Step-by-Step is a Southwark Council initiative to test different approaches to managing debt to the Council – including council tax debt. Where residents volunteer to participate, the Council will immediately suspend all recovery and enforcement action for a period to allow arrangements to be set in place.
Step-by-Step is a Southwark Council initiative to test different approaches to managing debt to the Council – including council tax debt. Pilots began in 2018-19 and included provision for a pause in collection and enforcement that anticipated features of the statutory Breathing Space implemented in 2021.
Step-by-Step rests on a single view of all debts to the Council and many of the Council’s residents have multiple debts held by the Council – as well as other, lower priority debts held by other creditors. Evidence gathered by Citizens Advice Southwark indicates that council tax debt is now the most commonly held debt among its clients seeking debt advice. The Council is one of the largest landlords of rented social housing anywhere in the country and council tax debt and rent debts are strongly correlated among the Council’s own tenants.
Under Step-by-Step, unsustainable, existing council tax and other debts to the Council may be bundled together and managed outside the traditional process. Debtor participation in Step-by-Step is voluntary but the Council encourages participation in cases where the resident’s situation and payment record indicates that they are struggling to make payments consistently on multiple debts.
Where residents do volunteer to participate, the Council will immediately suspend all recovery and enforcement action for a period to allow Step-by-Step, arrangements to be set in place. Under the latest pilots, Step-by-Step also offers debtors access to free, independent debt advice available by phone or online.
Affordability and, crucially, the debtor’s ability to pay their ongoing liabilities are central to Step-by-Step. Essentially, Step-by-Step provides for ongoing liabilities to be met and for pre-existing debt to be paid down in a sustainable way. The Council does not set any maximum period over which Step-by-Step debt must be repaid, and nor is there any minimum payment requirement. However, payment arrangements under Step-by-Step are reviewed from time to time and regular debt repayments may rise or fall where the debtor’s circumstances change.
Engaging debtors is one of our biggest challenges. Those with problem debts are sometimes fearful of the Council, others can react negatively to contact and in some cases, problem debts become so deep seated that debtors become despondent or apathetic and simply ignore communications. We often find that it is only after recovery and enforcement action have taken place that the extent of a debtor’s distress or vulnerability becomes apparent.
Step-by-Step is intended to offer those with problem debts that very often include council tax debts and other debt to the Council with a new start and a credible and sustainable route out of debt. The Council has adopted and tested behavioural insights techniques when developing communications products for Step-by-Step, which has its own distinctive branding, differentiating it from traditional Council communication products about debt.
Some council tax debtors respond more positively to a prompt to take steps to deal with their own situation than to threats of enforcement action. The Council wants to move away from routine use of the statutory recovery process and expects to reduce its reliance on that process in the future. Over the longer term, the Council aims to move to a debt recovery approach more closely tailored to individual circumstances and behaviours.
Results from pilots are encouraging, yielding collection improvements and popular with residents participating. The single view of debt offered by Step-by-Step marks a break-through and has already gained national recognition through several industry awards.
However, the statutory framework has shaped the sector’s attitudes and approach to council tax recovery. The majority of councils continue to follow the statutory process and partly for that reason we think, a market has yet to develop for software that would enable councils to adopt alternative approaches easily