Skip to main content Skip to navigation

Over 2 million households struggling to pay council tax says new research

Orton, Michael Dr.
Dr Michael Orton
Print quality picture

Over two million households are estimated to be struggling to pay council tax and consideration needs to be given to the negative impact of the tax on the Government's drive to "make work pay". This is according to a new report by the University of Warwick's Institute for Employment Research for the Joseph Rowntree Foundation.

Council tax is the subject of an ongoing review but to date, there has been no attempt to identify how many or why households have problems paying it. Struggling to pay council tax - A new perspective on the debate about local taxation, is the UK's first study to explore the numbers and reasons behind non-payment. The report also looks at the relationship between council tax valuation bands and low income as well as the experiences of those who receive council tax benefit.

The research calculates that nearly three million summonses for non-payment of council tax are issued each year. There are a number of reasons why people receive a summons but the research estimates that over two million households are struggling to pay.

Author Dr Michael Orton of teh University of Warwick's Institute for Employment Research said:

"The report raises a lot of issues about how the current council tax system is affecting people on low wages. Those interviewed as part of the research cited low income as the main reason for receiving a summons for non-payment of council tax. Despite having a job, the struggle to pay council tax is part of the day-to-day difficulty of making ends meet for many people. Low income creates vulnerability to missing payments and repaying arrears."

A key issue is that council tax is regressive, ie it takes a larger share of income from those on lower and middle earnings than from those on higher incomes. Low income households are more affected because they are paying proportionately more than those on high incomes. Council tax accounts for 4.9% of gross income for the bottom fifth of households; 3.7% for households in the second to bottom fifth and just 1.7% for those in the top fifth.

Within the current debates on local taxation, a lot of attention is paid to low-income households in high-value properties. In fact, households with low incomes in bands F-H represent just 0.7% of all UK households (including around 100,000 pensioners) but it is estimated that there are 5.7 million low income households in bands A-C (including nearly 3 million pensioner households).

Many of these low income households receive benefits. However, the report found that interviewees' experience of council tax benefit focused not on take-up, which in itself is poor, but at the low level of income at which people cease to be entitled, as well as administrative problems and the sheer complexity of the system.

The report concludes that consideration should be given to making council tax fairer by revising the proportion of the tax levied on each valuation band. There is also a need to move the discussion of council tax benefit beyond take-up: greater consideration should be given to the negative impact of council tax on "making work pay".

"Low income households in high value properties are exceptional. Consideration needs to be given to the position of the far larger numbers of low and middle income households who currently pay proportionately more tax," concluded Orton.

Notes to Editors:

The full report, Struggling to pay council tax: A new perspective on the debate about local taxation, by Michael Orton is published by the Joseph Rowntree Foundation and available from York Publishing Services Ltd (01904 430033) price £13.95.

In 2005-06, the average annual council tax bill in England was £1009.00.

The Institute for Employment Research at the University of Warwick is one of Europe's leading centres for research in the labour market field. Its work focuses upon the operation of labour markets and socio-economic processes related to employment and unemployment in the UK at national, regional and local levels.

The Joseph Rowntree Foundation is one of the largest social policy research and development charities in the UK. It supports a research and development programme that seeks to understand the causes of social difficulties and explore ways of overcoming them.

For further information, contact:
Michael Orton (author): 024 7652 3977 (office)

Peter Dunn, Press and Media Relations Manager
University of Warwick 024 76 523708
mobile 07767 655860

Nasreen Memon, JRF Head of Media Relations: 020 7278 9665 / 01904 615 958 /

PR71 28th September 2006