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Debt recovery Procedures and Support for Low Income Households
- Meeting of Policy and Resources Committee, Wednesday 12th February, 2020 6.30 pm (Item 152.)
- View the background to item 152.
The Chief Executive presented the report on the Council’s debt recovery procedures and proposals for actions that the Council could take to support low income households in financial difficulty. The first element of the report was to request that the committee agree the publishing of the debt recovery procedure in order to improve accessibility to the information. In practice there was not much discretion as debt recovery was mostly set out in legislation but there was some. The aim was to provide a clear document that was easy to find and follow.
Secondly as report was about debt recovery, the report provided information about debt owed to the Council. Business rates debt has remained relatively steady even though collection amounts had gone up. The Council had adopted government discount schemes to assist small businesses. In contrast the amount of Council Tax had been steadily increasing from 2014 to 2019. Notably the number of debtors had increased significantly since 2013 when the Council Tax Benefit system had changed to Council Tax Support system. National research showed this was not just a local issue, but amongst other factors it was the Council’s policy choices that had contributed to this change.
The report recommended adopting the Citizens Advice Bureau (CAB)/Local Authority protocol for debt recovery. The Council had a duty to collect monies owed and Council Tax debt was the most common debt the CAB saw and people presented late when things were complicated and entrenched. The aim of the protocol was to prevent debt in the first place and to ensure good practice in collection. The Council had been benchmarked against the protocol and performed well and on adoption the Council would work closely with the CAB. It was noted that the council had its own debt collection service, would need to improve the information provided to Council taxpayers, and would need to focus on engaging with debtors to prevent debt escalating. The CAB were supportive of the Council adopting the protocol.
The report also addressed the element of prevention. The Council’s Strategic Plan set out the objective of a Borough that works for everyone, with the aims of tackling deprivation and tackling health inequality and the work proposed would help to deliver those. There was extensive data available with regard to low income households in the Borough. Cost of living was also an important factor for example the affordability of rental properties in the Borough. This was demonstrated through only 1% of shared accommodation and 7% of other rental accommodation being within the maximum housing benefit amount in Maidstone. It was also demonstrated by the high pressure for housing as the number of households on the housing register had steadily risen. The Local Government Association had reported on work to address these issues and identified the benefits to Councils of such action. The report proposed a pilot scheme, funded through grant allocation, to identify and support low income families where the Council could intervene to prevent problems with the effectiveness evaluated later in the year.
The Committee highlighted the need to ensure that the Council recognised the difference between people who could not pay and those that would not pay. The Council was duty bound to recover Council Tax but had choices as to how that was done and could factor vulnerability into that process.
Concerns were raised about the risk of the Council becoming a debt advice service or being seen as a debt advice service as well as being required to collect the debt they were advising on. To address this risk it was important that the Council recognised what it was good at and what its partners were good at to prevent a blurring of responsibility.
The Committee sought assurance on the mechanics of the fourth recommendation to undertake the pilot work on early intervention. It was understood that ‘prevention was better than the cure’ and that the proposal was to invest in data analytics but questions were asked over who would be contacting the vulnerable customers and what actions would be taken. It was noted that the approach would be to use the communities and housing team who had the skills for sensitive contact. Further reports were requested on the mechanics of how the outputs of the data analysis would be used and later for the progress of the scheme.
1. The Debt Recovery Procedure document set out in Appendix 1 to the report be agreed for publication noting that it would be updated appropriately by officers when needed;
2. The findings of the Institute for Fiscal Studies report concerning the impact of changes from Council Tax Benefit to Council Tax Support be considered in Maidstone Borough Council’s review of the current Council Tax Support scheme with proposals for changes to the scheme to be presented to the Policy and Resources Committee in June 2020;
3. The Council should demonstrate its commitment to delivering the good practice in council tax debt recovery by adopting and signing the Citizens Advice Bureau/Local Authority protocol at Appendix 2 to the report;
4. A pilot piece of work be conducted as part of the council’s commitment to an inclusive economy/financial inclusion described in section 2.32 of the report;
5. A report on the analytical outputs and proposed actions be brought back to the Committee; and
6. An evaluation report be presented to the Committee after six months of operation.
- Debt recovery Procedures and Support for Low Income Households, item 152. PDF 115 KB View as HTML (152./1) 127 KB
- Enc. 1 for Debt recovery Procedures and Support for Low Income Households, item 152. PDF 235 KB View as HTML (152./2) 152 KB
- Enc. 2 for Debt recovery Procedures and Support for Low Income Households, item 152. PDF 198 KB