Middlesbrough Council aims to recover more than £67 million in unpaid debts

Middlesbrough Council is stepping up efforts to reclaim more than £67 million in unpaid debts.

Of the overall figure, more than half (£36.8 million) is uncollected council tax, up by £2.1 million in the past twelve months.

Other sources of unpaid debt include £8.4 million in business rates and £15.5 million in uncollected sums for paid-for council services.

The council says it will take a "firm but fair" approach but will launch legal action to recover debts where necessary.

A council report says council tax and business rates are a key funding source for the local authority, accounting for around 66 per cent of its income.

“Through a comprehensive collection strategy, underpinned by the council’s Welfare Strategy for both business and residents, the council will pursue debt in a firm but fair way,” the report says.

“Residents and businesses will be offered a range of support to resolve debt problems, such as maximising benefit, welfare advice and support, debt management, crisis support all of which form part of the support on offer.

“Where payment is not forthcoming the council will exercise its powers provided under the relevant legislation to enforce the debt.

"Some of these powers are significant and can lead to serious consequences such as attachment to earnings, removal of goods,forcing the sale of a property or even commitment to prison all of which are powers enshrined in law."

However, the report also warns that following a rise in council tax of 4.99 per cent - the maximum rise permitted - collecting debts will continue to be a challenge, due to high levels of deprivation, benefit caseloads and low levels of income.

The process of collecting ageing business rates was also described as "problematic" in the report, with the council left with few recovery options in cases where businesses have ceased trading or filed for bankruptcy.

Across the country, council tax arrears have hit a record high of £6 billion and National Debtline reports that a third of callers to its service had council tax arrears in May, making it the most common priority debt.

On average, National Debtline callers owe on average £1,762 in arrears – an increase of 49 per cent from £1,181 in 2019.

Steve Vaid, chief executive of the Money Advice Trust, the charity which runs National Debtline, said: “Council tax debt is on a worrying upward trend and the sheer scale of arrears now underlines the need for urgent action. But this is nothing new.

“Council tax continues to be one of the most common debts amongst our National Debtline clients, and recent cost of living pressures have left many more people struggling to keep up with their payments.

"Councils have a vital role in helping residents with unmanageable bills and to ensure council tax, crucial to funding local services, is collected in a way that is fair and affordable.

“Reforming collection practices should be a priority for the next government, including putting an end to people becoming liable for their full annual council tax bill after falling behind.”

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