Agenda item

Executive considered a detailed report which provided the Council’s current position regarding corporate debt as of 31^st March 2023.

The main sources of income for the Council’s General Fund were business rates, council tax, a small number of government grants, and service-related income. The

main source of income for the Council’s Housing Revenue Account was dwelling rent (often referred to as ‘housing rents’). Government grants were paid directly into the Council’s bank account on agreed dates, so it was not necessary to include them on

any of the debtor systems.

Bills for business rates, council tax and housing rents had to be requested, and this was carried out on a relevant system. Legislation was in place for each of these sources which determined the rules of collection.

For service-related income, invoices were raised on the sundry debtor system, which

was a module of the Civica Financial Management System. Examples of types of income included, housing benefit overpayment, trade refuse, industrial unit rent, garage site rent, wardens’ service and alarms, and leisure hire of facilities. This income was reported in two amounts with housing benefit overpayments identified from the rest.

Failure to collect debt would have a detrimental impact on the Council’s financial

position if sufficient bad debt provisions were not in place.

Table 1 in the report provided the sources of income for the Council as of 31^st March 2023, and 2022 for comparison purposes. The figures showed an increase in income billed in the year for all sources. The increase in the NNDR (business rates) income was small because the general national non-domestic multiplier set by the Government to calculate bills was frozen at the 2021/22 level for 2022/23.

Table 2 in the report showed that in 2022/23 arrears had increased for NNDR, council tax, housing rents and sundry debtors, and were the highest they had been in recent years. The cost-of-living increases such as the high inflation rates during 2022/23, had affected arrears for individuals and businesses as they struggled to pay. As always, payment plans had been agreed to help debtors not get into arrears, if possible, however, recovery action would still be taken where necessary. Sundry debtor arrears fluctuated depending on whether large invoices were raised close to 31st March, but not paid until April.

Table 3 in the report showed the bad debt provision for each class of debtor at 31^st March, for the last two financial years, and it was felt necessary to increase the provision again this year. Table 4 in the report showed for 2022/23 the movement since the last financial year in the value of each source of income, the amount that was outstanding as arrears, and the bad debt provision which related to that source of income.

Overall, in 2022/23 the Council had raised on its systems £5.357m (net) more in income. Arrears to the Council had increased by £1.949m but if the reductions in arrears for housing benefit overpayments were excluded, the increase was over £2m. Bad debt provision had been increased by £0.731m.

Indicators for debt collection were monitored through the ‘Perform’ system and reported at quarterly performance meetings. Targets for collecting income and reducing arrears for each class of debt were set and monitored.

The Portfolio Holder for Finance highlighted that as well as the cost-of-living crisis, the pandemic was still playing a part on businesses and individuals’ ability to pay; and repayment arrangements were still being offered where necessary.

Moved by Councillor Clive Moesby and seconded by Councillor Duncan McGregor

RESOVLED that the Council’s Corporate Debt as of 31^st March 2023 be noted.

Reasons for Recommendation

To ensure that Executive are informed of the latest position concerning the Council’s debt.

Alternative Options and Reasons for Rejection

The report was for information only.