Agenda item

The Committee considered the Income and Debt Management update.

In the ensuing debate, the following points were raised:

·         Mark Sanders undertook to circulate an unanonymised list of top 20 debtors to members. He added that since the report was written, a further five items of long term debt had been collected totalling approximately £1m

·         There appeared to be a significant amount of debt that whilst identified to an individual debtor, further analysis was needed to assign the income to an individual debtor invoice as the amounts received did not match the amounts outstanding precisely. It was important that the Council was aware of which accounts were outstanding to enable debt collection processes to be run effectively

·         How many debts had led to litigation action and how well prepared was the Council to undertake such action? Mark Sanders responded that the Council was taking a serious approach to litigation and would take legal action where necessary. There were sensitivities around certain cases for example where a service user had passed away. Resources had been invested into legal services and there were 20-30 cases ongoing. The work was at an early stage and should pay dividends over time

·         How did the provision for bad debt write-off relate to income and debt management work? Mark Sanders indicated that bad debt provision was held in a separate register

·         Did the Council have a system for assessing the risk associated with an individual debt for example the ability to recover that debt? Mark Sanders commented that the top 20 debts had been arranged on a numerical not risk basis. At present, there was not the available information to be able to provide a risk-based assessment of debts. The introduction of a financial appraisal programme would lead to a clearer understanding of why debts were being raised in the first instance and why they could not be paid up-front

·         In response to a query about the £3m increase in debt write-off, Mark Sanders indicated that the underlying debt would be smaller if all debts were written off to the extent expected

·         A further column would be useful in the table of top 20 debts set out in the report which included comments on actions being take, for example where projects plans were in place

·         At what point did the Council determine that it was not appropriate to continue to provide a service until a debt had been paid? Mark Sanders commented that the Council requested payment within 30 days of the submission of an invoice. There were certain sensitive areas where it would not be appropriate to withdraw a service. The Council could take an approach whereby it would not pay for a service until the particular debtor paid this Council’s debt

·         The Chairman welcomed the progress made in recognising the problem and then tackling long term debt with the creation of a centralised finance team

·         What actions were being taken to address the £6m long-term debt that was outstanding over 12 months old?  Michael Hudson advised that these debts were up to seven years old and in some cases, there was little chance of recovery. There could be a point reached where a £2k debt might cost £3k to recover and at that point the bad debt provision would be actioned. However, he emphasised that this £6m of outstanding debt remained a focus of the debt recovery team.

RESOLVED that the Income and Debt Management report be noted.