LGO issues follow-up report urging Manchester City Council to pay compensation

The Local Government Ombudsman has called on Manchester City Council to reconsider its refusal to pay compensation recommended by an earlier LGO report to an individual it saw bankrupted for non-payment of council tax.

In a report published in September 2009, the then Ombudsman did not accept the complainant’s (Mr Joseph’s) account that he did not receive any warning of potential bankruptcy.

However, the LGO criticised the authority for “deficient” warning procedures when notifiying bankruptcy for non-payment of council tax.

He criticised Manchester as well for failing to consider properly other options for recovering the debt, such as an attachment of earnings order against Mrs Joseph who was jointly and severally liable for the debt. The availability of this route meant the authority did not need to resort to bankruptcy proceedings, the Ombudsman said.

He also found that the council did not have a written policy for use by officers when considering council tax recovery action.

The Ombudsman recommended that the local authority pay £1,000 in compensation to the complainant and revise its guidance to finance officers.

The compensation related to the injustice caused by the complainant not having the opportunity to consider his position properly, and the fact that Manchester had not taken the option to initiate a different recovery process. The LGO however did not go as far as to recommend that the council should compensate Mr Joseph for the cost of annulling the bankruptcy

In 99% of cases, local authorities pay the recommended compensation but Manchester stuck to its guns, arguing that the complainant had sufficient warning to pay off the debt before the council launched proceedings.

The council has also said it was opposed to paying compensation to those who have not paid their council tax, claiming it would send out “the wrong message” to persistent non-payers and those who pay despite difficult personal circumstances. The authority has changed its guidance, however.

In a follow-up report the LGO, Dr Jane Martin, has now called on Manchester to reconsider its position and pay up.

Martin 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.”

Philip Hoult