Community Voice Councillor Mike Barnes as expressed concerns over the amount of money owed to Stoke-on-Trent City Council.
Councillor Barnes is outraged at the figure of £49.4million of debt that is outstanding to Stoke-on-Trent City Council.
In a question submitted to the full City Council meeting tomorrow [Thursday].
Councillor Barnes asked:
"Please could you detail the total amount of uncollected debt (debt not written off from previous years including the year 2009/10 owed to the council or which the council is responsible for collection (ie business rates), at the end of the last financial year 2009/10. Please could you break it down into headings – for example – rent arrears, counciltax, business rates, etc
The Council’s response is:
The following table shows, as at the 31 March 2010, the total value of the amount to be collected across the various categories of fund, the level of uncollected debt and the level of bad debt provision set a side to offset any debts that are subsequently deemed irrecoverable and are therefore recommended to be written off:
|Details of total amount of uncollected debt as at 31/03/10|
| ||Value of Debit Raised|
|Outstanding debt as at 31/03/2010|
|Bad Debt Provision|
|Net Debt as at|
|Council Tax arrears City Council’s element||76.0||14.1||8.9||5.2|
|Council Tax arrears Police’s element||0.0||2.2||1.4||0.8|
|Council Tax arrears Fire’s element||0.0||0.8||0.5||0.3|
|National Non Domestic Rate Arrears ||81.0||9.8||6.6||3.1|
|Housing rent arrears||55.0||2.6||1.1||1.5|
| || || || || |
|Grand Total|| 302.0||49.4|| 24.0||26.4|
As the table shows, the total net debt (total debt less bad debt provision) across the 4 categories of debt was £26.4m at the end of the 2009/10 financial year. This is against total revenue collectable of £302m, and therefore represents less than 9% of the total revenue due.
It is important to stress that for some of the arrears, notably General Debtors, this will be based on a “snap-shot” in time i.e. the balance sheet date and the overall level of debt can vary considerably at any given time e.g. the total debt may include single large sums owed by 1 or 2 debtors that are recovered soon after the debt has been raised.
Also, the total level of arrears must be considered against the available bad debt provision, and the City Council has been prudent in setting aside reasonable and appropriate levels of bad debt provision to mitigate against non-recovery. We have of course over the last 2 years experienced the worst economic downturn in a generation, and whilst it is difficult to ascertain definitively the impact this may have had (and continues to have) on the level of arrears, it is almost certain that it will have had some impact. However, it is recognised that greater focus is needed on not only recovering arrears but preventing the arrears in the first place.
Councillor Barnes asked:
What is being done to secure recovery of this debt?
The Council responded:
There are various streams of work underway to recover and reduce the level of arrears across the various debt categories. Of particular note is the intervention work currently underway within the Revenues and Benefits Service, which is currently in the “re-design phase” and which is incorporating a focused piece of work on debt reduction and recovery.
Whilst this work will continue for some time, a significant amount of effort has already been invested in tackling debt over the last 18 months and some specific examples of the work that has been undertaken are as follows:
Prior to 2008 the focus of the Council Tax Service was on achieving the Council tax in-year collection target. At the end of each year, any uncollected debt was given a lower priority and over time this debt increased with little management action taken to recover it or write off un-collectable amounts (and this has been the case for other types of debt).
A dedicated team was established early in 2008 with a focus on tackling and reducing former year’s arrears, and this was successful in putting in place measures to recover almost £1m of debt.
The revenues team has also made a number of changes to its processes and procedures with the aim of simplifying the way in which customers can make payments and of strengthening the Councils debt recovery arrangements:
- Payers now have a much greater choice of payment date i.e. any day of the month – previously they could only pay on certain days within the month and all customers now have the option of paying weekly
- We have introduced a paperless Direct Debit system which means that the Direct Debit is set up with the customer over the phone or counter, rather than sending out a mandate and inputting information once returned
- Money matter surgeries take place two afternoon’s per week with the Citizens Advice Bureau
- Information is sent to customers at the summons stage, to encourage them to set up an instalment agreement to pay their arrears over an appropriate timeframe
- The Council has implemented a “forced sales policy” on empty homes, with the sale proceeds being used to clear outstanding council tax liability.
- Training has been provided to the Call Centre and front-line staff enabling them to offer more flexible payment terms to suit customer needs.
- Training has also been provided to internal departments and external organisations to increase their knowledge on discounts and exemptions
- Approximately 10 cases were taken through the committal process last year; the first ones for four years.
The way in which the authority collects housing rents is currently under review as part of the Revenue and Benefit Service intervention. This intervention will include a full review of processes and procedures associated with rent payment and recovery of arrears.
Before the intervention began a complete review of the rent arrears process had been undertaken and timescales for contacting tenants were reduced so that tenants are aware at the earliest opportunity that they need to make arrangements to pay their rent.
Improved management information is now being extracted from the housing rents system and this is being used to investigate the reasons why tenants get into rent arrears. There will always be a small percentage of tenants who will not pay their rent and it is essential that the appropriate recovery action is carried out as swiftly as possible. Early identification, together with providing support and advice particularly around benefit issues needs to be provided at all stages for those who genuinely cannot afford to pay their rent. Benefit Services are currently carrying out a benefit take-up exercise targeted at council tenants who have rent arrears and are not currently claiming housing benefit to assess their individual circumstances.
A comprehensive examination of former tenant debts is also underway to identify any cases which have little or no prospect of being recovered (for example where the tenant has deceased) these will be written off and reported in accordance with Financial Regulations. A balanced judgement needs to be made on the costs of collection of these former tenant cases. Options for taking action in the County Court will be investigated to evaluate whether the costs of taking such action would be cost effective. It may require a review of the current policy and provision for bad and doubtful debts for former tenant arrears.
Councillor Barnes asked:
How much debt has been written off across all departments and accounts (eg HRA) in the last five years?"
The council responded:
| || || || || || || |
|Council Tax ||248,416||304,738||88,012||56,331||3,814,772||4,512,269|
|HRA rent arrears||146,324||130,979||136,534||-8,158||218,039||623,718|
| || || || || || || |
As previously outlined, the amount of arrears written-off has been historically low.
In September 2009, the Council went live with its new Council Tax system, and as part of the “data cleansing” exercise to transfer information from the old system onto the new, £3.8m of Council Tax arrears were written off by the Director of Central Services (under his delegated powers but subsequently reported to Cabinet), along with £0.8m of other arrears.
A report on amounts in excess of the Directors Delegated powers is due to be presented shortly to Cabinet. This will recommend that a further £370,531 of arrears are written off and this process will now be conducted on at least an annual basis.
CounCillor Barnes was not satisfied with the City Council’s response. He said:
The resonse to my question on debt to the council – an incredible £49.4 million! and an admission that over the last few years little has been done to address this matter other than to right it off! The Cabinet on the council recently received a report on finance which is in the minutes of the full council meeting – how much did the cabinet discuss the matter – no discussion took place at all. What credibility does a council have in making massive cuts in services to people who pay their council tax – whilst it can’t even be bothered to make sure it collects all it is due – £49m is almost equal to the amount of total council tax in Stoke-on-Trent for one year.
Cllr Kieran Clarke, Cabinet Member for Resources responded to Cllr Barnes’s concerns in an Audio Interview which can be heard below..