Agenda item - Write Off of Debts Quarter 4 Report

Agenda item

Write Off of Debts Quarter 4 Report

Minutes:

The Head of Customer Access and Financial Support presented the Quarterly Monitoring of Write Offs report covering the period 1st January 2015 to 31st March 2015.  During presentation of this report the following points were highlighted for Members’ consideration:

 

·         Debt write offs were a last resort and only occurred when the Council had no other recourse.

·         Debts that had been written off could subsequently be pursued once again if there was a change in circumstances.

·         The majority of debts that were written off had been owed for a number of years; it was rare to write off a debt within the space of a single year.

·         The timing of write offs could not be considered indicative of trends in payments or customer behaviour but, rather, as representative of the point in the recovery process that had been reached.

·         An incorrect figure had been recorded in the covering report for the total unrecoverable debt that had been written off during the period.  This figure should actually have been recorded as £23,188.31.

·         There had been a change to the Council’s finance system at the start of the new financial year.  This had impacted on the potential to obtain data for previous years for comparative purposes.

·         It was difficult to assess sundry debts in a quarterly report as the figures recorded varied according to the time of year.  For example garden waste charges were issued to all customers at the same time.

·         Similarly the total Council Tax due was recorded as due from 1st April.  This recording arrangement did not easily recognise that many customers could legitimately pay in instalments over 10 or 12 months.

·         Bankruptcy remained the primary reason for writing off debts.

·         Cases classified as ‘uneconomical to pursue’ were usually debts where it could potentially cost the Council more to pursue payment than to write off the debt.

·         Only a small proportion of Council debts were written off.  For example 0.5 per cent of non domestic rates arrears were written off by the Council in the period.

 

Following presentation of the report a number of key issues were discussed in further detail:

 

·         The figure that had been recorded in the report for the total cumulative Council tax arrears, for the period 1999/2000 to 2014/15, appeared to be inaccurate and needed to be clarified.

·         The Council had to follow a specific process for collecting Council Tax and recording Council Tax arrears in line with legislative requirements.

·          The district Council collected Council Tax for other organisations such as the police and Worcestershire County Council.  These organisations would be owed some of the Council tax arrears.

·         The Council could use bad debts provision to manage risks and protect against any write offs.

·         Debts could be secured against the value of a customer’s property, though this would not be the first step taken by the Council to recover debts.  However, many customers were not property owners and therefore this process could not always be applied.

·         Officers confirmed that sundry debtors included both residents and companies.

·         Figures were not collected in terms of how the Council’s debts compared to other local authorities.  However, comparative data was provided in respect of collection rates.

·         Concerns were expressed about the total figure owed to the Council and the potential for greater recovery of debts to have a beneficial impact on the Council’s finances.

·         However, Members were advised that the Council had a good recovery rate, with approximately 97 per cent of debts collected.

·         The Council used different methods to recover debts, including credit ratings and bailiffs.

·         Debts classified as ‘statute barred’ had not been included in the report and did not apply to Council Tax or to business rates.

·         It would be easier to present a clearer outline of the level of debts owed to the Council and progress made in recovering debts at the end of the financial year.

·         In respect of the cumulative debts, Members suggested that changes might need to be made to make it easier to understand the data provided.

·         The inclusion of Historic data in future versions of the report in order to compare year on year progress in respect of recovering debts owed to the Council.

·         Information about the payment methods used by customers to resolve any debts to the Council was also discussed for inclusion in future reports, Officers advised that whilst this was possible, Members should be mindful that is was also time consuming to prepare.

 

RESOLVED that

 

(a)       The format of the report be revised for future versions of the Write off of Debts report;

(b)       Future monitoring reports be received annually; and

(c)       The report be noted.

Supporting documents: