Dealing with Council Tax Arrears: what you need to know

Following on from our blog earlier this week, today’s messages focus on what you need to know to help you deal with Council Tax (CT) arrears.

 

Households accumulate CT arrears for several reasons; not solely because they have sufficient income to cover their CT liability. Below are three of those additional reasons:

 

  1. Those liable for CT don’t realise that they are entitled to a discount or an exemption, even a write-off, so are paying a much higher liability than they should be;
  2. Those liable for CT do not notify their local authority of a material change to their circumstances – such as an increase in their income – leading to an overpayment of Council Tax Support (CTS) which needs to be paid back; and,
  3. An interruption in someone’s means-tested benefit claim – particularly Universal Credit – can lead to an automatic (though often erroneous) suspension or termination of their CTS claim which the claimant isn’t aware of until it’s too late. 

 

In all these scenarios measures can be taken to either prevent these issues arising or, retrospectively, to minimise the damage done. Ask your local independent advice service for guidance on this or go to https://www.moneyhelper.org.uk/en/money-troubles/dealing-with-debt/help-if-youre-struggling-to-pay-council-tax for more information on related issues.

 

To understand how to deal effectively with (potential) CT arrears caused by non-payment it is important to, briefly, understand the CT ‘debt recovery process’. This journey, for a liable  householder, runs as follows:

 

  1. CT bills are received in February or March with full payment required before April.
  2. If full payment is not received in time, or a monthly repayment plan is not agreed, the householder becomes liable for the full payment as a debt.
  3. One or two reminders are sent to the householder; the number and tone varying between local authorities.
  4. If repayment is still not made the local authority will go to court to seek a Liability Order (LO) legally clarifying the amount owed and who owes it.
  5. If payment is not made immediately the local authority can then avail itself of a range of enforcement options, namely:
    1. Referring the case to commissioned Enforcement Agents (‘bailiffs’) who can visit properties, take possession of goods and sell them to recover the debt .
    2. Move to agree with the DWP a direct deduction from your welfare benefits.
    3. Arrange an ‘attachment to earnings’ to take repayments directly from your wages.
    4. Put a Charging Order on your property, if you own it, in order to recover the debt should the property be sold.
    5. Instigate bankruptcy proceedings to recover the debt, or, 
    6. In exceptional circumstances, where the local authority believes it can prove to a court that you have willfully refused to pay even though you have the means to pay, the local authority can ask that you be committed to prison for non-payment.

 

For more details on all of these options go to https://www.citizensadvice.org.uk/debt-and-money/help-with-debt/dealing-with-urgent-debts/dealing-with-council-tax-arrears/ .

 

At every stage, once a debt has accrued – especially after a Liability Order has been obtained – it is in the householder’s interests to contact the local authority directly as soon as possible to discuss and agree a repayment plan.

 

Local authorities are obliged to ensure repayment plans are affordable, so be ready with an up-to-date statement of your income and expenditure.

 

Local authorities (and bailiffs) will also be sensitive to debtors “with vulnerabilities”, so make sure they know about any vulnerabilities in the household which might make payment more difficult or amplify the impact of debt recovery.

 

To help ease repayments conventional repayment periods of 10 months can be extended to 12 at the local authority’s discretion.

 

Finally, in exceptional circumstances, where the householder has no realistic ability to repay their debts and trying to repay them would cause severe financial hardship, the local authority can use its discretion to write-off all or part of the liability under what is known as a ‘section 13a decision’.

 

If you are faced with CT arrears for any of the reasons referenced above, but feel unable to resolve the issues satisfactorily by yourself, you must seek independent expert advice from organisations providing free, impartial and confidential accredited debt advice such as Citizens Advice, National Debtline or Stepchange.

 

Don’t let fear of debt stop you from taking control of your finances.

 

Editor’s Note

The guidance provided above is accurate at the time of writing but is not exhaustive. Please seek expert advice before taking important steps in your debt management journey.

Saving Money on your Council Tax Bill – Citizens Advice blog

This week Citizens Advice across Warwickshire are raising awareness of how to save money on Council Tax bills and what to do if you feel you are at risk of not being able to pay your Council Tax.

While rules around Council Tax can vary between local authorities there are many common features of Council Tax policy and discounts. Below is some useful guidance described in the form of an answer to a question from one of our clients.

My council tax bill is coming out in March and I am dreading opening it as it always goes up. My income has stayed the same but everything else seems more expensive and I have hardly anything left over – how will I cope if my payments for this year go up?

Many of us are feeling overwhelmed as we see our basic bills and essential costs go up. You’re not alone in finding things difficult and, crucially, there’s support available. First off, there are discounts available to some people depending on their circumstances. You can check your bill or contact your council to find out if you might be eligible for an automatic reduction to your council tax.

If you’re not getting a discount, you might still be entitled to one. It depends who lives in the property. So, if you’re the only adult in your home, you’ll get a 25% discount on your council tax bill. When working out how many people live in a property, some people aren’t counted- they’re called ‘disregarded people’ and include under 18s, a student nurse or someone on an apprenticeship scheme and many more. Check the government website for more details.

If everyone who lives in the property is disregarded, you will still receive a council tax bill, but it will have a 50% discount. However if everyone in your home is a student or severely mentally impaired, you won’t pay any council tax. Additionally, if someone has moved out, tell the council as this might change your eligibility. If you are entitled to a discount as a result, it will be valid from the date when the person
moved out, even if you told the council after the event, and the reduction may be backdated.

If you think you might be eligible you should apply to your local council for a discount as soon as possible. You can find your council’s contact details on GOV.UK.

You mention that your income hasn’t increased. If you are on a low income you might be able to get your council tax reduced. If you get benefits or have other people living with you, this might affect how much your council tax is reduced by. Your local council will ask you details about your income and your circumstances, so they an work out if you’re entitled to a council tax reduction. They will then calculate your new bill and tell you how much council tax you need to pay.

If you have other people living with you who are aged 18 or over, you might all be responsible for paying council tax. Only one of you needs to apply for a council tax reduction. The council will make a decision and reduce the amount of council tax you have to pay accordingly.

You may also be eligible for additional support if you’ve reached State Pension age which you can check on the government website can GOV.UK If you’re under State Pension age, the ‘working age rules’ apply and if you’ve reached State Pension age, it depends if you or
your partner get certain benefits. The working age rules still apply if you’ve reached State Pension age and you or your
partner get:

  • Universal Credit
  • Income-based Jobseeker’s Allowance (JSA)
  • Income-related Employment and Support Allowance (ESA)
  • Income Support.

If you’ve reached State Pension age and don’t get any of these benefits, the ‘pension age rules’ apply. Even if none of the reduction criteria applies to you, your local council can still reduce your council tax bill or cancel it altogether, this is called ‘discretionary reduction’. They’ll normally only do this if you can show that you’re suffering severe hardship and can’t afford to pay Council tax.

If you’re in this situation you should ask your local council for help. You’ll need to show them evidence of your circumstances. If your immigration status doesn’t let you claim public funds, you can still apply for a discretionary reduction. A discretionary reduction doesn’t count as public funds.

We know that times are incredibly tough and council tax is a priority bill so it’s important to keep in contact with your council if you can’t keep up payments. Citizens Advice is here to help you find a way forward, without judgement, working with you side by side.

Later in the week we will be sharing useful information on what to do if you are at risk of not being able to pay your Council Tax so look out for that.

Editor’s Note

The overwhelming majority of the content for this blog is replicated with permission from an article first published by Samantha Wostear of Citizens Advice on February 8th 2024.

Politicians ‘burying their heads in the sand’ as new research finds millions are in the red – Citizens Advice Press Release

  • Five million people in the red with an additional two million people cutting back their spending to unsafe levels in order to not slip into a negative budget,
  • Soaring housing and energy costs driving people into the red – with private renters worst off,
  • Average households in the red are £4,200 short of the cost of essentials every year.

Alarming new research from Citizens Advice has found that five million people are in a negative budget, as the charity warns a living standards catastrophe is becoming the new normal ahead of the general election. 

The charity’s new analysis shows that the number of people in the red has jumped from 3.25 million since the start of 2020. That’s more than 50% in just four years. Currently, that includes 1.5 million children living in a household that has more money going out than coming in. 

Housing and energy costs are swallowing up people’s income, pushing many into the red. Private renters in a negative budget are spending nearly three-quarters (73%) of their income on these two costs alone, leaving little for other essentials. While mortgage holders in the same situation are spending 43% of their income on energy and mortgage costs combined.

Without government action, Citizens Advice predicts over 250 people will fall into a negative budget every day in the run up to the election.

Running to stand still

Citizens Advice says it is seeing more people in full-time work and people with mortgages finding themselves living on empty, cutting back spending to under the bare minimum and going without vital food or heating to stay warm.

The charity’s latest research found that despite falling inflation, the cost of essentials remains stubbornly high with 2.35 million people cutting back on things like meals, energy and seeing friends and family.

For others, falling behind has been unavoidable. In particular, pensioners privately renting are more than three times more likely to be in a negative budget than pensioners generally.

“I’m living on a shoestring” – Alison’s story

Alison* is a widow in her early sixties who lives alone. She has a permanent brain injury which causes health issues that limit what she can physically do.

Before her illness, Alison ran her own cleaning business. Now she is unable to work and receives Universal Credit and Personal Independence Payment. For several years, she received the additional limited capability for work element of Universal Credit – for people unable to work due to their health – and was in a positive budget.

However, last year, her claim was reassessed and she was deemed fit to work. As a result, her monthly income was reduced by around £400. She has appealed the recent decision but while waiting for the tribunal outcome, she cannot make ends meet.

“Since my limited capability for work element was taken away, I’m getting £400 a month less, roughly. Now I’m living on a shoestring. I don’t buy clothes, I have not got the money. I’ve only got £40 to last me for the next 12 days.

As soon as you get any money in the bank, you go food shopping and it’s gone. It goes so quick. I have to shop very carefully and I don’t go out.”

Action needed more than ever

With a general election on the horizon, four in five (79%) voters say negative budgets are an important issue. But Citizens Advice is warning that politicians are failing to address the root cause of people’s costs far exceeding their income, while resorting to short-term handouts. 

The charity’s new research shows that cost-efficient policy changes can be made immediately to turn the tide on living standards. Citizens Advice is proposing a package of support that could lift 1.1 million people out of a negative budget right away. This includes uprating benefits using the Household Cost Indices – a measure that more accurately reflects the rate of inflation for low-income households – as well as improving energy bill support and reforming Local Housing Allowance. 

But to ensure living standards are improved in the long-term and at scale, more must be done to deal with stagnant incomes and tackling spiralling costs – crucially the cost of housing.  

Dame Clare Moriarty, Chief Executive of Citizens Advice, said:

“A negative budget is the difference between making ends meet and being pushed deeper and deeper into trouble. Getting people out of the red and into the black is what our advisers specialise in. But they can’t tackle a challenge of this scale alone. 

For too long politicians have papered over the cracks, allowing a chasm to grow underneath as living standards drop even further. Now is the time for bold action to give sustained security to the millions of people living on empty. Policymakers can’t continue to bury their heads in the sand.”

————————————

Notes to editors

  1. A copy of The National Red Index: how to turn the tide on falling living standards can be found here
  2. Negative budgets are a simple equation – if subtracting someone’s essential living costs from their income puts them in the red, then they are in a negative budget. The National Red Index uses a combination of expenditure data from Citizens Advice debt clients, and income and expenditure data from the Office for National Statistics’ Living Costs and Food Survey (LCFS), to establish how many people across England, Scotland and Wales are in a negative budget. Specifically, we take the average spent by our debt clients (after they’ve been helped by an expert adviser to cut down their spending) on flexible costs – things like food, clothing and groceries which you can cut back on if your finances are squeezed – and combine it with people’s fixed costs from the LCFS – things like rent and council tax that are hard to change. This gives us an overall figure for spending on essential costs, which we adjust for things like how many people live in the household, where they live, and if anyone in the household is disabled. We then subtract this overall spending figure from income data from the LCFS to determine how many people nationally are in a negative budget. The calculations for 2019/20, 2020/21 and 2021/22 are based on real data from our clients and the LCFS.  To create a dataset for 2022/23 and the current financial year, for which LCFS data was not yet available, we have taken the real data for 2020/21 and 2021/22 and adjusted it by inflation. We have one dataset for which we have used the Consumer Price Index inflation rate, and another for which we have used the Household Cost Indices inflation rate.
  3. The Household Cost Indices (HCIs) offer a more accurate measure for low income households because they include costs excluded by CPI, weight households more equally, and take into account the share of income spent on different things. Most living standards analyses use the Consumer Price Index (CPI) inflation rate. To enable our analysis to be comparable, and to provide a conservative view, we have also used CPI in our analysis throughout our report. We expect these figures to be significant underestimates, as outlined by the comparison between our headline figure based on HCI (5m) and CPI (4.4m).   
  4. The figure for the number of children in a negative budget (1.5 million) was calculated by multiplying 1) the number of households with dependent children in a negative budget (848,049), by 2) the latest ONS figures average number of dependent children per family with at least one dependent child (1.77). As such, the 1.5 million figure only includes dependent children and excludes non-dependent children.
  5. Voter survey data based on a representative poll of 10,100 adults (18+) in the UK conducted by Opinium for Citizens Advice, fieldwork conducted between the 20th of December 2023 to 6th of January 2024.
  6. Citizens Advice is made up of the national charity Citizens Advice; the network of independent local Citizens Advice charities across England and Wales; the Citizens Advice consumer service; and the Witness Service.
  7. Our network of charities offers impartial advice online, over the phone, and in person, for free.
  8. Citizens Advice helped 2.66 million people face to face, over the phone, by email and webchat in 2022-23. And we had 60.6 million visits to our website. For full service statistics see our monthly publication Advice trends.
  9. Citizens Advice service staff are supported by more than 16,000 trained volunteers, working at over 1,600 service outlets across England and Wales.
  10. Citizens Advice is the largest provider of free, multi-channel debt advice. Providing that help gives Citizens Advice unique insight into the types of debts people struggle with.
  11. You can get consumer advice from the Citizens Advice consumer service on 0808 223 1133 or 0808 223 1144 for Welsh language speakers.

‘National Consumer Week – Part II’

Today, January 29th, marks the start of ‘National Consumer Week – Part II’; building on Part I which was delivered before Xmas.

The focus of this week is on helping consumers understand what to do if things went wrong when Christmas shopping or shopping in the January Sales, as well as what can be done if something ordered didn’t arrive, how to return faulty goods, and how to shop safely and stay aware of scams.

There will be daily posts on Twitter/X of useful links around each of these topics. For more information about the campaign itself, go to:

https://www.citizensadvice.org.uk/about-us/our-work/our-campaigns/awareness-raising-campaigns/NCW/ .

 

In the meantime:

 

If you have any other queries about consumer issues, and want to talk to someone in person, call the Consumer Helpline on 0808 223 1133. 

Alternatively, if you want to search for other trusted independent advice on a range of consumer issues go to Consumer Friend , a new website set up by independent consumer experts aimed at making consumer rights easy to understand for all.

Remember, you can help yourself. Do your research, stay safe when buying, and if you’re not sure seek more advice.

Energy Savers Week 2024 – national campaign

Citizens Advice have teamed up with the Energy Saving Trust this Energy Savers Week (15 – 21 January) to bring you some top tips that will help you save both energy and money on your heating.

Throughout the week, through our social media channels, we’ll be sharing more winter warmer tips to help you stay warm and save energy. 

Discover how you can use these, and other, low-cost energy efficiency tips around your home, and how much money they could save you. 

 

Five winter warmer tips

  1. Turn down your thermostat by 1°C and save around £105 a year on energy bills.
  • But to keep comfortable and stay safe we recommend staying above 18°C.
  1. Switch your heating off when leaving the house for a few hours.
  • It’s cheaper to reheat your home than keep your heating on low when you’re out, unless you own a heat pump.
  1. Fit draught-proofing strips to your windows and doors and save around £45 a year.
  • This can be a quick DIY job. Keeping extra heat in your home will leave you feeling warmer and more comfortable.
  1. Get a hot water cylinder jacket and save roughly £50 a year on energy bills.
  • Jackets are easy to fit, typically cost under £30, and you’ll also spend less on a hot shower or bath in the future.
  1. Keep furniture away from radiators and heaters to feel warmer at home.
  • Don’t overwork your system by blocking your source of heat and remember to remove radiator covers to get more value for money.

 

For more information on how to keep warm and save energy this winter check out both Citizens Advice and Energy Saving Trust social media channels.

We have also developed energy advice resources, including booklets , leaflets and posters .

 

Further tips

For additional information go to:

For more advice on using less energy at home please see these resources:

For any partners who would like to take support Energy Savers Week, our resource pack can be found here .

The cost-of-living crisis isn’t ending, so why might the Household Support Fund be? (Citizens Advice blog)

In recent years, the Household Support Fund (HSF) has been the final line of defence for those struggling with the cost of living. However, without any mention in the Autumn Statement of an extension, the Fund’s future is uncertain.

The HSF is funded by the central government and administered by local authorities. It supports those who can’t afford essentials like food, energy bills and water through proactive and application-based support. Local authorities can tailor how funds are used and who can apply for funding.

As it stands, the Household Support Fund will end in April 2024. This sits alongside the ending of the Cost of Living Payments totalling £900 that have been made across 2023–24 to low income households. The loss of both sources of support at once risks creating a financial cliff-edge for thousands of households.

Households need support to stay afloat in the cost of living storm
“The cost-of-living crisis is not going to magically end on the 31st March 2024. The people we help will continue to be in a financial crisis long past this date. Without the HSF, more will resort to extremes to manage their household budget and go without” — a Local Citizens Advice adviser.

Almost all our expert advisers (96%) think people will still need the HSF’s financial support after the current funding ends in April 2024. In fact, budgets for low-income households will get tighter in the coming months. 8 million people will have £900 less next year without the Cost of Living payments.

Citizens Advice has broken unwelcome records throughout the cost-of-living crisis and that pattern shows no sign of ending. By the end of November, we’d already helped more people with crisis support in 2023 than any other year on record. Over the last 11 months, we’ve helped over 71,800 people in relation to localised social welfare, which includes the HSF, a 62% increase compared to the same period last year.

People who need the HSF are struggling with the everyday emergency of meeting essential costs. The vast majority of people we advised on the HSF this year needed support with additional issues. Charitable support, food banks, and fuel were the most common.

The Household Support Fund needs expanding, not ending.
With nearly 4 months left of this funding cycle, money is already running out. 23% of advisers surveyed said the HSF had used up its funds and closed applications in at least one of their local authorities. A further 20% were concerned funds would be exhausted before 31st March 2024.

Advisers describe local authorities closing applications for the rest of the month once an application limit is reached, or not advertising when applications will reopen, in a bid to try to ration the funding they have. Rose’s* story shows what this looks like in practice.

Rose came to Citizens Advice for support after trying to access her local HSF by phone at 9am, the day applications opened. She managed to get through to the website at 10am, but was told all the funds had already been allocated. All our advisers could do was refer her to a local food bank.
(*Rose is not the real name of the client. It has been changed to ensure anonymity)

We need the Government to commit to continuing the HSF
Our frontline advisers described the HSF as a ‘lifeline’ which has kept households afloat during the cost-of-living crisis. With that crisis still with us, support in the form of Cost of Living Payments ending and demand for our services continuing to break records, the HSF is needed now as much as it ever was. And what’s more, the experience of our advisers shows the Fund needs to be not just extended but expanded, to bring an end to the rationing that comes from local authorities trying to stretch too little too far.

There’s still time for the Government to act to extend the Fund before it ends in March, and low-income households across the country are relying on it to do so.

Editor’s Note

This blog is shared with kind permission of Julia Ruddick Trentman – Policy Researcher at Citizens Advice – and was first published on January 3rd 2024.

5 reasons a higher minimum wage could be bad news for people claiming benefits – a blog from Citizens Advice

The minimum wage rise will interact in complex ways with the benefits system

The rise in the National Living Wage (NLW) announced at the Autumn Statement in November was very welcome. From April, the lowest paid employees will earn £11.44 per hour, rather than £10.42 — an increase of 9.8%.

There was good news for young people in particular. 21 and 22 year-olds will be eligible for the NLW for the first time, so their minimum hourly pay rises by 12.4%. People aged 18–20, and people under 18 or working as apprentices, will see rises of 14.8% and 21.2% respectively.

Sadly, however, it is not all good news.

In a welfare system for working-age people based largely on income-related benefits, higher earnings can lead to the reduction of benefit income and a loss of eligibility for things like free school meals. The NLW is also used as a benchmark for exemptions to the benefit cap and conditions around searching for work — a higher value tends to restrict the numbers eligible for such exemptions.

Here, I outline 5 possibly not-so-good implications of increasing NLW…

1. Low-income working households will not see the full value of a higher NLW

Many low-income households receive part of their income from employment, and part of their income in benefits. Thankfully, the government has decided to uprate working-age benefits by 6.7% from April 2024. But NLW is going up by nearly 10%, which means that benefit payments will be reduced, as earnings rise, at a faster rate than they are increasing.

Some working households will also now be paying more tax, as a result of income tax and National Insurance thresholds being frozen while earnings rise. This actually helps to minimise benefit withdrawal (because income-related benefits are calculated using post-tax income) but ultimately holds back increases in overall income.

For a typical family of 4, where both parents work around 25 hours per week earning NLW, their 2024/25 pre-tax income from employment will be around £220 per month higher. But as a result of tax and benefit decisions (excluding housing costs), their overall income will be only around £160 per month higher. Without this gap, they would be more than £700 per year better off.

Some people will of course be moved off Universal Credit altogether as a result of these changes. Receiving only a very small amount of Universal Credit can mean households are eligible for ‘passported’ support with living costs such as the Warm Homes Discount or Cost of Living Payments (although the latter scheme is due to end before April 2024).

2. Fewer people will be exempt from the benefit cap as a result of higher NLW

Perhaps the worst outcome of the Autumn Statement was the decision to freeze the benefit cap in 2024. This means that some households will see little or no gain from the uprating of Universal Credit and/or LHA.

While there are a range of exemptions to when the benefit cap applies to households, a higher NLW raises the bar that working households need to reach to qualify for the earnings-related exemption.

Under this rule, households where adults (alone or in combination) have earnings equivalent to 16 hours per week earning NLW are exempt from the benefit cap. In April, this threshold is expected to rise from £722 to £793 per month.

Those already working the required hours, earning NLW, will see no impact. Those with higher hourly pay, but working fewer hours, may now see their benefit income capped — their earnings will not rise as a direct result of the NLW increase.

This is not an unlikely scenario. 90% of households subject to the benefit cap include children (according to the latest statistics). Parents who are skilled workers with higher hourly pay often work reduced hours in order to care for young children.

3. A higher NLW lifts people out of eligibility for free school meals

To qualify for free school meals (FSMs) in England and Wales, a household must have earnings of no more than £7,400 per year. When this cut-off was introduced in 2018, it was equivalent to working for around 18 hours per week, earning NLW.

With the threshold frozen ever since, from April 2024 it will be equivalent to working around 12 hours per week, earning NLW. As a result, far fewer low-income households will qualify for FSMs for their children.

And school meals are effectively more expensive for Universal Credit claimants than households without income-related benefit income — because Universal Credit payments are withdrawn at a rate of 55p for every additional £1 earned. Once parents reach the £7,400 cliff-edge and lose FSM eligibility, they must earn more than double the annual cost of £480.70 per child to increase their overall income by an equivalent amount.

4. A higher NLW has implications for Universal Credit conditionality

One of Universal Credit’s lesser-known features is the Administrative Earnings Threshold (AET), which determines the extent of conditionality that a claimant may be subject to.

The AET is linked in regulation to NLW. A single person must have earnings equivalent to 15 hours per week earning NLW, and a couple must have earnings equivalent to 24 hours per week earning NLW, in order to be eligible for ‘light touch’ conditions. If they earn less than this, they will be placed in an intensive work search (IWS) regime with requirements to seek a higher paid job.

The IWS regime comes with the threat of sanctions, if conditions are not met.

People already working the required hours at NLW will of course not be affected by this change. But take the example of a part-time employee, working around 12 hours per week and earning around £13.50 per hour. They are a single parent for one child and have a Universal Credit award of around £460 per month (excluding housing costs). Their Universal Credit award will rise as a result of uprating, but their pay will not rise as a direct result of the NLW increase.

Therefore, whereas their weekly earnings this year lift them out of conditionality, next year they will be subject to IWS conditions. They could try to increase their hours or pay to avoid this — but would then also lose some of their benefit income.

5. Self-employed people may lose benefit income when NLW rises

The presumption that self-employed people could deliberately restrict their own earnings in order to qualify for income-related benefits means the Universal Credit system includes expectations around what they should be earning. These expectations are linked to NLW.

A self-employed claimant’s ‘minimum income floor’ (MIF) is usually equivalent to working 35 hours per week at the minimum wage rate for their age group. For those aged 23 or above, the MIF will rise with NLW from £1580 per month to £1735 per month in April 2024.

With 21 and 22 year-olds now eligible for NLW, self-employed people in this age group will also have a floor at this level, rising from £1544 per month.

The significance of the MIF is that the government will calculate your Universal Credit entitlement based on its value even if you are actually earning a lower amount. Given that self-employed people will not automatically see their earnings rise in line with NLW, a higher NLW risks their benefit payments being reduced significantly.

The low-paid self-employed may of course already be earning considerably less than the legal minimum for employees, and ‘platform’ workers have little scope to raise prices to increase their earnings.

MIF rules apply differently to self-employed people with childcare responsibilities. But the Autumn Statement has made these rules more restrictive, compounding the impact of the higher earnings expectations. Even where designated as the main carer for children aged 3–12, the Universal Credit system will now assume a self-employed claimant has earnings equivalent to 30 hours per week earning NLW. This is a significant increase from the rules applicable in 2023/24 (16 hours for parents of 3 and 4-year-olds, and 25 hours for parents of 5 to 12-year-olds).

In the UK welfare system, nothing is ever quite what it seems! The good news of a higher NLW should be celebrated — but we also need to look closely at its knock-on effects to understand how benefit claimants will be affected in practice.

Editor’s Note

This blog, first published on December 18, is replicated here by kind permission of Craig Berry from Citizens Advice.

15 million people likely to use unregulated Buy Now Pay Later to help ease seasonal spending – Press Release from Citizens Advice

Citizens Advice braced for new year of debt support as increased numbers turn to BNPL.

New research by Citizens Advice finds more than one in four UK adults (28% – the equivalent of 15.1 million people) say they’re likely to use Buy Now Pay Later (BNPL) to help with festive spending. This rises to 56% of parents with primary school-aged children.

The findings come as the charity reveals those unable to cover the costs of their essentials – like groceries and bills – are more likely to have been a regular user of BNPL in the last 12 months*. In the context of the ongoing cost-of-living crisis, the charity’s analysis found 11% of BNPL users used the product to pay for groceries. This figure jumps to 35% for people who regularly use BNPL**.

The government committed to regulating BNPL in 2021 as a matter of priority, but work has stalled. Citizens Advice warns these continued delays are putting consumers – many already facing tough financial situations – at risk of being exposed to unmanageable levels of debt and even bailiff action. This is because BNPL lending does not require any affordability checks, unlike other credit options. 

The charity’s concerns are reflected in its new research:

  • One in five (21%) BNPL users have missed or made a late BNPL payment in the last twelve months, with one in ten (10%) of those visited by an enforcement agency or bailiff as a result
  • Almost a third (29%) of BNPL users who were due to make a payment in the last month borrowed money to repay their instalments, meaning their initial debt is only leading to more debt

This worrying trend is mirrored in what the charity’s advisers are seeing on the ground: there’s been a 67% increase in people seeking help from Citizens Advice with BNPL debt in the last 12 months. 

With the use of BNPL only continuing to grow, Citizens Advice is calling on the government to bring forward regulation of the BNPL sector. Despite the government carrying out a full consultation, and actually drafting laws, the sector remains unregulated. 

Dame Clare Moriarty, Chief Executive of Citizens Advice, said:

“The number of people turning to Buy Now Pay Later, and falling into debt as a result, underlines the urgent need for regulation. With so many households already on the financial ropes, BNPL borrowing for extra Christmas costs risks delivering the knockout blow.

“This should set off alarm bells for the government, whose dithering on regulation of the sector has gone on for too long. As the use of this form of credit soars, the impact of its lack of regulation becomes impossible to ignore. 

“Consumers are being failed and as a result could see a 2024 plagued with unmanageable debt, poor credit, and bailiffs knocking at their door. The government must act on its almost three-year-old pledge and bring the BNPL market into line urgently.”

Notes to editors

  1. Citizens Advice is made up of the national charity Citizens Advice; the network of independent local Citizens Advice charities across England and Wales; the Citizens Advice consumer service; and the Witness Service.
  2. Our network of charities offers impartial advice online, over the phone, and in person, for free.
  3. Citizens Advice helped 2.55 million people face to face, over the phone, by email and webchat in 2021-22. And we had 40.6 million visits to our website. For full service statistics see our monthly publication Advice trends.
  4. Citizens Advice service staff are supported by more than 18,500 trained volunteers, working at over 2,500 service outlets across England and Wales.
  5. You can get consumer advice from the Citizens Advice consumer service on 0808 223 1133 or 0808 223 1144 for Welsh language speakers.

Please note: this Press Release was first published by Citizens Advice on November 30th.

How Gypsy, Roma and Traveller groups are a policy blindspot and why this needs to change – a Citizens Advice Blog

“…overlooked, under-served by policy, and under-researched.”

That’s how National Energy Action (NEA) described the lack of policy engagement with Gypsy, Roma, Traveller groups (GRT) and people who live nomadically. The consequences of this long standing policy blindspot are stark and ongoing.

The NEA’s report showed that GRT groups are more exposed to fuel poverty than the wider population. Early government support for energy bills was not effective in reaching GRT groups and this problem was addressed after advocacy from GRT charities.

At Citizens Advice we’ve been looking at the impact of the cost-of-living crisis and its impact on marginalised clients. Our series An Unequal Crisis has looked at racially minoritised groups, disabled people and impacts on mental health.

In our final blog of the series, I look at what our cost of living data shows for GRT groups. This includes an overview of the clients we see, fuel poverty and foodbank use. I’ll start by reflecting on a key challenge facing policy makers: the lack of robust data on GRT groups. This is as much a problem of exclusion and discrimination as it is of research methods.

Gypsy, Roma, Traveller

GRT is an umbrella term for Romany Gypsies, Scottish Gypsy/Travellers and Irish Travellers. GRT groups are very diverse. They have different histories, nationalities, ethnicities, and religious beliefs. But they often have a shared history of nomadic lifestyles. This means GRT groups face similar challenges even where people are living in static homes rather than sites. This includes systematic racial discrimination which contributes to poor outcomes for GRT groups.

GRT groups face some of the sharpest inequalities in income, health, housing, employment and education. Post exclusion and digital exclusion are also significant barriers for people to access support. Romany Gypsies, Scottish Gypsy /Travellers and Irish Travellers are protected by the Equality Act. This means authorities should consider how policy decisions impact them as part of the Public Sector Equality Duty.

But the example of early government energy bill support showed that’s not always the case. GRT groups are more exposed to fuel poverty because those who live on sites or roadsides don’t have a direct relationship with an energy supplier or may use alternative fuel sources like energy bottles.

This wasn’t factored into the Energy Bill Support Scheme launched in 2022 which was designed for people with a domestic electricity connection. The oversight was addressed by the Alternative Fuel Payment Scheme, and the Energy Support Scheme — Alternative Funding rolled out later in February 2023.

This delay in supporting those more exposed to rising energy prices was an example of policy making “as usual”. The failure to account for marginalised groups who face many overlapping disadvantages due to racial, gendered and ableist inequality means policy solutions can be partial by design.

Where’s the data?

A vital lesson from anti-racist work in the UK has been using demographic data to map the experiences of different groups. This allows us to understand the type and extent of disadvantages racially minoritised groups face in different areas like health, education, housing or the labour market. This data is used to advocate for policies that improve outcomes for racially minoritised groups. At least that’s the theory.

Being able to tell different kinds of stories in policy means we can advocate for different kinds of change.

There are a couple of barriers to having more robust data on GRT groups. It has not always been an option for people to identify as GRT in demographic data collection. This means it’s hard to track outcomes for GRT groups across policy areas. It’s only since 2011 that ‘Gypsy or Irish Traveller’ was an option in the census. ‘Roma’ was included as recently as 2021.

Despite advocacy by the Traveller Movement, the NHS is an ‘example of poor practice’. In the NHS there is no option for people to declare as GRT. The charity Families, Friends and Travellers (FFT) say the ‘starkest inequalities in healthcare access and outcomes’ are on issues such as life expectancy, disability and mental health. But a tailored approach to healthcare is more difficult to attain because of their ‘invisibility in mainstream datasets’.

“Romany and Traveller people face life expectancies between 10 and 25 years shorter than the general population.”

FFT also argue that GRT groups may be ‘reluctant to disclose ethnicity for fear of experiencing discrimination within services.’ This compounds already patchy data collection efforts. It means the experiences and outcomes of GRT groups are underreported in health, education, employment, and housing.

These are not only issues of data collection methods that are not inclusive. The slow pace of change to include GRT groups is itself a product of the long standing discrimination. The social exclusion experienced by GRT people in society is reproduced by exclusion from being counted as groups protected by the Equality Act.

What do we know?

At Citizens Advice our data is impacted by small sample sizes. We see fewer GRT clients than we might expect according to the 2021 census data. We’re also updating our ethnicity categories to reflect the ONS and include “Roma” for future data collection.

Since October 2022, we’ve seen just under 1,300 Gypsy and Irish Traveller clients versus 168,000 of all other racially minoritised clients. This makes it difficult to do comparisons that show robust disparities between white and racially minoritised groups as we’ve done elsewhere.

The data we do have supports the findings of the NEA, the Traveller Movement and Friends, Family and Travellers. I’ve also used Evidence Forms created by advisors at Local Citizens Advice that provide qualitative detail about our clients.

Irish or Gypsy Traveller people we’ve helped

  • Between Oct 22- Oct 23, we’ve seen more Irish or Gypsy Traveller women (68%) than men (32%).
  • 65% of Irish or Gypsy Traveller clients have a disability or long term health condition (65%). This is a higher rate of disability (physical, mental health or illnesses lasting or expected to last 12 months or more) when compared to 19.3% of people in England and 21% in Wales according to the 2021 census.
  • This is also a higher rate of disability when compared with all clients coming to Citizens Advice of whom 47% have a disability or long term health condition.
  • This trend is driven by people who require support to apply for the disability benefit Personal Independence Payment (PIP) — the top issue for all our clients. Irish or Gypsy Travellers also come to us for this issue more than the rest of our clients (26% vs 20%).
  • Accessing Food banks is the second most common advice issue for Gypsy and Irish Travellers. Evidence Forms show that Gypsy and Irish Traveller clients are spending more of their income on rising fuel costs and less on food which is driving food bank use.
  • Charitable support is most commonly sought by Gypsy or Irish Traveller women (76%), of which (43%) are lone parent households.
  • The third issue Gypsy and Irish Traveller clients come to Citizens Advice about is fuel related. We see clients struggling with the increased cost of gas and electricity on sites, lack of access to government support, energy arrears and the need for fuel vouchers.
  • Schemes like the Household Support Fund which are meant to be for vulnerable families dealing with the cost-of-living crisis are inaccessible to those without a fixed address like many GRT people.

What next?

At Citizens Advice we’ve been sounding the alarm about how this winter might be worse than the one just gone by. The energy price cap is still 60% higher than winter 2021. With no more direct government support people can expect to pay the same, if not more, for their energy this winter.

For GRT groups unable to access support and struggling with the increased cost of living, the situation is more challenging. One thing which should be addressed immediately is ensuring support designed for those struggling with the cost of living is accessible to people without a fixed address or who are digitally excluded.

In the longer term, data collection needs to improve in order to bolster the ability of government, regulators and local authorities to understand and address the disparities. Improved data can and should lead to the provision of more targeted and specialist support for GRT groups.

Editor’s Note

This blog is shared by kind permission of Dr Nadya Ali, Senior Policy & EDI Officer, Citizens Advice.

The cost of-living-crisis — a new nightmare normal: a blog from Citizens Advice

Welfare policies are pushing people into the red.

Our latest data insights shows that people are still struggling to afford daily living costs. The data we have for the last quarter, released today, shows that the cost-of-living crisis is no longer a crisis, but a terrifying ‘new normal’ of people living on empty.

The number of people we’re helping to access food banks continues to rise. This is a clear sign that the impact of the April/May Cost of Living payments is wearing off — and presents worrying signs for the winter. We’re now helping more than 830 people every month with an emergency food bank referral.

At the same time we’ve helped a record number of people who can’t afford to top up their prepayment meter this year. By the end of September, we’ve already helped more people who can’t top up their prepayment meter this year than we did for all of 2022 — and 2022 was higher than the previous ten years combined. If someone’s prepayment meter is not topped up, then that means going without light, electricity, heating and the means to cook and store food.

People are cutting back wherever they can. But rising costs are forcing many to stop spending on essentials completely, leaving them cut off from key services like broadband and car insurance.

Negative budgets are pulling everyone into the red

Essential living costs are continuing to outpace incomes as half of the people we help with debt are in a negative budget, with more going out each month than they have coming in.

Our latest Living on Empty report reveals that the number of people employed and in a negative budget has grown considerably over the past few years. This is the case for people across all different types of employment, whether self-employed, working part-time or full-time. We’re increasingly seeing people in full time work who previously had enough to make ends meet, being pushed into the red — the number of people in this group in a negative budget has gone up by nearly 12% since the start of 2019/20.

We’ve also seen mortgage holders, another group who used to break even each month, being pulled below the negative budget threshold.

The increasing challenge for groups we’ve previously helped less often with debt issues to meet daily costs underlines the widespread impact of the cost-of-living crisis. It’s fundamental that the Government acts quickly to bring down essential costs and make sure incomes keep pace with living costs.

Our data continues to highlight how the cost-of-living crisis is hitting marginalised groups harder. Among the people we help with debt advice, a higher proportion of People of Colour are in a negative budget than white people.

Pre-existing structural inequalities have resulted in racially minoritsed groups being disproportionately impacted by rising bills and inflation, while facing additional barriers to financial recovery and rebuilding financial resilience. These figures starkly underline the urgent need for the Government to address disparities in living standards and income.

Unwelcome records

Living with a negative budget means being forced into debt is the only way to cover crucial living essentials. We’ve raised the alarm that arrears for household bills have created a ticking debt timebomb. Our most recent data shows just how close this is to going off, and that for many households, it already has.

This quarter, levels of rent and council tax arrears are the highest they’ve ever been among the people we help with debt advice, while energy debt remains at a record high. Unwelcome records continue to be broken showing how households have no way of stopping debt, let alone begin to pay them back. For so many people, this impossible situation means bailiffs banging at the door, the constant threat of eviction and risk of homelessness, and being trapped in a spiral of debt it’s impossible to stop or get out of.

What could be worse?

Knowing that the very policies intended to support you are keeping you there.

Welfare policy pushing people into the red

Deductions and sanctions to Universal Credit (UC) have pushed many households further into debt.

People with a low income applying for UC to support them with living costs face up to a 5 week wait for their first payment. During this time they can apply for an advance to help them. However, this is a loan which has to be repaid.

Deductions for this are taken as a priority from their monthly payments — meaning they don’t receive the full amount of financial support they’re entitled to until it’s paid back.

People claiming UC can also be faced with sanctions. These are deductions from UC for missing an appointment with a job coach or not fulfilling other mandatory work search requirements in your claimant commitment. This, again, reduces the amount of much needed financial support people receive.

We’ve analysed the data for the people coming to us who receive UC and are subject to sanctions, and found that it’s virtually impossible for someone with a sanction to break even each month. Any kind of sanction pushes someone deeper into a negative budget, and consequently, deeper into debt.

Policies surrounding deductions and sanctions and frozen Local Housing Allowance (LHA) have contributed to them not having enough money to buy food, forcing them to rely on foodbanks and charitable support.

These policies are keeping people trapped in a cycle of poverty and debt it’s very hard to get out of. They also place people under considerable stress. We know the impact poverty and the cost-of-living crisis has on mental health. The worries people have about maintaining access to food, housing and good health are heightened when their financial situation is placed under more stress by benefit deductions.

The scale of this stress becomes even more stark when you consider that we rarely help someone with just one issue. Problems are complex and most of the people coming to us have several interlocking issues which make their situation very tricky to navigate.

The people we see face a confusing web of many different issues, as you can see in the chart below. For example, half (50%) of the people we help with rent arrears, also need help with Council Tax Arrears. This causes a lot of worry, and makes working through them an even more challenging task.

Frontline insights are key to good policymaking

Looking at our latest data insights and the stories of the people we see everyday it’s clear how aspects of the welfare safety net, intended to support them, cause harm and make it even harder for them to get back on their feet.

Our insights from the frontline drive our assessment of policy and the development of our policy asks. That’s why we’re calling on the Government to reduce the rate at which deductions are made to benefit payments — to repay budgeting advances and advance payments etc — and ensure benefits to be uprated in line with inflation in the Autumn statement. We’re also calling for the Government to unfreeze LHA and introduce an enhanced Warm Homes Discount to provide immediate support to people this winter.

If the Government doesn’t take immediate action to support people, our figures for the next few months are only going to get worse.

Editor’s Note

This blog, first published on October 10th, was reproduced by kind permission of India Walden, Policy Research Assistant at Citizens Advice.