Written Statement: Council Tax Debt Rescue Scheme

While the height of the cost-of-living crisis is thankfully behind us, many people in Wales are still experiencing financial problems and have persistent debts. The Welsh Government has always sought to support and help people, with a wide range of policies and schemes which put money back in their pockets to help them pay for the everyday essentials.

I am today launching an experimental exercise to help people with council tax debt, which will help them repay what they owe while also improving their future financial resilience. This trial builds on previous important work in this area, including ending prison sentences for non-payment of council tax and establishing a best practice Protocol for the collection of council tax debt in partnership with Welsh councils.

This new Council Tax Debt Rescue Scheme will be offered by Smart Money Cymru Credit Union and Merthyr Credit Union for people living in Merthyr Tydfil, Newport and Blaenau Gwent. The pilot is being run in these areas initially because of the patterns of council tax arrears and the location of the credit union hubs, which will administer the scheme. If successful following monitoring and evaluation, it may be extended to other parts of Wales.

The scheme is designed for people in council tax arrears who are in financial hardship and who would otherwise be at risk of using either high-interest payday lenders or illegal money lenders to make ends meet. Under the scheme they will be offered bespoke assistance and affordable interest-free payment plans to help them to both repay the council tax debt and to begin to build savings at the same time. The Welsh Government will support credit unions to provide plans which will be available initially to tackle up to £2,000 of council tax arrears over a maximum pay-back period of two years. I anticipate the pilot phase will run until March 2026.  

Credit unions are ideally placed to work with people and families to help improve their financial resilience over the longer term, to help them improve their credit scores and to build savings while working to clear their council tax debt. They are regulated by the Financial Conduct Authority to provide bespoke affordability assessments, which consider personal circumstances in a tailored way, and they will be able to assess people’s suitability for an interest-free payment plan while managing their current and future housing costs. 

Local councils work hard to offer a range of flexible ways for people to pay their council tax and these will continue. But some people who are in financial hardship may need more help, and I am keen to explore new ways. This initiative will be available from 1 May onwards.

People should engage with their council as early as possible if they are struggling to pay their council tax bill, and check if other help is available, such as any unclaimed discounts or support for low-income households through the Council Tax Reduction Scheme – more information is available at: Pay less Council Tax: eligibility checker. Free advice is also available from Advicelink Cymru.