Agenda item

To seek approval for the write-off of uncollectable debt (report of the Portfolio Holder for Finance, Commercialisation and Partnerships enclosed).

(Please note that the appendices to this report are not for publication by virtue of Paragraphs 1 (Information relating to any individual), 2 (Information which is likely to reveal the identity of any individual) and 3 (Information relating to the financial or business affairs of any particular person (including the authority holding that information)) in Part 1 of Schedule 12A of the Local Government Act 1972, and are therefore attached to this agenda as item 12).

Consideration was given to the report of the Portfolio Holder for Finance, Commercialisation and Partnerships which sought approval for the write-off of uncollectable debt.

The Portfolio Holder for Finance, Commercialisation and Partnerships provided the following updates:

Impacts of Covid on recovery and enforcement

·    Large numbers of households and businesss were affected by COVID-19, and there had been a significant increase in Universal Credit claims, and, in turn, local Council Tax Support;

·    Since the last report to Cabinet in May, the furlough scheme has ended and the additional £20 per week paid to UC claimants had been removed. Along with the cost-of-living increase, the climate remained uncertain;

·    Debt recovery processes were severely disrupted in the last financial year, and this year officers were catching up on recovery and enforcement action for last year’s arrears as well as 2021/22 new debt; 

·    As a result, in-year collection rates had not returned to pre-Covid levels, and the effect was likely to be carried forward into future financial years. 

Number of cases entering breathing space following its introduction in May 2021

Legislation provided for two types of breathing space – ‘standard’ and ‘mental health crisis’:

·         ‘Standard’ provided a 60-day moratorium to give debtors time to get debt advice and set up debt solutions;

·         ‘Mental Health Crisis’ applied for the period of treatment, plus 30 days;

·         Access to breathing space was through a qualified debt advisor, and for Mental Health Crisis a declaration was also needed from an Approved Mental Health Professional;

·         So far, 35 debtors, with amounts totalling £66,665 had entered breathing space – many of these had expired the 60 days, leaving 6 currently in breathing space with just under £9k of debt;

·         All cases to date were ‘standard’ breathing space.  The table shown at 3.5 in the report provided a breakdown of the debt by type, with the vast majority relating to Council Tax.

The debts detailed within the report were presented in line with the Debt Management, and Operational Debt Write Off policies adopted by Cabinet in July 2017.

·    Efficient and well administered debt management was crucial to the Council, and Cabinet members would recall the presentation where Officers had provided an overview of the statutory requirements and processes relating to recovery and enforcement;

·    However, by the very nature, volume and value of annual revenues to the Council, there would always be uncollectable amounts which would be recommended for write off;

·    The debts presented to Cabinet totalled £55,572, of which, £17,036 was borne by this Council;

·    Almost 73% (£41k) of the total presented for write off was due to insolvency;

·    All recovery and enforcement options had been considered and exhausted;

·    The Council had provision for bad debt, and this amount would be offset against that provision;

·    In respect of any amount written off, if any information came to light at a later date, the amount could be resurrected in part or in full.

DECISION:

a)    That updates on the Covid impact and Breathing Space be noted; and

b)    That the amounts identified in the report, as detailed below, be approved for write off:

Council Tax                                             £23,957.39

Business Rates                                       £21,880.41

Housing Benefit Overpayment                £ 9,734.08

Total                                                        £55,571,88

((Other options considered:

·         Not to approve the write off of the debts shown within the report.

Reasons for decision:

·         All recovery methods have been considered and where appropriate pursued, before making the decision to write off.

·         Officer time can be maximised on greatest returns, at the same time as ensuring robust procedures for debt management are in place across all revenue streams.)