Cabinet
10 June 2013
Agenda Item No______10_______
Debt Recovery 2012-13
Summary:
This is an annual report detailing the council’s collection
performance and debt management arrangements for 2012/13
The report includes a:




Recommendations:
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
Members are asked to:
Approve the annual report giving details of the Council’s writeoffs in accordance with the Council’s Debt Write-Off Policy and
performance in relation to revenues collection.
Cabinet member(s):
All
Contact
Officer,
number, and e-mail:
1.
All
All
telephone Louise Wolsey 01263 516081
louise.wolsey@north-norfolk.gov.uk
Introduction
1.1. The Corporate Debt Management and Recovery Policy at Appendix 1 was last
approved by Members in May 2011. One of the components of this policy is a Debt
Write-Off Policy attached at Appendix 2. This annual report is one of the performance
management measures to provide members with outturn figures for 2012/13 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
Cabinet
2.
10 June 2013
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. Below is 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
%
of
Years
Current
Arrears
Arrears
Included
v Net
(after write –
Debit
offs)
Provision for
Bad/Doubtful
Debt for all
years
2009/10
£1,596,611 £829,249
1.56%
£579,895
2010/11
£1,596,946 £756,064
1.39%
£570,910
2011/12
£1,630,971 £762,241
1.39%
£588,250
2012/13
£2,184,250 £1,221,685** 2.2%
£798,512
2009/10
£203,102
£139,290
0.64%
£107,503
2010/11
£216,850
£151,995
0.73%
£130,880
2011/12
£221,280
£179,044
0.64%
£141,591
2012/13
£467,220
£345,291
1.51%
£279,008
*This is the cumulative arrears (excludes costs) for all years including 2012/13.
** This is the arrears figure as at 31/3/2013. Collection of the 2012/13 debt is ongoing
and £194,230 (16%) council tax and £88,149 (26%) NNDR has been collected since
that date against previous year’s arrears.
The Government re-introduced the Deferral scheme in 2012. The value of deferred
payments is £92,453. This figure is not included in the arrears figures.
Table 2
Cabinet
10 June 2013
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
Net
Debit
at 31st March
Raised
All Years (after
End of Year
write offs)
%
Provision
outstanding
Bad/Debt
against debit
all years
at year end
2009/10
*£1,016,713
£5,213,910
19.50%
£353,654
2010/11
**£816,705
£4,804,262
17.0%
£393,829(a)
2011/12
***827,655
£5,283,458
15.67%
£451,857
2012/13
****761,402
£5,054,143
15.06%
£462.143
2010/11 Housing Benefit Overpayments = £ 487,627
2011/12 Housing Benefit Overpayments = £ 509,403
2012/13 Housing Benefit Overpayments = £594,596
3.2. The arrears figures reflect that 26 debtors with invoice values over £5,000
account for £272,241 (36% of the outstanding debt).




21 of these invoices are Housing Benefit overpayments (HBOP) totaling
£232,671.
2 HBOP are currently in dispute and are at Tribunal stage, totalling
£22,803
10 HBOP are paying by installments, totaling £113,771 - By the nature of
the debt repayment of these will be over a considerable period of time
(arrangements varying from £10- £100 month dependent on individual
circumstances).
The other 9 invoices are at varying stages of recovery.
It is not anticipated that the remaining non HBOP accounts will result in arrears. The
bad debt provision now includes debts with balances greater than £2,000 which are not
over a year old (i.e. raised in 2012/13)
Table 3
for
for
Cabinet
Income
Area
Council
Tax
NNDR
Sundry
Debtors
10 June 2013
Year/Date
Net
Collectable
Debit
2009/10
2010/11
2011/12
2012/13
£53,309,139
£54,588,328
£54,801,832
£55,279,404
Average
Number of Amount
per
Accounts
Account (after
adjustments)
52,281
£1020
52,540
£1038
52,708
£1040
52,905
£1045
2009/10
2010/11
2011/12
2012/13
£20,128,852
£20,901,384
£21,705,544
£22,850,477
5,779
5,868
6,023
6,094
£3,483
£3,562
£3,603
£3,749
£203,102
£216,850
£221,280
£470,930
2009/10
£5,213,910
21,451
£243
£1,016,713
2010/11
£4,804,262
24,157
£199
£816,705
2011/12
2012/13
£5,283,458
£5,054,143
6,801
6,083
£777
£831
£827,655
£761,402
Total of all Years
Arrears
£1,596,611
£1,596,946
£1,630,971
£2,184,250
Table 4
Performance Indicators for in year collection.
Income
Area
2009/10
Council
Tax
2010/11
2011/12
2012/13
Target
2012/13
Target
2013/14
98.4%
98.6%
98.6%
97.9%
98.3%
98.3%
99.2%
99.1%
98.8%
98.4%
98.9%
99.0%
NNDR
3.3. The collection of Council Tax and Non-Domestic rates has been particularly
challenging this financial year. The service converted to a new revenues and benefits
back office, document management and workflow system in June 2012. It was
anticipated that performance would be affected by the data conversion and additional
staff were recruited to assist. However, following the data conversion there were
significant problems with NNDC accessing the data that was held at Kings Lynn. It was
not until January 2103 when the data was returned to NNDC that full working access to
the system was resolved. In addition the economic position and changes to some
people’s welfare benefits will undoubtedly have impacted on collection. Ongoing
recovery of the previous year’s debts will continue. Over 5000 reminders will have been
sent in April & May and over 1,500 summonses.
Cabinet
10 June 2013
3.4.1 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. An important part of debt management is to ensure that bills
are sent out accurately and timely and that council tax payers are aware of any
appropriate discounts, exemptions and benefit entitlement they may be entitled to.
Information sent with the annual bills, the web site, service information provides
information on discounts etc.
Ongoing promotion of DD also forms an important part of debt management 76.4% of
council tax payers are paying by direct debit and 53% of NNDR customers pay by direct
debit.
3.5
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 281 empty
properties of which 170 have a RV over £2,599. 49.
3.6
The Government introduced the Small Business Rate Relief (SBRR) scheme in
April 2005 to give more support to small businesses. Businesses with a Rateable Value
below £6,001 receive a 50% reduction to their charge. Changes to Rating Legislation
on the 1st October 2010 increased the amount of relief granted to 100%, this will
continue until 31 March 2014 when the relief may reduce back to 50%. We grant SBRR
to 3,307 accounts (54.3%) out of 6,094 business rated properties.
Accounts receiving SBRR with a Rateable Value up to £6,000 = 2,945
Accounts receiving SBRR with a Rateable Value £6,001 to £12000 = 362
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
2012/13 (£)
Income Area
2008/9(£)
2009/10(£)
2010/11(£)
2011/12(£)
Council Tax
NNDR
Sundry Debtors
includes
Housing Benefit
write-offs
Housing Benefit
118,310
78,100
63,468
65,557
76,111
62,783
159,759*
71,320
47,423
144,803
120,994
33,241
85,614.67
46,165
64,902
29,682
32,440
30,654
16,841
51,688
Cabinet
10 June 2013
Table 6
The table below details the category of debts that have been written off over the year
2012/13.
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(£)
138.32
4.61
17,393.64
5,347.24
53,404.91
2.20
12,694.43
4,898.88
21,044.56
19,334.82
30,144.17
19127.83
0
0
600.21
0
294.98
124.46
2,249.77
1548.06
0
199.17
0
0
0
0
0
3,553.04
0
0
0
1,387.40
85,614.67
704.54
0
0
0
772.26
46,165.25
1732.75
192.14
-2,167.84
1,995.71
0
64,902.34
4.2
Council Tax write offs have decreased in value from last year. Only £3,553 of our
write offs arose due to the debt being impossible to collect, £19,334 was due to
insolvency - something which we cannot control and £53,404 due to absconders.
4.3
National Non-Domestic Rates (NNDR) write offs have decreased in value from
last year.
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.
Cabinet
10 June 2013
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 issues.