further debt and mental health problems.
In one example, Citizens Advice helped a retired couple who - for the first time in their lives - had fallen behind on some of their essential bills and owed £700 in council tax. The bailiffs who came to collect the debt were aggressive and demanded the full amount immediately, saying they were going to call the police if the couple couldn't pay. The couple are now afraid to open their front door.
Citizens Advice says it has seen a significant increase in the proportion of debt issues it helps people with that are related to household bill debts since 2011. Since then, problems with these kinds of debts have overtaken the number of consumer credit issues that people are seeking the charity's help with.
Its figures show the people it helps with household bill problems tend to be in a more precarious financial position than those with consumer credit debts. The charity says people with household bill debt were 37% more likely to be out of full-time employment and almost 1 in 3 people (34%) had a mental health problem.
Gillian Guy, Chief Executive of Citizens Advice, said:
"One person every 3 minutes come to us for help with bailiff issues. Families are living in fear of a visit from the bailiffs, and small missed bills can skyrocket through excessive enforcement fees.
"Our evidence shows aggressive tactics by bailiffs cause huge distress and can even push people further into debt. Families are going without essentials like food or electricity to meet their payments.
"The Ministry of Justice has already announced a call for evidence into aggressive collection practices by bailiffs. They must use this to take strong action and introduce an independent bailiff regulator to fix this broken system."
Figures from the charity show:
- UK households owe £18.9 billion to essential service providers and government in arrears. This includes tax credit overpayments of almost £7.5 billion, £2.84 billion owed to local authorities in council tax arrears and £2.20 billion owed to water companies.
- Household debt has now overtaken consumer credit as the key money problem people bring to Citizens Advice.
- Last year we helped people with 690,000 household bill debt problems, compared to 350,000 consumer credit issues.
Citizens Advice is calling for:
- The government to commit to measuring the levels of household debt. The government should collect and report annually on the level of debt to government and to essential service providers - in a similar way to the Bank of England's monthly statistics on consumer and mortgage lending.
- The bailiff industry to be independently regulated. The Ministry of Justice should use its announced 'crackdown on rogue bailiffs' and 3 year review of the 2014 Taking Control Regulations, to bring bailiffs and bailiff companies under an independent regulator.
People who are concerned about their finances can contact Citizens Advice for budgeting and debt advice.
Notes to editors
- Households get into debt on household or 'essential bills' either when they fall behind on payments, such as their rent or council tax payments. Or, in the case of tax credit and welfare overpayments, because they were paid too much money in error.
- To try to build an accurate picture of the scale of the problem of household bill debt in the UK, Citizens Advice has looked at data sources from key sectors to estimate the total stock of household bill debt. We used a range of sources to calculate that figure. Where possible, we have used 'administrative data' - that is data held by regulators, governments or providers which quantifies the total debt owed by individuals. The full methodology can be found in Appendix 1 of our report.
- The total estimate includes data for England, Wales, Scotland, and Northern Ireland. Welfare data is for England, Wales and Scotland. Council tax data is just for England. Water data is just for England and Wales. Rent arrears data is just for England. Court fines are just for England and Wales. Fuel data is for England, Wales and Scotland.
- This report is the first in a series which will look at the scale, causes, and consequences of household bill debt problems. In future reports we will concentrate on the reasons people fall behind on specific household bills and, in particular, look at the problems caused by the way those debts are collected by government and essential service providers.
- CItizens Advice is the largest provider of free, multi-channel debt advice. Debt is the second most common issue we help people with and accounted for 1 in 4 of the problems we helped people with last year. Providing that help gives Citizens Advice unique insight into the types of debts people struggle with.
- In July, Citizens Advice responded to the Treasury Select Committee's report on household finances.
- Citizens Advice is made up of a network of local Citizens Advice in England and Wales, all of which are independent charities, the Citizens Advice consumer service and the national charity Citizens Advice.
- Together we help people resolve their money, legal and other problems by providing information and advice and by influencing policymakers.
- Citizens Advice is the statutory consumer advocate for energy and postal markets. We provide supplier performance information to consumers and policy analysis to decision makers.
- The Citizens Advice Witness Service provides free and independent support for both prosecution and defence witnesses in every criminal court in England and Wales.
- Citizens Advice also offers Pension Wise appointments at 500 locations across England and Wales.
- The advice provided by the Citizens Advice service is free, independent, confidential and impartial, and available to everyone regardless of race, gender, disability, sexual orientation, religion, age or nationality.
- To get advice online or find your local Citizens Advice in England and Wales, visit citizensadvice.org.uk
- You can get consumer advice from the Citizens Advice consumer service on 03454 04 05 06 or 03454 04 05 05 for Welsh language speakers.
- Last year we helped over 2.7 million people face to face, by phone, email or web chat. For full service statistics see our monthly publication Advice trends.
- Citizens Advice service staff are supported by more than 23,000 trained volunteers, working at over 2,500 service outlets across England and Wales.