Report to:

Audit Committee

Date:

10 March 2022

Title:

Sundry Debt

Portfolio Area:

Finance and Assets – Cllr H Bastone

 

Wards Affected:

All

Urgent Decision:

N

Approval and clearance obtained:

Y

Date next steps can be taken: N/A

 

 

 

Author:

Clare Scotton

Pauline Henstock

Role:

Finance Business Partner

Head of Finance Practice and Deputy S.151 Officer

Contact:

01803 861559 clare.scotton@swdevon.gov.uk

01803 861377 pauline.henstock@swdevon.gov.uk

 

 

Recommendation:

That the Audit Committee note the position in relation to Sundry Debt.

 

1.    Executive summary

 

1.1        The Council is responsible for the collection of: Sundry Debts, Housing Benefit Overpayments, Council Tax and National Non-Domestic Rates (NNDR).

 

1.2        This report provides Members with an update of the position of Sundry Debt and Housing Benefits Overpayments up to 31st January 2022.

 

2.    Background

 

2.1        The Council’s management arrangements underpin delivery of all the Councils priorities, including the commitment to providing value for money services. Incorporated within this, is the timely collection of monies due to the Council. Debts are recovered in accordance with the Council’s Recovery Policy as published on our website.

 

2.2        Following the centralisation of debt recovery into one service from October 2017 and the implementation of the Debt Recovery Action Plan, Members requested a series of updates to demonstrate robust control of debt recovery procedures, particularly relating to sundry debt.

 

2.3        The implementation of a comprehensive action plan has resulted in robust recovery procedures. This report outlines the latest positions in collection relating to Sundry Debt and Housing Benefit Overpayments by providing data that demonstrates the progress made.

 

3. Outcomes/outputs

 

3.1        The arrears covered in this report are split into three categories as follows:

a.    Sundry Debts

b.    Housing Benefit Overpayment Recoveries from those still in receipt of Housing Benefit

c.    Housing Benefit Overpayment Recoveries from those no longer in receipt of Housing Benefit

 

3.2        All Council sundry debts are actively pursued, and in most instances are collected in a timely manner. In cases where payment is not received on time, a series of reminder letters are issued promptly to the debtor. If this fails to secure payment, recovery is pursued through the courts.

 

3.3        The Council took the decision to pause the chasing of Sundry Debts at the very start of the pandemic but this process was resumed last Summer and reminder letters are being sent out regularly.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sundry Debts

 

3.4        The balance of arrears for Sundry Debts over recent years is summarised below. This figure has decreased to £287k since September 2021 which is the lowest level for quite some time. Sundry Debts consist of Estates Management, Licensing, Trade Waste and Housing. This excludes car parking fines which are included on a different system.

 

 

3.5        This balance of £287k can be further broken down by age category to give a clearer picture of the nature of Sundry Debt arrears as follows.

 

3.6        The current balance for Sundry Debts of £287k does not include any individual debts over £20k.

 

3.7        The Assets team have been actively pursuing unpaid debtor invoices and supporting our customers with options such as payment arrangements.

 

3.8        Sundry debts over six months old total £171k and can be further      analysed by service area below. It can be seen that just over £69k relates to Housing and Benefits which are difficult debts to recover. This makes up 41% of the total debt in this age category. £50k relates to Environmental Health invoices. The majority of these are licences and therefore low value, high volume. Licensing invoices were not being chased during the pandemic and customers who had already paid are were offered refunds under the Council’s Additional Restrictions Grant (ARG) Business Grant scheme. This scheme has now finished and all outstanding licensing invoices are being actively pursued. Just over £21k relates to rental income from unit lets and slow recovery is expected in the current financial climate. The Assets team are working closely with tenants to work out a payment plan to recover these debts.

 

 

 

Sundry debt written off

 

3.9        Sundry debts totalling £22,022 were written off in the first six months of 2021/22 due to their size and likelihood of being recovered. No further debts have been written off in the second half of 2021/22 to date.

 

 

 

 

Housing Benefit Overpayment Recoveries from those still in receipt of Housing Benefit

 

3.10    The balance of arrears for Housing Benefit Overpayment Recoveries from those still in receipt of Housing Benefit is £389k as at 31st January 2022, a decrease on the balance of £403k as at 30th September 2021. The balance over time can be seen on the chart below.

 

 

3.11    Recovery action was paused following the initial lockdown in March 2020 but this process is now back up and running. The Case Management team make every effort to identify overpayments promptly and so begin the recovery process whilst amounts are still relatively low. By recovering these debts whilst people are still in receipt of Housing Benefit, the ease of recovery is greater, as is the likelihood of full recovery.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Housing Benefit Overpayment Recoveries from those no longer in receipt of Housing Benefit

 

    3.12  The balance of arrears for Housing Benefit Overpayment Recoveries from those no longer in receipt of Housing Benefit is £422k as at 31st January 2022, a slight decrease on the balance of £445k as at 30th September 2021. The balance over time can be seen on the chart below.

 

 

 

3.13     The amount outstanding is continuously monitored and well managed for both categories of Housing Benefit Overpayment Recoveries. A downwards trend is expected as members of the public move increasingly from the Housing Benefit system over to the Universal Credit system.

 

3.14     The effect of this will be that less Housing Benefit will be administered by the Authority and so the amount that is overpaid will reduce.

 

            Housing Benefit write offs

 

3.15     Since 1st April 2021, just over £57k of this debt has been written off.

 

 

 

 

 

 

 

 

 

 

3.16     This balance of £422k can be further broken down by age category to give a clearer picture of the nature of these arrears, as follows.

 

           

 

3.17     Of this balance, £177k relates to debt where overpayment arrangements are in place and consideration is being given to instructing bailiffs on debt totalling £82k. £68k relates to debt where a direct earnings attachment is in place.  A full picture showing the status of this debt can be seen below.

 

 

 

 

 

 

 

4. Options available and consideration of risk

 

4.1        The Business Manager for Case Management is keen to continue to focus on debt recovery and it is anticipated that every effort will be made to recover monies owed to the Council promptly. Where this isn’t possible, the debt recovery procedures will be followed and overdue debts will be duly followed up.

 

 

5.  Proposed Way Forward

 

5.1        The Committee note the content of this report and continue half yearly reporting.

 

 

6. Implications

 

Implications

 

Relevant
to
proposals
Y/N

Details and proposed measures to address

Legal/Governance

 

Y

The guidelines for Statutory Interest Charging and adding recovery costs falls under the European Directive 2011/7/EU on Combating Late Payment in Commercial Transactions. Enforcing successful legal action for recovery of debt is dependent upon a robust system of ensuring correct business names are recorded within our systems.

Financial implications to include reference to value for money

Y

Improved income collection, resulting in less impact of uncollectable debt on the Income and Expenditure Account, due to fewer write offs.

 

Risk

Y

There remains a risk of income not being collected. The Debt Recovery Plan alongside the Debt Recovery Policy seeks to minimise this. Risk to reputation is managed carefully by prompt recovery of amounts due wherever possible.

This risk is also mitigated by taking a balanced view and ensuring that resources are not expended on debts which are not cost effective to pursue and these are written off in accordance with the Council’s Write Off Policy

Supporting Corporate Strategy

 

The debt recovery process supports all six of the Corporate Strategy Themes of Council, Homes, Enterprise, Communities, Environment and Wellbeing.

Climate Change - Carbon / Biodiversity Impact

 

None directly arising from this report.

Comprehensive Impact Assessment Implications

Equality and Diversity

 

N

All enforcement action that is taken prior to this point is undertaken in accordance with legislation and accepted procedures to ensure no discrimination takes place.

Safeguarding

N

N/A

Community Safety, Crime and Disorder

N

N/A

 

Health, Safety and Wellbeing

N

N/A

Other implications

N

None

 

 

 

Supporting Information

Appendices:

None

 

Background Papers:

None

 

Approval and clearance of report

 

Process checklist

Completed

Portfolio Holder briefed/sign off

Yes

SLT Rep briefed/sign off

Yes

Relevant  Heads of Practice sign off (draft)

Yes

Data protection issues considered

Yes

Accessibility checked

N/A