Committee:

RECOMMENDATIONS:

That the Hub Committee:

1. Notes that, in accordance with Financial Regulations, the Section 151 Officer has authorised the write-off of individual debts totalling £77,279.31 as detailed in paragraph 3 of the report; and

2. Approves the write-off of the individual debts totalling £29,868.75, as shown in Appendix A of the report.

1. Executive summary

1.1 The Council is responsible for the collection of Council Tax, Non-Domestic Rates, overpaid Housing Benefit and Sundry Debt.

1.2 This report informs members of debt written-off for these revenues streams. Debt up to the value of £5,000 can be written off by the Section 151 Officer under delegated authority. Permission needs to be sought from Hub Committee to write off individual debts with a value of more than £5,000. Members agreed a write-off policy in March 2023 which sets out the circumstances in which a debt is deemed to be irrecoverable. This includes insolvency cases and where the debtor is deceased or cannot be traced.

1.3 The report covers the period 1 October 2022 to 31 March 2023. The total amount of debt to be written-off is £107,148.06. The amount written-off for the period 1 April 2022 to 30 September 2022, for all revenue streams, was £125,528.70.

1.4 One of the key outcomes of the Revenues and Benefits Service Review is the improvement of collection rates for Council Tax and Non-Domestic Rates and the report includes information about the amount of debt written-off by financial year as well as comparing collection performance against shire districts.

1.5 In 2022/23 the Council achieved a Council Tax collection rate of 98.3% which was significantly above both the national average of 96% and the average for shire districts which was 97.2%. This placed West Devon Borough Council in the top quartile nationally.

1.6 For Non-Domestic Rates, our collection rate of 99% also placed us in the top quartile nationally, compared to a national average of 96.8% and an average collection rate of 97.5% for shire districts.

2. Background

2.1 The Council’s sound financial management arrangements underpin the delivery of all the Council’s priorities, including the commitment to provide value for money services. This report forms part of the formal debt write-off procedures included in these financial arrangements. The Hub Committee agreed at its meeting of 7 March 2023 to adopt a Council Tax, Non-Domestic Rate (Business Rates) and Housing Benefit Overpayments write off policy to ensure transparency and consistency in decisions regarding the writing-off uncollectable debt.

2.2 It was also agreed that future write-off reports would be presented in an updated format. Previously the report detailed debt written-off during a quarter regardless of the financial year to which it relates. One of the key outcomes of the Revenues and Benefits Service Review is the improvement of collection rates for Council Tax and Non-Domestic Rates and the report contains additional detail on debts written-off by financial year.

2.3 The writing-off of debt which is irrecoverable is recognised as good practice by the Department of Housing, Levelling Up and Communities, the Chartered Institute of Public Finance and Accountancy and the Department for Work and Pensions. Debts are only considered for write off after we have taken all steps to collect them. It is important is that processes and procedures are frequently reviewed to ensure maximum effectiveness in debt collection and recovery.

2.4 Whilst it is recognised that most of the income owed to the Council will be successfully billed for and collected, there are a variety of reasons why debt will become irrecoverable and needs to be written off. Debts will only be recommended for write-off once all options to recover and enforce them, as allowed for by the relevant legislation, have been exhausted.

2.5 When it is certain that debts are irrecoverable or the cost of recovery would outweigh the benefit, debts should be written-off following appropriate review and authorisation with reference to the write-off policy. A full audit trail is also retained.

3. Outcomes/outputs

Council Tax Write-Offs

3.1 The table below shows Council Tax debts which have been approved for write-off in Quarters 3 and 4 of 2022/23 by the Section 151 Officer under delegated powers. It also compares the cases and amounts against the corresponding quarters of the 2021/22 financial year.

Reason for write off	No. of cases	2021/22 – Amount written off (£)	No. of cases	2022/23 – Amount written off (£)
Debtors who cannot be traced	4	4,803.01	2	472.24
Death of a debtor	5	2,764.17	13	5,678.69
Insolvency	34	34,691.55	34	48,786.34
Small balance	112	15,813.94	101	1,454.69
Miscellaneous	5	2,060.65	2	394.28
Uncollectable old debt	147	6,463.41	20	3,917.32
Total	307	66,596.73	172	60,703.56

3.2 The primary reason for writing off Council Tax debt remains insolvency. This includes debt relief orders and bankruptcy, and the amount continues to reflect some of the financial issues council taxpayers may be experiencing due to the cost-of-living crisis.

Council Tax Write-Offs by financial year

3.3 The breakdown below details the write-offs by financial year. Our collection rate of 98.3% was significantly above the average performance of Shire Districts which was 97.2% and we wrote off a small amount of debt in year.

Financial year	Amount written off (£)	In-year Collection Rate	Shire District average
Pre 2018/19	10,424.44	Various	Various
2018/19	4,491.93	97.7%	97.9%
2019/20	7,052.60	97.7%	97.7%
2020/21	4,647.94	97.3%	96.9%
2021/22	23,681.77	97.8%	97.2%
2022/23	10,404.88	98.3%	97.2%
Total	60,703.56

Council Tax Write-Offs – over £5,000

3.4 Permission needs to be sought from Hub Committee to write off individual debts with a value of over £5,000. As this information is confidential, the full details are contained in exempt Appendix A, however the high-level detail is as follows:

Case 1

Amount - £6,472.85

Reason for write-off – Individual Voluntary Arrangement

Case 2

Amount - £6,240.84

Reason for write-off – Individual Voluntary Arrangement

Case 3

Amount - £5,173.96

Reason for write-off – Individual Voluntary Arrangement

The amounts requested for write-off by financial year are as follows:

Financial year	Amount to be written-off (£)	In-year collection rate	Shire District Average
Pre 2018/19	6,538.93	Various	Various
2018/19	1,668.16	97.7%	97.9%
2019/20	2,528.73	97.7%	97.7%
2020/21	3,299.27	97.3%	96.9%
2021/22	2,155.03	97.8%	97.2%
2022/23	1,697.53	98.3%	97.2%
Total	17,887.65

Non-Domestic Rate Write-Offs

3.5 The table below shows debts under £5,000 which have been approved for write-off in quarters 3 and 4 of the 2022/23 financial year, as approved by the Section 151 Officer under delegated powers. It also compares the cases and amounts against the corresponding quarters of the 2021/22 financial year.

Reason for write off	No. of cases	2021/22 – Amount written off (£)	No. of cases	2022/23 – Amount written off
Insolvency	7	11,988.32	6	12,590.30
Debtors who cannot be traced	1	654.71	0	0.00
Small balance	1	0.01	1	0.10
Uncollectable old debt	0	0.00	2	260.18
Total	9	12,643.04	9	12,850.58

3.6 The primary reason for writing-off Non-Domestic Rate debt remains insolvency.

Non-Domestic Rate Write-Offs by financial year

3.7 The breakdown below details write-offs by financial year and compares our in-year collection rate against the average for shire districts. No in-year debt, under £5,000, was written-off in 2021/22 and it should be noted that we achieved a NNDR collection rate of 99.0% compared to an average for shire districts of 97.5%.

Financial year	Amount written off (£)	In year collection rate	Shire District average
Pre 2018/19	977.48	Various	Various
2018/19	6,462.99	97.6%	98.4%
2020/21	677.31	91.5%	95.0%
2021/22	4,732.80	93.7%	97.0%
2022/23	0.00	99.0%	97.5%
Total	12,850.58

Non-Domestic Rates Write-Offs over £5,000

3.8 Permission needs to be sought from Hub Committee to write-off individual debts with a value of over £5,000. Details of two cases, which relate to previous financial years, are included in the exempt appendix:

Case 1

Amount - £6,042.65

Reason – Company dissolved

Case 2

Amount - £5,938.45

Reason – Company dissolved

The amounts requested for write-off by financial year are as follows:

Financial year	Amount to be written off (£)	In-year collection rate	Shire District Average
Pre 2018/19	5,938.45	Various	Various
2018/19	6,042.65	97.6%	98.4%
Total	11,981.10

Housing Benefit Overpayments Write-Offs

3.9 The table below shows debts under £5,000 which have been approved for write-off in quarters 3 and 4 of 2022/23 by the Section 151 Officer under delegated powers. It also compares the number of cases and amounts to the same quarters in 2021/22.

Reason for write off	No. of cases	2021/22 – Amount written off (£)	No. of cases	2022/23 – Amount written off (£)
Insolvency	0	0.00	0	0.00
Death of a debtor	1	594.51	1	5.82
Small balance	4	32.45	1	2.68
Uncollectable old debt	15	2,926.88	3	122.51
Miscellaneous	1	2,957.29	28	834.16
Total	21	6,511.13	33	965.17

3.10 The reduction in the total written-off reflects, in part, an overall reduction in housing benefit overpayments due to the Housing Benefit Award Accuracy Initiative. It is a programme launched by the Department for Work and Pensions (DWP) to help local authorities improve the accuracy of housing benefit payments and reduce fraud and error.

Sundry Debt Write-Offs

3.11 The table below shows debts under £5,000 which have been approved for write-off in quarters 3 and 4 of 2022/23 by the Section 151 Officer under delegated powers. It also compares the number of cases and amounts to the same quarters in 2021/22.

Reason for write off	No. of cases	2021/22 – Amount written off (£)	No. of cases	2022/23 – Amount written off (£)
Insolvency	3	2,999.37	1	2,760.00
Total	3	2,999.37	1	2,760.00

3.12 The amount of debt written-off is comparable across financial years and the primary reason for write-off remains insolvency which may be indicative of continuing difficult trading conditions.

4. Options available and consideration of risk

4.1 The Hub Committee can either approve the debt being written-off or not. Should the write-off of an individual debt not be approved, it will remain on the relevant system as an outstanding balance. In cases of insolvency there is no other option available to the Council other than to write-off the debt.

4.2 If debts remain on the system, it may result in additional time and cost spent pursuing the debt when there is no realistic prospect of collection. This is an inefficient use of the Council’s staffing resources.

5. Proposed Way Forward

5.1 The Hub Committee approves the write-off of individual debts more than £5,000 as detailed in Appendix A.

5.2 The Hub Committee notes the debts under £5,000 approved for write-off by the Section 151 Officer under delegated powers.

Implications	Relevant to proposals Y/N	Details and proposed measures to address
Legal/Governance		The relevant billing, collection and recovery processes are governed by statutory provisions linked to the type of debt. Debts will be written-off in accordance with the Council’s Financial Procedure Rules, the Council Tax, Non-Domestic Rate (Business Rates) and Housing Benefit overpayments write off policy and any legislation relevant to the type of debt. All relevant enforcement remedies will be pursued before a recommendation to write-off is made. The relevant powers for this report are contained within the following legislation. Section 151 Local Government Act 1972 Section 44 Local Government Finance Act 1988 Section 14 Local Government Finance Act 1992
Financial implications to include reference to value for money		A clear process for the writing-off of irrecoverable debt represents effective financial management practice. To continue to pursue debt when it is no longer cost effective to do so is an inefficient use of resources. Provision for bad debts is made in the Council’s accounts. The Committee notes that, in accordance with Financial Regulations, the Section 151 Officer has authorised the write-off of individual Council debts totalling £77,279.31 as detailed in paragraph 3. It is recommended that the Committee approves the write-off of the debt more than £5,000 for £29,868.75, as detailed in the exempt Appendix A. The total debts to be written off are £107,148.06.
Risk		The Council Tax, Non-Domestic Rate (Business Rates) and Overpaid Housing Benefit write off policy provides assurance regarding controls and the operational process in recovering debt. It should be recognised, however, that due to the volume, value and nature of annual debt due to the Council there will always be irrecoverable amounts which will be recommended for write-off once all enforcement remedies have been exhausted. A provision for bad debts is made in the Councils’ accounts. The debt recovery policy and the write off policy and supporting procedures are in place to minimise risk.
Supporting Corporate Strategy		Delivering efficient and effective services.
Consultation & Engagement Strategy		There is no requirement to consult.
Climate Change - Carbon / Biodiversity Impact		No direct carbon/biodiversity impact arising from the recommendations.
Comprehensive Impact Assessment Implications
Equality and Diversity		All enforcement action prior to writing off debt is undertaken in accordance with the relevant legislation and accepted procedures. The Council’s approach to dealing with debtors remains fundamentally unchanged, however through formalising policy and procedures we are better able to engage with debtors who have potentially tried to ignore their debts.
Safeguarding		None directly arising from this report.
Community Safety, Crime and Disorder		None directly arising from this report.
Health, Safety and Wellbeing		None directly arising from this report.
Other implications		A bad debt provision is built into the financial management of the Council.

Supporting Information

Appendices:

Exempt Appendix A – Write-offs of individual debts over £5,000

Background Papers:

None

Report to:			Hub Committee
Date:			21 November 2023
Title:			Q3 and Q4 Write-Off Report 2022/23
Portfolio Area:			Cllr Edmonds – Lead Hub Member for Resources
Wards Affected:			All
Urgent Decision:		N		Approval and clearance obtained:			Y
Date next steps can be taken: Upon the expiry of the Call-in period.
Author:	Geni Hotchkiss				Role:	Head of Revenues and Benefits
Contact:	geni.hotchkiss@swdevon.gov.uk