THOUSANDS of families across Liverpool falling behind with their council tax payments is the latest sign of the credit crunch hitting home, it was claimed last night.

Liverpool council says around 13,000 council tax reminders have been sent out in the first two months of the financial year – a 90% increase compared to the same period last year.

With mortgages, food, and utility bills all increasing, the number of people claiming benefits from the council has also risen by 36%.

The council has urged people facing difficulties to contact the authority to see if officials can help arrange benefits.

Last night, leading Merseyside economist Peter Stoney said Liverpool appeared better insulated to the credit crunch than other parts of the country because of the huge amount of recent investment.

But he also warned there were some worrying signs for the future with one in five school leavers on Merseyside having no qualifications – impacting not only on the lives of those individuals but also on the region’s ability to attract large employers.

According to the council, the trend of high numbers of people falling behind on their council tax payments is not unique to Liverpool and is being experienced by other large cities like Manchester.

Liverpool’s deputy council leader, Flo Clucas, said the issue was affecting middle income families, as well as singles, lower earners and pensioners.

According to the council’s economic forecasts, if the trend continues, it will have to increase its bad debt provision by £3.6m.

Last night, Cllr Clucas urged those facing problems paying their council tax to get in touch.

She said: “Fuel bills, energy bills and food bills have gone through the roof for some people.

“People have to pay their council tax, but if people have genuine difficulties, we can set the benefits in train for them.

“If we can help people get over a problem we will.”

She had recently helped a pensioner in her Allerton and Hunts Cross ward who thought he was receiving all the benefits he was entitled to.

After going through the “benefit maximisation” process, it turned out he did not actually have to pay council tax.

“The last thing we want with the winter looming is people choosing whether they heat their home or eat.”

But she said the people being sent reminders for council tax were from a broad cross section of society, and added: “In many cases, it is people who have not expected to have difficulties.”

The result of cheap mortgages, and lower utility deals coming to an end meant people who were previously able to cope suddenly found themselves in difficulties.

Despite the level of people not paying council tax, the council’s financial position appears to be improving since it was labelled the worst in the country due to its management of money.

Strict financial control has led to the council having finished £5.6m better off at the end of the financial year than anticipated, with balances of £13m.

However, according to the council, there is still a £1.6m deficit in the funding for the city’s Capital of Culture plans.

The Government Office North West has invited the Culture Company to bid for £1m of European Regional Development Fund money.

And the council will foot the remaining £600,000 bill out of a £800,000 saving it made from re-negotiating insurance deals.

Phil Halsall, executive director of finance, said: “The actions we put in place to deliver the 08/09 budget are in place and having an effect.

“The key thing is that we maintain that strong and healthy position. Overall we are in a very positive position to where we were last year.”

Mr Stoney, senior fellow at Liverpool University’s Management School, said: “People are finding it hard to make ends meet, but that is no excuse for not paying council tax. People need to economise in other ways.”

He is forecasting that the Merseyside region will have a gentle slowdown.

“The big worrying thing for Merseyside is the number of people claiming incapacity benefit – 97,000, which is three times the number claiming job seekers allowance.”

He said the number of people in Merseyside with no qualifications – 160,700 – according to the latest available data from 2006, was also worrying as it is 6% above the national average.

FOR council tax information and welfare benefits advice in Liverpool call 0151 233 3007.