R Melanie Woolcock v The Secretary of State for Communities and Local Government

Hearing dates: 18–19 December 2017

Further written submissions: 28 December 2017

Judgment Approved

Introduction

This claim concerns the enforcement of liability for unpaid council tax by way of imprisonment. The Claimant contends that the system as currently operated by magistrates' courts in England and Wales is unfair and unlawful; and she seeks a declaration against the Secretary of State for Communities and Local Government (“the SSCLG”) and the Welsh Ministers (as being responsible for the relevant regulations in England and Wales respectively), and the Secretary of State for Justice (“the SSJ”) (as being responsible for magistrates' courts and the training of magistrates), to that effect.

Before us, Cathryn McGahey QC and Rose Grogan appeared for the Claimant, Tim Buley of Counsel for the SSCLG, James Segan of Counsel for the SSJ and Jonathan Moffett QC for the Welsh Ministers. At the outset, I thank them all for their contribution to the debate.

Council Tax

Council tax is a system of local taxation introduced by the Local Government Finance Act 1992 (“the 1992 Act”) to replace the community charge. It is now used in England, Wales and Scotland to fund approximately one-quarter of expenditure on local services such as adult social care, children's services, refuse collection, schools and leisure facilities. It is administered by local authorities. The applicable law and procedure in England (where there are 326 billing authorities) and Wales (22 billing authorities) is materially the same. The application of council tax in Scotland plays no part in this claim, and I need say nothing further about it.

Although it also has a personal element, council tax is primarily a property tax on dwellings. In England, approximately 24.1m dwellings have been identified for council tax purposes, of which 23.5m are liable for the tax. Each dwelling is allocated to one of eight bands based upon its notional value as at 1 April 1991. In Wales, approximately 1,426,000 dwellings have been identified, of which 1,370,000 are liable for the tax. Each dwelling is allocated to one of nine bands based upon its notional value as at 1 April 1991. In both England and wales, each local authority then sets a tax rate for each band. Some homes are exempt or benefit from reduced rates, e.g. when the property is empty or when occupied by a particular class of person such as students or members of the armed forces.

In respect of the personal element, by way of example, where there is only one resident adult then generally only three-quarters of the full rate is payable (the single person discount). In Wales, of the 1,370,000 dwellings that are liable for council tax, nearly 500,000 are entitled to a one-quarter discount, largely as a result of single occupancy.

Further, by section 13A(2) of the 1992 Act (inserted by section 10(1) of the Local Government Finance Act 2012), local authorities in England are required to make a scheme specifying reductions in council tax to be payable by persons or classes of person in financial need (a council tax reduction scheme), which must comply with the detailed requirements of Schedule 1A of the 1992 Act and the Council Tax Reduction Schemes (Prescribed Requirements) (England) Regulations 2012 (SI 2012 No 2885). In England, just over 4m individual claimants benefit from a local council tax support scheme.

Similarly, by section 13A(4), the Welsh Ministers may require such schemes by way of regulations; and, by the Council Tax Reduction Schemes and Prescribed Requirements (Wales) Regulations 2010 (SI 2012 No 3144) (W 316), each local authority in Wales is required to make a council tax reduction scheme. In Wales in 2016–17, 292,000 households were in receipt of reductions in council tax under a council tax reduction scheme, of which 220,000 had their council tax reduced to nil.

Part I of, and Schedules 1 to 9 to, the 1992 Act provide for the levying and collection of council tax. Section 6 provides that the tax is normally payable by the residents of a dwelling; and, if there are no residents, the owner.

Importantly for this claim, Schedule 4 to the 1992 Act, given effect by section 14(3) and entitled “Enforcement: England and Wales”, contains provisions about the recovery of council tax payable. It should be said at the outset that the recovery rate for council tax is exceptionally high: 97.1% in England, and 97.4% in Wales.

Paragraph 1 of Schedule 4 empowers the Secretary of State to make regulations in relation to the recovery of council tax. By article 2(a) of, and Schedule 1 to, the National Assembly for Wales (Transfer of Functions) Order 1999 (SI 1999 No 672) and paragraph 30(2)(a) of Schedule 11 to the Government of Wales Act 2006, in respect of Wales that function now lies with the Welsh Ministers, to whom is also devolved general competence in respect of “local government finance” (sections 107–108 of, and paragraph 12 of Schedule 7 to, the Government of Wales Act 2006).

The Council Tax (Administration and Enforcement) Regulations 1992 (SI 1992 No 613) (“the 1992 Regulations”) are made under paragraph 1 of Schedule 4 to the 1992 Act. They have been amended, from time-to-time, for England by the Secretary of State and for Wales by the Welsh Ministers and their predecessors; but, for the purposes of this claim, there are no material differences in the regulations which now apply in England and Wales. The 1992 Regulations are supported by guidance for England issued by the Secretary of State (Guidance to local councils on good practice in the collection of council tax arrears (June 2013)), and for Wales issued by the Welsh Assembly Government (Collection of council tax arrears good practice protocol (July 2009)), which each (e.g.) require local authorities, in their communications to council taxpayers, to include information about where they can go for help and advice.

The 1992 Regulations enable council tax to be collected in monthly payments. Regulation 23 requires a local authority to send out a reminder notice to a council taxpayer when an instalment is missed, giving him seven days to pay the outstanding instalment. If no payment is made, the right to pay by instalments is lost, and the entire amount of council tax becomes due. If the taxpayer fails to pay that sum, and does not respond to a final notice served under regulation 33, then the authority can seek a liability order from the magistrates' court, under paragraph 3 of Schedule 4 to the 1992 Act and regulations 33–36 of the 1992 Regulations. An application for such an order is by way of complaint and on at least 14 days' notice, so the person alleged to be liable has an opportunity to pay the debt or make such representations as he wishes to make. In England, paragraph 3.5 of the Secretary of State's Guidance specifically requires a local authority to take all reasonable steps to exhaust all other options before seeking a liability order.

A liability order confirms the amount of the outstanding debt, and the identity of the liable person. It is, in many ways, the equivalent of a judgment, which can be enforced in any of the ways set out in regulation 52 of the 1992 Regulations, i.e. (i) making an attachment of earnings order (regulation 37 of the 1992 Regulations); (ii) applying for sums to be deducted from certain state benefits (regulation 2 of the Council Tax (Deductions from Income Support) Regulations 1993); (iii) making an application to the county court for a charging order (regulation 50 of the 1992 Regulations); (iv) taking control of the debtor's goods and selling them (section 45 of the 1992 Act and Schedule 12 to the Tribunals, Courts and Enforcement Act 2007 (“the Schedule 12 procedure”)); and (v) bringing insolvency proceedings (regulation 49 of the 1992 Regulations).

Furthermore, paragraph 8 of Schedule 4 to the 1992 Act provides that regulations under paragraph 1 of that schedule may provide for a council tax debtor, who is an adult, who is the subject of a liability order and who has been the subject of the Schedule 12 procedure but has been found to have insufficient goods to satisfy the amount due, to be committed to prison. That paragraph sets out in some detail the procedure for such a committal for which regulations may provide. For example, paragraph 8(3)(c) gives power for regulations to include “provision allowing remission of payments when no warrant is issued or term of imprisonment fixed”.

Regulation 47 of the 1992 Regulations (as amended from time-to-time) largely replicates the procedure for which provision is made in paragraph 8 of Schedule 4. So far as relevant to this claim, regulation 47 provides as follows:

“(1) Where a billing authority has sought to enforce payment by use of the Schedule 12 procedure…, the debtor is an individual who has attained the age of 18 years, and the enforcement agent reports to the authority...