Cabinet
6 June 2011
Agenda Item No______8_______
DEBT RECOVERY 2010-11
Summary:
This is an annual report detailing the council’s collection
performance and debt management arrangements for 2010/11
The report includes:
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Recommendations:
Members are asked to:
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Cabinet member(s):
All
Contact
Officer,
number, and e-mail:
A summary of debts written off in each debt area showing
the reasons for write-off and values.
Collection performance for Council Tax and NonDomestic Rates.
Level of arrears outstanding
Level of provision for bad and doubtful debts
Approve the annual report giving details of the Council’s
write-offs in accordance with the Council’s Debt Write-Off
Policy and performance in relation to revenues collection.
Approve the revised Corporate Debt Management and
Recovery Policy
Ward(s) affected:
All
telephone Louise Wolsey 01263 516081
louise.wolsey@north-norfolk.gov.uk
1.
Introduction
1.1.
The Corporate Debt Management and Recovery Policy at Appendix A was last
approved by Members in May 2010. One of the components of this policy is a
Debt Write-Off Policy attached at Appendix B. This annual report is one of the
performance management measures to provide members with outturn figures for
2010/11 for the following:
• A summary of debts written off in each debt area showing the reasons for
write off and values.
• Collection performance for Council Tax and Non - Domestic Rates
(NNDR).
• Level of arrears outstanding
• Level of provision for bad and doubtful debts
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6 June 2011
1.2.
The Policies have been revised to reflect:
• organisational changes in Sundry Income
• the introduction of debt relief orders
• increase in write off authorisation for team leaders from £10 to £25 .
2.
Background
2.1.
Writing off bad debts is a necessary function of any organisation collecting
money. The Council is committed to ensuring that debt write offs are kept to a
minimum by taking all reasonable steps to collect monies due. There will be
situations where the debt recovery process fails to recover some or all of the debt
and will need to be considered for write off. The Council views such cases very
much as exceptions and this report identifies those debts.
3.
Performance
3.1.
Tables 1 and 2 below provide a summary of the Council’s three main income
streams and the level of debt associated with each, for the last four financial
years.
Table 1
Income
Area
Council
Tax
NNDR
Year/Date Total
Arrears at
31st March
All Years
(after write
offs)*
Current
Years
Arrears
Included
(after write
–offs)
% of
Current
Arrears
v Net
Debit
Provision for
Bad/Doubtful
Debt for all years
2007/8
£1,295,671
£744,300
1.51%
£549,983
2008/9
£1,365,630
£731,840
1.41%
£482,539
2009/10
£1,596,611
£829,249
1.56%
£579,895
2010/11
£1,596,946
£756,064** 1.39%
£570,910
2007/8
£155,072
£92,828
0.50%
£101,661
2008/9
£194,830
£131,029
0.67%
£117,882
2009/10
£203,102
£139,290
0.64%
£107,503
2010/11
£216,850
£151,995
0.73%
£130,880
*This is the cumulative arrears for all years including 2010/11.
** This is the arrears figure as at 31/3/2011. Collection of the 2010/11 debt is ongoing
and £86,000 (over 11%) has been collected since that date against last years arrears.
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6 June 2011
Table 2
Table 2 shows the level of sundry debt outstanding at the year end and the element of
that debt which is attributable to Housing Benefit Overpayments being collected by
invoicing customers.
Income Area
Sundry Income
(includes
HB
Overpayments
Sundry Income
(includes
HB
Overpayments)
Sundry Income
(includes
HB
Overpayments)
Sundry Income
(includes
HB
Overpayments)
Year
Total Arrears
at 31st March
All Years
(after write
offs)
%
Net Debit
Provision for
outstanding
Raised
Bad/Debt for
against debit
End of Year
all years
at year end
2007/8
*£919,673
£5,096,008
18.04%
£453,220
2008/9
**£1,053,125
£4,496,712
23.42%
£385,612
2009/10
***£1,016,713
£5,213,910
19.50%
£353,654
2010/11
*****£816,705
£4,804,262
17.0%
£393,829(a)
* 2007/08 Housing Benefit Overpayments =
** 2008/09 Housing Benefit Overpayments =
*** 2009/10 Housing Benefit Overpayments =
**** 2010/11 Housing Benefit Overpayments =
3.2.
£ 347,452
£ 440,561
£ 427,827
£ 487,627
The arrears figures reflect that 25 debtors with invoice values over £5k account
for £351,093 (43% of the outstanding debt). Seventeen of these invoices are HB
overpayments totalling £ 196,343. Four of which were produced in 2010/11, each
with a value greater than £10k are currently in dispute and are at Tribunal stage.
By the nature of the debt repayment of these will be over a considerable period
of time (arrangements varying from £40- £100 month dependant on individual
circumstances). Out of the remaining six invoices, three were raised in March
and it is not anticipated that these will result in arrears.
(a) The bad debt provision now includes debts with balances greater than £2k
which are not over a year old (i.e. raised in 2010/11)
Cabinet
6 June 2011
Table 3
Income
Area
Council
Tax
NNDR
Sundry
Debtors
Year/Date
Net
Collectable
Debit
2007/8
2008/9
2009/10
2010/11
£49,425,430
£51,880,516
£53,309,139
£54,588,328
Average
Number of Amount per
Accounts Account (after
adjustments)
51,807
£954
52,061
£997
52,281
£1020
52,540
£1038
2007/8
2008/9
2009/10
2010/11
£18,328,109
£19,809,677
£20,128,852
£20,901,384
5,530
5,650
5,779
5,868
£3,314
£3,506
£3,483
£3,562
£155,072
£194,830
£203,102 *
£216,850*
2007/8
2008/9
2009/10
£5,096,008
£4,496,712
£5,213,910
21,970
22,770
21,451
£232
£197
£243
£919,673
£1,053,125
£1,016,713
2010/11
£4,804,262
24,157
£199
£816,705
Total of all
Years Arrears
£1,295,671
£1,365,630
£1,596,611
£1,596,946
* This figure does not include £96,293 deferred payments carried forward to 2010/11 &
2011/12.
Table 4
Performance Indicators for in year collection.
Income
Area
2007/8
2008/9
2009/10
Council
Tax
98.5%
98.53%
99.4%
99.1%
2010/11
Target
2010/11
Target
2011/12
98.4%
98.6%
98.5%
98.5%
99.2%
99.1%
99.2%
99.3%
NNDR
3.3.
There are no longer national indicators for the collection of Council Tax and Non
Domestic Rates. The performance indicator (PI) is retained as a local PI, and
continues to be monitored monthly.
3.4.
Council Tax and Business Rates have worked closely with colleagues in
Customer Services to mitigate the impact of the closure of the cash office on our
Cabinet
6 June 2011
customers. Promoting the benefits of direct debit payment to both the customer
and the authority has been ongoing throughout the year. In February of this year
the service took the opportunity to link into the national campaign run by BACS in
support of the Marie Curie Cancer Appeal. This was heavily promoted at annual
billing and has been very successful seeing an increase of 1,943 direct debit
payers. Currently direct debit payers account for 68% of council tax payers and
58.6% of NNDR payers.
3.5.
Council Tax have revised working practices to provide a more generic response
to customers contacting the service for either registration or debt enquiries. Other
initiatives introduced to improve customer service and provide a more
comprehensive service have included on line billing. This enables bills to be sent
out
with
confirmation
of
a
change
of
circumstances
e.g.
discounts/exemptions/moves.
3.6.
Self Service via the web has been actively promoted, including targeted mail
shots, for Business Rates and Council Tax. This work will continue throughout
2011/12. Customers can view their account history, receive bills, sign up for
direct debit, apply for discounts/exemptions/ reliefs and notify the services about
change of circumstances. Currently there are approximately 800 users.
3.7.
The empty property relief threshold for business properties was reduced for
2011-12 from £18,000 down to £2,599. Any property with a Rateable Value
above £2,599 is liable to pay the full ‘empty rate charge’. Currently there are 217
empty properties – 166 with a RV over £2,599. 49.
3.8.
The Government introduced changes in October 2010 to the Small Business
Rate Relief (SBRR) giving more support to small businesses. 2,587 out of 5,868
business rated properties receive small business rate relief in NNDC. The
changes made businesses with a rateable value of £6,000 or less exempt from
business rates until 1/10/2012 (following the budget announcement).
Accounts receiving SBRR with a Rateable Value up to £6,000 = 2018
Accounts receiving SBRR with a Rateable Value £6,001 to £12000 = 569
4.
Write-Offs
4.1.
The table below details the actual amounts of debts that have been written off
over the last five years.
Table 5
Income Area
2006/7(£)
2007/8(£)
2008/9(£)
2009/10(£)
2010/11(£)
Council Tax
NNDR
Sundry Debtors
includes
Housing Benefit
write-offs
Housing Benefit
38,614
37,681
42,289
86,369
75,355
30,391
118,310
78,100
63,468
65,557
76,111
62,783
159,759*
71,320
47,423
27,322
12,060
29,682
32,440
30,654
* The write-offs for debtors who can not be traced has increased by over £58,000.
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6 June 2011
A number of factors have influenced this:
• Cases where no details of the debtor are held are passed to tracing agents who
use credit data to trace them. With the impact of the recession credit data is less
reliable than was previously the case which has impacted on the success of
these searches.
• The Council tax team have been increasingly responsive to bad debt cases
through ongoing monitoring of debt and more rigorous monitoring of debts with
the two bailiff firms.
4.2.
Write–offs for bankruptcies has increased by £10,000. The implementation of
debt relief orders has had an impact on this write off category and will continue to
do so as the use debt relief orders increase.
Table 6
The table below details the category of debts that have been written off over the year
2009/10.
Category
Unable to collect
Uneconomic/
bailiff unable to
collect
Debtor deceased
Debtor
absconded
Debtor in
bankruptcy
Or liquidation or
other
Insolvency
proceedings
Detained/Prison
Debt cannot be
proved (conflict
of evidence)
Ill health & no
means
Undue hardship
Debt remitted by
the Court
Irrecoverable
VAT
Debts Reinstated
Other
Costs
Totals
Council Tax(£)
NNDR(£)
Sundry Debtors(£)
33,551
10,282
37
806
6,648
0
7,183
8,507
90,914
108
33,222
49,611
14,189
0
0
0
24
0
1,918
475
0
700
133
0
810
0
0
388
0
0
(618)
0
18,679
159,759
20,605
0
0
0
959
71320
354
704
(21,687)
0
0
47,423
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6 June 2011
5.
Financial Implications
5.1.
The Council is already required to make provision for bad and doubtful debts.
The additional information gained from this report will help improve monitoring
and our ability to consider the appropriateness of the provisions in a more
accurate way.
6.
Equality & Diversity
6.1.
The Debt Management & Recovery Policy takes account of the impact that
getting into debt can have on people and their families, so it also encourages
people to pay, and aims to provide reasonable facilities and assistance for them
to do so.
6.2.
Before writing off debt, the Council will satisfy itself that all reasonable steps have
been taken to collect it and that no further recovery action is possible or
practicable. It will take into account the age, size and types of debt, together with
any other factors that it feels are relevant to the individual case. All write-offs are
dealt with in the same fair and consistent way in line with equality and diversity is
sues.