Revealed: Scotland's £1.3bn council tax debt mountain 

Government data based on council returns seen by the Herald shows that debt levels have hit record levels while collection rates have remained fairly static.

The debt mountain equates to nearly half the £2.837bn expected to be collected in council tax from Scots households in 2022/23.

At the end of the financial year council tax outstanding within the 12 months has risen by over 12% since the pandemic from £96.947 in 2018/19 to £108.771m in 2022/23.

At March 31, the end of the 2022/23 financial year, Scotland's cumulative council tax debt mountain recorded from 1999/00 has grown to £1.343bn. It was at £1.157bn in 2019/20.

Some £42.366m of the debt dates back ten years or more.

READ MORE: 'Appalling': ScotGov rent curbs fail to prevent new record bill rises

Records based on local authority returns show that the debt mountain officially recorded had reached £1.311bn in 2018/19 - but that covered a 25 year period.

Tax collection levels have risen slightly from 97% in 2018/19 to 97.2% in 2022/23.

It comes as Scotland's council leaders warned the Budget will leave services at “breaking point”, with “cuts in every community” and potential job losses across local authorities.

A council tax freeze was announced by First Minister Humza Yousaf in October but at the time no details had emerged on how much money councils would receive to compensate for this, although ministers said it would be fully funded.

But later Scottish Government in its spending plans allocated some £144 million in compensation for freezing council tax.

But the Convention of Scottish Local Authorities (COSLA), the national association of Scottish councils warned in a paper earlier this month that councils needed nearly £14.4bn in the budget just to "stand still".

In response the Scottish government said it had given councils a real-terms increase of £376m, or 3%, this year.

Cosla leaders said the figure will not fully fund the council tax freeze – something First Minister Humza Yousaf had pledged would be the case.

StepChange Debt Charity Scotland has raised concerns about the proportion of the people it deals with that hold council tax arrears as well as what it called the "excessive and punitive action" that is often taken by local authorities to collect the debt.

They said that almost two fifths of new clients (37%) responsible for paying council tax bills were in arrears between July and September, up from 31% in the previous quarter.

The charity has also reported an uptick in new clients with rent arrears, rising to a quarter (25%) in Q3 of 2023, up from 21% in Q2.

Richard Lane, director of external affairs at StepChange Debt Charity Scotland, said: “Our latest data shows a worryingly high incidence of council tax debt. While council tax has always been a bill that our clients have struggled with, cost of living pressures are only worsening this situation as people’s budgets are further stretched by high energy bills, food and rent or mortgage payments.

“Once someone falls into arrears with their council tax, debt can build up rapidly, making it increasingly difficult to repay alongside covering other financial commitments. In some cases, local authorities can be very quick to turn to the use of sheriff officers, without always thoroughly checking whether someone within the household is vulnerable and may need extra support. This kind of punitive action tends to only worsen someone’s financial situation, while also potentially impacting their mental health and wellbeing.

"We know that local authorities do great work to support households experiencing financial difficulty, so we would urge them to approach council tax arrears by engaging with and supporting residents facing problem debt, rather than turning to enforcement action.”

The Scottish Tenants' Organisation said: "This record council tax debt fails the poor and vulnerable and in this cost of living crisis they cannot shoulder that burden and therefore it should be written off as much of this debt is historic and there is no chance of any realistic collection of this debt. Local Authorities must not harass our most financially vulnerable citizens."

The average annual council tax collection failure rate across Scotland over the past 11 years has risen from 2.3% in 2011/12 to 93.8% now.

According to official figures, the local authority with the biggest annual council tax collection headache in 2022/23 is now West Dunbartonshire, which had failed to collect 7.3% of what was billed in 2022/23. It is an improvement on the 8.7% collection failure rate before the pandemic in 2019/20.

It was followed by Aberdeen City (6.2%), both Glasgow and Midlothian (5.5%), North Ayrshire (5.3%), North Lanarkshire (5.1%) and Renfrewshire (4.7%).

The council with the best record for collection for is Perth and Kinross which failed to collect 1.6% of billed council tax in 2022/23, followed by Shetland (2.1%), Stirling (2.2%), East Dunbartonshire (2.3%), East Lothian and East Renfrewshire (2.4%) and Angus (2.5%).

But in the last 11 years annual collection rates slumped to as low as 90.4% in West Dunbartonshire in 2020/21.

Sean Clerkin, campaign co-ordinator of the STO added: "The Scottish Government should restore the historic financial cuts to the spending budgets of Scottish local authorities to what they should be having cut their budgets disproportionately for many years. To do anything else would be be Dickensian and cruel."

Cosla have disputed the way the Government had calculated its figures for local government funding when reaching its spending plan conclusions in the budget.

It said the budget is “not only leaving councils at real and significant financial risk for the coming year, but, as it stands, it will mean cuts in every community in Scotland and job losses across Scottish local government”.

Deputy First Minister Shona Robison pledged £13.2 billion to councils as she outlined the Budget included the £144 million to fund a council tax freeze.

A COSLA spokesperson said: “Scotland’s council tax collection rates remain extremely high and have almost recovered to pre-Covid levels, with collection rates in the last two years we have data for sitting at 94.8% in 20/21 and 95.7% in 21/22 respectively.

“Scotland’s councils are fully aware that they have a responsibility to collect unpaid council tax on behalf of those who diligently pay. They also realise that every pound collected is a pound for essential front-line services, used by all our citizens and the ongoing real term reductions in Local Government’s core funding makes this all the more important.

“Councils have mechanisms in place to help those people who find themselves in arrears or have difficulty paying.. Every council across Scotland is acutely aware of the pressures being faced by households, both due to Covid and now the cost of living crisis, and a huge amount of work is ongoing to support those who fall into difficulty.” It comes as rent rise restrictions failed to stop a debt mountain rise by £43.1m since before the pandemic to stand at a record £189.97m.

The average arrears per Scots household renting in Scotland's low cost homes has shot up by nearly 30% from £249 in 2019/20 to £322 in 2022/23.

Official analysis shows that rent debt in social housing rose by over £20m in the past year alone - despite a bill freeze brought in by the Scottish Government to support people through the cost-of-living crisis. The rise in the previous year was over half that at just £9m.