SCOTLAND'S council tax debt mountain has risen to record levels, increasing sharply by 30% in a year as concerns grow of a credit crisis during the coronavirus pandemic.

Official figures seen by the Herald show that in 2020/21 the amount of council tax that remained outstanding in the year amounted to £139.552m on March 31, 2021.

Last year, before the pandemic hit, the in year council tax debt stood at £108.162m.

The amount currently owed in council tax which has led to tens of thousands of households being pursued is believed to have impacted by the economic effects of the Covid-19 pandemic as councils limited debt recovery processes to avoid contributing to financial pressure on council taxpayers.

Councils have reported that repayment arrangements have been put in place, in many instances over a longer period of time.

In some cases council tax payers have arrangements moving into the current year with tax recovery continuing.

But Citizens Advice Scotland now fear council tax debt could grow even further in 2022 as the economic effects of furlough ending, rising prices in the shops, reductions to Universal Credit and soaring energy prices hit hard.

They say that will lead to tightening finances for more people putting extreme pressure on household decision-making around which bills to pay, including council tax.

Council tax debt is currently the number one debt issue the Citizens Advice Bureau network sees.

Analysis of figures for 2020/21 reveals that 1,422 people sought help from the Citizens Advice network with a complex debt issue involving council tax, owing a cumulative £4.1 million in council tax arrears.

CAS say "worryingly" the average debt owed was £2,925.84 - almost three times the average council tax bill of £1,198.

Figures for the first two quarters of 2021/22 show this figure creeping even higher, with an average debt of £3,513.01 and a total debt of over £3.5million.

Taken together, this means CAS clients have seen over £7.6m in council tax debt over the course of the pandemic.

The Herald:

CAS is calling on people to make use of the Scottish Government’s council tax reduction scheme which can help reduce future payments. For some people, it can also offer a backdate of up to six months.

CAS financial health spokesperson Myles Fitt said: “This winter is set to be really challenging for so many families across Scotland. The combination of rising energy bills, the impact on incomes from the end of furlough and the £20 weekly reduction in Universal Credit has created a perfect financial storm for the thousands of households who were already experiencing money problems or who were just manging to get by.

"Council tax debt is the biggest debt issue the Citizens Advice network in Scotland sees, and people racked up millions of pounds in arrears during the pandemic. Worryingly, early data for 2021/22 suggests this problem is growing – and that’s before the perfect storm of rising costs and falling incomes hit people."

According to official figures, the local authority with the biggest council tax collection headache remains Aberdeen City, which had failed to collect 8.1% of what was billed having had a 6.4% rate last year.

They were followed by North Ayrshire and Glasgow City (7.9%), East Ayrshire (6.8%), North Lanarkshire (6.7%) and Dundee City (6.3%).

The council with the best record for collection for a second successive year is Stirling which failed to collect 2.9% of billed council tax, followed by Shetland (3%), Angus (3.1%), East Dunbartonshire (3.3%), Perth and Kinross (3.4%) and East Renfrewshire (3.6%).

It comes as the Scottish Government earlier this month said it would lift curbs on council tax increases next year, ending a flagship policy pursued by the party since it won control of the devolved government in Edinburgh in 2007.

The Herald:

A 'Save our Services' campaign was launched in October, 2020 as fears rose over council tax hikes to fill in particular, a £91m back hole in Glasgow's public finances over the following two years.

Since 2007, the SNP has frozen or controlled increases to council tax rates. Scottish local councils have complained loudly in recent years that they are struggling to fund vital services.

But Cosla, the body representing Scotland's councils warned that next year's funding settlement would be "disastrous" for communities and that essential services have been left in a "precarious position".

Councillor Gail Macgregor, its resources spokeswoman, said the funding outlined in the Ms Forbes' Scottish budget represented a £100 million cut.

But Ms Forbes said insisted the spending plan deliver “real-terms growth" for councils.

She added: "It protects the core budget in cash terms and it also ensures that local government are getting a fair share of the health and social care consequentials, which is something that they have long called for."

A Scottish Government spokesman said: “Average council tax bills across Scotland are lower than those in the other nations of the UK. Council tax brings important administrative and financial accountability to each local authority and is a vital element of funding local public services.

“Councils have a range of actions they can choose to take if someone is unable to pay their council tax. These include discussing and agreeing payment plans.

“The Council Tax Reduction Scheme exists to prevent people falling into council tax debt. People having difficulty in meeting their council tax payments should contact their local authority to see if they are eligible for a reduction which can be backdated by up to six months.

“Currently over 475,000 households receive some level of council tax reduction (CTR). A reduction may be up to 100 per cent, and on average recipients save over £750 a year.

“Enforcement action is also available to councils, including legal action when a household has chosen not to pay the council tax that they owe.”