Manchester City Council has refused to pay compensation for injustice caused by its approach to recovering council tax debt through bankruptcy proceedings.

Manchester City Council has refused to pay compensation for injustice caused by its approach to recovering council tax debt through bankruptcy proceedings. The original critical report was issued by the previous Local Government Ombudsman (LGO). In her report issued today (6 April 2011), the successor LGO, Dr Jane Martin, calls on the Council to reconsider its position and pay the £1,000 compensation recommended.

In September 2009 the Ombudsman’s predecessor issued a report criticising the Council for its deficient warning procedures in notifying bankruptcy for non-payment of council tax. He also criticised the Council for not properly considering other options for recovering the debt and argued that the Council did not need to resort to bankruptcy proceedings.

The injustice was limited to the loss of the opportunity for the complainant to consider his position properly, and the outrage that the Council missed an opportunity to put a different recovery process in place. The Ombudsman recommended that the Council should pay him £1,000 to compensate for his experience which could have been avoided, and asked that revisions be made to Council guidance to finance officers.

In response to the original report, the Council has revised its guidance as recommended, but has refused to pay compensation. The Council considers that the complainant had sufficient warning to pay off the debt before it took bankruptcy proceedings through the courts. It also says that, as a matter of principle, it is opposed to paying compensation to those who have not paid their council tax. It believes that this would send out the wrong message to both persistent non-payers and to those who do pay council tax despite personal difficulties.

This is a rare case of non-compliance requiring a further report to be issued. 99 per cent of Ombudsman recommendations were met by councils in the last five years [2005/06 to 2009/10].

In this case the Ombudsman said: “I have given careful consideration to the point the Council is making. However, my predecessor recommended payment of compensation to remedy the injustice caused by the maladministration he identified. I consider this to be a separate matter from the issue of non-payment of council tax.”

Report ref no 07B10432 FR

Article date: 06 April 2011