Payday lenders will prey on more people because of Northampton Borough Council’s cuts in council tax support, finance experts have warned.
The latest council budget shows the Conservative administration aims to reduce the payments - which are in effect discounts for the low paid - by up to 10 per cent this year.
Ending council tax support has been a key driver behind council tax arrears/bailiff action and potentially the use of payday lenders.Citizen’s Advice Bureau in Northampton
This is despite a wide-ranging report about poverty in the town that contains strong advice from experts that this will lead to more people defaulting on council tax.
Not only will Guildhall revenues reduce, the experts say, but the policy will also see more people forced into debt. Central and East Northamptonshire Citizen’s Advice Bureau said: “We must ensure Council Tax Support levels are kept as high as possible as ending Council Tax Support has been a key driver behind council tax arrears/bailiff
action and potentially the use of payday lenders.”
The view was backed by New Policy Institute, who are economy and poverty analysts.
They said: “Our research shows that the bigger the cut in council tax support, the bigger the fall [in collection rates] tended to be.
“Councils should consider the implications for the collection rate when setting council tax support for next April.”
Even without the cuts, the CAB reports that both council tax arrears issues and bailiff issues have increased by 21 per cent in the last year.
Northampton Borough Council has been approached for a comment, along with representatives from the Conservative administration.