Agenda item

Report 1            Proposal to Create a Single Debt Collection Service (see pages 11 to 17)

Report 2            Proposal to Create an In-House Bailiff Service (see pages 18 to 27)

Report 3            Proposal to Carry Out More Proactive Work Prior to Referring Debts to Bailiffs (see pages 28 to 34)

Report 4            Summary of Outcomes from the Scrutiny Review (see pages 35 to 43)

Further to Minute No. 146 of 2^nd December, 2009 Cabinet meeting, the Director of Internal Audit and Governance submitted four reports on debt recovery.

Report No 1 – Creation of a Single Debt Recovery Service

Of the 112,000 Council Tax payers in Rotherham and 20,000 housing tenants, less than 500 residents had significant debt on both their rent and Council Tax accounts.  In 2009/10 there were approximately 30 formal complaints received by the various Services relating to debt collection of which only 7 were upheld.  In proportion to the number of payers, the number with significant multiple debts was small and the number of complaints even smaller.

The report set out how the current arrangements between the respective Services for co-ordinating their work relating to residents with significant multiple debts could be developed to achieve the objectives of the Scrutiny recommendation without requiring full consolidation of existing Services which could have significant financial and operational implications.

Attempts had been made to identify any authority that had combined the collection of Council Tax, sundry debts and rents.  Scrutiny Services had also been unable to find any authority using a single collection point.  The Programme Director for Finance at the LGA had stated that it was not uncommon to have Council tax, sundry debts and business rate collection under 1 roof, however, he could not name any authorities that had included rents in the arrangement.

Of particular significance was the fact that Rotherham’s performance in collecting debt was exemplary under the existing arrangements and any reduction in current performance would create a detrimental impact on the Council’s overall budget.

Resolved:-  (1)  That the findings and conclusions of the Review be noted.

(2)  That Debt Collection Services improve the communication and co-ordination of debt recovery action relating to significant multiple debts, as opposed to the consolidation of existing services, be supported.

Report 2 – Bailiff Services

The comparison of existing charges to both the Council and customers with estimated costs of an in-house service, suggested that the Council would have to subsidise any internal service by approximately £88,404 per year or charge customers more than was currently the case for the recovery of debt.  The creation of an in-house service would also involve set up costs of approximately £76,765.

In considering any alternatives it was noted that the Council’s current arrangements, which involve the use of external bailiffs, worked very effectively.  The Council’s Council Tax and NNDR collection rates were amongst the best in the country.  The creation of an in-house service could adversely affect the Council’s income collection rates, at least in the short term.  If this happened, there would be a reduction in Council Tax collected to pay for Council services.

The Scrutiny review recommendation has had a positive impact.  Whilst the number of formal complaints received by the Council about bailiffs was low, as a result of the review quarterly forums had been established between the Council, bailiffs and advice services to enable any concerns to be addressed in an open and constructive way.  This should improve the customer relations element of existing arrangements.

It was therefore recommended that the Council should continue to work with bailiffs to make the services provided to customers’ as sympathetic as possible in the circumstances.  It was also recommended that the Council continue to work as proactively as possible with debtors, to prevent cases from being referred to bailiffs.

Resolved:- (1) That the findings and conclusions from the review of the business case for creating an in-house bailiff service be noted.

(2) That the recommendation to continue to work closely with bailiffs and advice services, rather than to establish an in-house bailiff service be supported.

Report 3 – Additional effort to contact debtors prior to referral of cases to bailiffs

A pilot had been carried out on 97 council tax cases about to be passed to bailiffs.  This resulted in a small amount of additional council tax being collected and agreement of payment arrangements with half of the sample group.  However it was noted that two thirds of the residents making payment arrangements later defaulted on the agreement within one month of making it.  In these cases, referral to bailiffs was delayed, and with it, the chances of the prompt recovery of debt.

The pilot demonstrated benefits including identification of vulnerable residents or residents potentially entitled to benefits or discounts and identification of vacant properties.

In order to attempt to contact approximately 900 relevant cases per year prior to referring these to the bailiffs, RBT would have to engage one extra collection officer at a cost of £29,000.  There was currently no budget available to meet these costs and this requirement would have to compete with other Council priorities.

Resolved:- (1) That the findings and conclusions from this pilot involving taking additional steps to contact residents owing Council Tax prior to the Council referring debts to bailiffs for recovery be noted.

(2) That the recommendation to not invest in additional proactive activity at this time be supported.

Report 4 – Scrutiny Review of Debt Recovery

A large number of positive outcomes had been achieved from the review, including:

• The production of a customer focused corporate debt policy
• Better information on where to get help with debt and procedures for helping vulnerable residents
• Better co-ordination of debt collection
• Closer working with and monitoring bailiffs

These outcomes would both improve the services managed by the Council and result in a fairer and more sympathetic approach to the collection of debt.

Resolved:- That the positive outcomes achieved from the scrutiny review of debt recovery arrangements be noted.