Agenda item

To review the restricted appendix to agenda item 16 (Appendix 1 enclosed).

Consideration was given to the report of the Director of Finance (Section 151 Officer) which asked members to review the Debt Write Off Policy.

The Director of Finance (Section 151 Officer) attended remotely to present the report, with technical support provided at the meeting by the Deputy Head of Revenues and Benefits (PSPS).   The following main points were highlighted:

• The Debt Write Off Policy was implemented in 2017 and had been subject to periodic review, with recent amendments including an increase in the level of delegated authority for officer write offs from £1,050 to £5,000;
• The Council collected in excess of £100 million annually across council tax and business rates and that robust policies were therefore essential;
• Debt write off was a last resort, undertaken only after all reasonable recovery options had been exhausted, and debts could be reinstated where they later became recoverable;  and
• The recovery tools available to the Council included tracing activity, use of enforcement agents, deductions from benefits, and data matching through national initiatives.

Members considered the report and raised the following points:

• Members queried whether clearer timescales could be introduced within the policy for the recovery of debts, particularly given concerns about the age of some debts presented for write off.
  • The Deputy Head of Revenues and Benefits (PSPS) explained that although there were procedural timelines, it was not possible to apply fixed recovery timescales due to the varying nature of debts and individual circumstances. It was noted that recovery could extend over long periods where repayments were made through benefit deductions, which were often set at low weekly amounts, and that each case was managed on its own merits.

• Members queried the speed of recovery action and triggers for escalation.
  • The Deputy Head of Revenues and Benefits (PSPS) outlined the standard process for council tax and business rates, including reminders, loss of instalment rights, and progression to liability orders and enforcement action. Recovery action commenced relatively quickly following missed payments, but that ongoing monitoring, reviews, and periodic tracing checks were undertaken where debtors could not initially be located. Tracing activity was repeated at intervals, typically every six months, to identify any change in circumstances.

• Members raised concerns regarding the cost effectiveness of prolonged recovery activity, questioning whether the cost of officer time and external enforcement could exceed the value of the debt being pursued.
  • The Deputy Head of Revenues and Benefits (PSPS) advised that the principle of “uneconomic to collect” was already applied within the policy and that decisions were made having regard to the likely cost of recovery against the level of debt. It was noted that while average costs could appear high, the marginal cost of standard recovery actions such as issuing reminders was relatively low, and therefore continued recovery action was often justified.

• Further discussion took place regarding whether there should be a defined financial threshold below which debts would not be actively pursued.
  • The Deputy Head of Revenues and Benefits (PSPS)  confirmed that, in practice, very small balances were subject to limited recovery action and could be written off where no trace was available and recovery would be disproportionate. However, it was emphasised that setting explicit thresholds within policy could create unintended consequences, including encouraging non-payment.

• Members explored whether alternative approaches could be adopted, including the potential sale of debt to third parties.
  • The Director of Finance advised that while this was theoretically possible, it would raise concerns in relation to fair debt recovery practices and reputational risk to the Council. It was further noted that the Council already achieved high collection rates and that it was generally more appropriate to continue recovery activity in-house.

• Members raised queries in relation to housing benefit overpayments, including the causes of overpayments and delays in stopping payments. Members suggested that delays in processing changes in circumstances could contribute to increased debt levels and requested information on the average timescales for action after notification was received.

• Members considered the broader issue of tracking repeat debtors who moved between local authority areas, expressing concern that individuals could leave the district and relocate elsewhere without being traced
  • The Deputy Head of Revenues and Benefits (PSPS) responded that:
    • There was no direct, joined-up system between local authorities to track individuals across boundaries. Where notification of a new location was received, officers could make enquiries with the relevant local authority, subject to data protection provisions, to determine whether information was held;
    • In the absence of a national system, recovery in such circumstances relied heavily on intelligence, tip-offs, and the use of external tracing agencies and credit reference data. It was further noted that tracing activity was undertaken over extended periods, as information regarding individuals’ whereabouts could take time to materialise;
    • In cases of housing benefit overpayments, officers were able to undertake checks against Department for Work and Pensions data; however, this facility was not available for council tax or business rates debts; and
  • The Director of Finance added that, while such cases existed, they represented a relatively small proportion of overall debt. The Council sought to balance robust recovery with fairness, including supporting those who were unable to pay through payment arrangements and access to advice

• In conclusion, members recognised that recovery timescales and approaches were necessarily flexible and dependent on individual circumstances. While there was support for exploring improvements in efficiency and data sharing, members acknowledged the limitations of the current legislative framework.

AGREED:

That the Panel’s comments on the Debt Write Off Policy be submitted to Cabinet for consideration.