Cherwell District Council’s (CDC) executive committee will next week consider plans for the council to step up its efforts to recover bad debt in the future.
Published: Wednesday, 31st August 2022
The executive will also be asked to write off existing bad debts which the council has exhausted every avenue in pursuing, and for which there is little or no chance of repayment. The council had already made provision for these bad debts, which exceeds the total that would be written off, so there will no impact on services or cost to residents and businesses as a result.
Councillor Adam Nell, Portfolio Holder for Finance, said: “As the council has moved into a new era, working solely for its own residents and businesses, we now have the opportunity to focus even more on pursuing money owed to CDC.
“It is never easy to stop pursuing debtors who owe money to the council, especially as the vast majority of residents and business pay what they owe, but there comes a time where all avenues have been exhausted and it is no longer cost-effective to continue.”
“I am pleased that a new and more vigorous corporate debt policy has been produced, intensifying efforts to recover monies owed to the council. Budget holders in all service areas will review outstanding debts on a monthly basis to monitor progress on debt repayment. There will also be even closer co-operation between the council’s finance and legal departments to pursue debt repayment where a legal approach is required because of non-payment.
“As a well-run public organisation, the council has made financial provision for bad debts, something every organisation has to manage. This more than covers the amount being written off, so through sound management we’ve ensured services will not be affected and there will be no impact on residents or businesses.
“We take our responsibility to collect money very seriously, as demonstrated by the excellent collection rates for council tax and business rates that are much better than some other councils, and in future we will be looking at bad debt on a more regular basis.”
The council’s overall budget includes a provision for bad debt of £1.143m, and the bad debts proposed for write off account for £0.6m, with some of the debts originating more than 10 years ago.
Bad debts involve debtors who have been declared bankrupt, have a business which has gone into liquidation, have died, or left a property without trace and all reasonable efforts to trace the debtor have proved unsuccessful. Money owed to the council can include housing benefit overpayments and a range of sundry debts, including non-payment of council tax and business rates.
In-year collection rates of council tax and business rates are 98.1 per cent and 97.8 per cent respectively, but non-payment takes still takes place, albeit from a small minority.
The sundry debts of £0.6m proposed for write off stretch back more than six years, an average of £0.1m per year. During 2021/22 total sundry debtors invoices of £15.4m were raised. The average of £0.1m is less than 1 per cent of the annual value of invoices raised.
Housing benefit overpayments proposed for write off total £0.2m and stretch over a period of more than 10 years, an average of £0.02m per year. We have already made payments for this in previous years, so there is no cost in writing this £0.2m off. The total value of housing benefit for 2021/22 was £22.5m. The average of £0.02m is less than 0.1 per cent of total housing benefit issued.