Council tax debt has overtaken credit cards as the most common form of debt requiring advice and support, says a leading charity.
The Citizens Advice Bureau (CAB) says it expects to help more than 191,000 people struggling to pay Council Tax in 2014/15 – up 20% on the previous year.
And according to a report from the CAB, rising rents could result in up to 122,800 people requiring help with rental debts by the end of March 2015.
The Government abolished Council Tax Benefit at the end of March 2013, meaning that some of the poorest people are having to pay for the very first time.
The move has resulted in a postcode lottery, with benefit claimants and low-income households paying more in some areas than others, depending upon each local authority’s Council Tax Reduction scheme.
A growing proportion of people are approaching the CAB for help and advice on paying rent, council tax, water and fuel debts. Meanwhile, financial issues related to credit cards, mortgages and unsecured personal loans have declined.
While more households are struggling with Council Tax and housing costs, debts resulting from credit cards are expected to fall by 12% in 2014/15 – exposing the ‘changing face of household debt’.
The mainstream credit problems of the post-2008 period have turned into problems with priority debts, says the CAB.
Despite a recent fall in fuel and petrol prices, the CAB also highlights how households have had to endure a 210% rise in energy costs over the last 10 years.
Citizens Advice Chief Executive Gillian Guy said:
“Households’ financial recovery will not happen overnight. The improving economy, rise in employment and price reductions for some day to day costs is good news for many people but it is important to remember that this is set against a back drop of six years of financial difficulties.
“There is a concerning shift in the kind of debt problems people are getting into. The mainstream debt problems of the credit crunch, from credit cards to loans, are morphing into even more troubling problems.
“We’re helping people who are struggling to afford a warm home, keep a roof over their heads or put food on the table.”
The CAB highlights how the Office for Budget Responsibility expects household debt to soar to a record high of £2.43 trillion by 2019.
There has also been a significant rise in the amount of debt held by self-employed people – up 41% to £20,000. They now represent the highest percentage of people helped by the CAB at 29%.
Citizens Advice is carrying out a separate study about the challenges that self-employed people face.
Behind the self-employed come unemployed people, who have an average debt of £17,500. Pensioners come in a close third, with an average total debt of £17,200.
13% of CAB clients had ten debts or more.