Agenda item

The Deputy Section 151 Officer presented the report to the Committee.

The main sources of income for the Council’s General Fund (GF) 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 (HRA) was dwelling rent, often referred to as ‘housing rents’.

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 separately from the rest.

Table 1 of the report detailed the sources of income for the Council at 31^st March for the two financial years 2023/24 and 2024/25 for comparison:

The figures in Table 1 showed an increase in income billed in the year for most sources.  The reduction in income from housing benefit overpayments was good news – less claimants had received too much benefit, resulting in the Council having less income to reclaim.

The decrease in the sundry debtor’s income was almost certainly due to the Dragonfly Companies’ invoices raised being less in 2024/25 now that the arrangements with both companies were established.

Debt management was how the Council managed its arrears and debtors.  Table 2 of the report detailed the level of arrears for the Council at 31^st March for the two financial years 2023/24 and 2024/25:

The figures in Table 2 showed arrears had increased in 2024/25 for National Non-Domestic Rates (NNDR), Council Tax and sundry debtors.  Individuals and businesses were still struggling to pay, depending on their individual circumstances – payment plans had been agreed to help debtors not get into arrears if possible.

The current levels of arrears for NNDR and Council Tax were the highest they had been in recent years, and sundry debtor arrears fluctuated depending on if large invoices were raised close to the 31^st of March of the financial year but not paid until the April of the following financial year.

For the last 4 years when the impairment allowance levels had been assessed at year’s end, the Council had increased them by over £3m in total (as a result of the financial effect of the COVID-19 Global Pandemic (the ‘Pandemic’) and Cost of Living Crisis (for both businesses and individuals)).

Table 3 of the report detailed the provision for impairment for each class of debtor at 31^st March for the financial years 2023/24 and 2024/25:

As a local authority, it was necessary to have a debt collection process that adhered to legislation but ensured the maximum amount of income was collected.

The Council’s debt collection processes had operated as normal for 2023/24 and 2024/25, but it was clear the Pandemic and Cost of Living Crisis had influenced business and individuals’ abilities to pay (as the arrears levels still demonstrated).

For 2024/25, indicators for debt collection were monitored through the ‘Perform’

system and reported at the quarterly performance meetings where any areas of concern were raised.  Targets for collecting income and reducing arrears for each class of debt were set and monitored.  The performance data on debt collection was also reported quarterly to the Executive for information where any areas of concern.

Table 4 of the report detailed the movement since the financial year 2024/25 in the value of each source of income, the amount that was outstanding as arrears, and the impairment allowance which related to that source of income:

Overall, in 2024/25 the Council had raised £6.018m (net) more in income.  The arrears had increased by £0.575m but if excluded any reductions in arrears, the increase was £0.813m.  Impairment allowances had increased by £0.662m (net).

The Council was required to write-off debt as soon as it was deemed uncollectable – this was to ensure the correct value of arrears was included on the Council’s balance sheet at 31^st March of each financial year.  The Council’s Constitution allowed the Director of Finance & Section 151 Officer, ‘after consultation with the relevant Portfolio Holder, to authorise the write-off of bad debts up to an approval limit of £2,500’.

The Executive approved the write-off of bad debts which were individually over £2,500 on receipt of a report, during the financial year.  Table 5 of the report showed the value of bad debts written off over the previous financial year 2024/25:

In all cases, every attempt was to be made by the Council (and agencies working with the Council) to collect the outstanding debt before a write-off was proposed.

Compared to the previous financial year, the Council had written off £0.087m more during 2024/25 – this was mainly for Business Rates and Council Tax arrears.

This debt was proving more difficult to collect as some businesses and individuals changed location and country more so than in previous years, making them harder to trace.

To a question on the impairment allowance levels increasing to over £3m in total, the Portfolio Holder for Resources reiterated that the Council pursued all debts when possible, though the aftermath of the Pandemic was still being felt.  Numerous companies had also liquidated in that time, though the Council made all attempts to trace existing companies.

In conclusion, many individuals still struggled to pay Council Tax and companies Business Rates – it was important to be considerate on individual circumstances and work cooperatively to collect arrears, but it was equally important to continue chasing arrears.

A Member noted that in previous years the Council could be very successful in collecting arrears and in other years not as much.  The Pandemic was also historically behind the Council and it was important to reduce the Council’s £3m impairment allowance levels when possible.  The Portfolio Holder was thanked for efforts made on this work.

The Portfolio Holder for Resources did not want the Council to lose capital and sought to reassure the Committee it was important to reduce debt and bring in all available income.  The Council was also open to any / all ideas in the collection of debts from the Committee and Members.

Moved by Councillor Sally Renshaw and seconded by Councillor Janet Tait

RESOLVED that the Finance and Corporate Overview Scrutiny Committee note the report concerning the Council’s Corporate Debt as at 31^st March 2025.