Hammersmith & Fulham LBC will stop using bailiffs to collect council tax debt from 1 April next year.
The London borough has launched a joint venture with 1st Credit, described as “an ethical debt purchase and collection company”, which aims to improve the treatment of people who owe debt to the council.
The venture’s brief is to save the council money by ending the use of bailiffs and preventing residents falling into debt in the first place. It also aims to reduce the number of debt instances that escalate to court action.
Implementing the scheme, called H&F Ethical Debt Collections, will mean debt handling will be subject to Financial Conduct Authority standards.
Max Schmid (Lab), cabinet member for finance, said: “Heavy handed debt collection in the public sector is counter-productive: court action, bailiffs and lawyers all cost money, and can create high levels of stress and anxiety in families that find themselves in debt.
“If a bailiff pressures someone into paying their council tax arrears at the expense of their rent, they are more likely to be evicted and end up in temporary accommodation. This can have severe emotional costs for the evicted family and huge financial costs for the council and other parts of the public sector.”
The alternative service will involve income and expenditure assessments with people in debt to agree affordable repayments over a set period.
Cllr Schmid added: “Our decision to not use bailiffs is not going to allow anyone who should be paying their taxes to avoid doing so. Anyone who can afford to pay but refuses to do so will be will be pursued using more effective, and more ethical, legal means.”
Some collections in the borough are already being carried out by the new service, including former tenant arrears and housing benefit overpayments, and other types of debt will be phased in.
The council will also do more to identify and support residents to avoid debt.