Old debts to local governments should be written off as part of an effort to support people who are in or likely to face financial difficulty in the coming months, according to Citizens Advice Scotland (CAS).
The charity has drafted a series of measures it wants to see relevant authorities in Scotland introducing in the context of a “post-COVID recovery plan”.
Debts relating to council taxes and rent arrears that have been outstanding for more than five years should be written off by local authorities in part because “further recovery action is pointless,” CAS has suggested.
These debts should be “cancelled altogether” so that people who are in arrears to their local councils can focus on servicing other debts and maintaining some level of financial stability.
CAS has also suggested that people should be allowed to spread their payments of more recently accrued council tax debts “very thinly” so those debts are less onerous.
Part of the thinking behind the CAS’ recommendations is that people who are struggling desperately to cope with their debts will be less able to spend their money elsewhere in the economy if they aren’t given any form of relief.
As the CAS’ chief executive Derek Mitchell explains: “People who are burdened with making challenging debt repayments cannot fully participate in the economy, which then holds back growth.”
The CAS have urged the government to “put people at the heart” of any post-pandemic economic recovery plan.
“The economic fallout from Covid-19 will be hugely challenging for Scotland, and it’s essential that steps are taking to maximise incomes and minimise the cost of living for people,” said Mr Mitchell.
“Making sure people have enough to live on must be an essential part of ensuring inclusive economic growth,” he added.
“We’d encourage policymakers to be bold and explore the options for a minimum income guarantee.”
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A long-term personal debt crisis is an inevitable consequence of the Covid-19 pandemic unless urgent action is taken to support people in financial trouble.
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