Agenda item

Report of the Corporate Director of Resources

The Committee received a report of the Head of Collections and Housing Benefits which set out current debt collections levels for all debt collection across the Council, and for people affected by the changes to the Council Tax Benefits and provided an update on the progress of the review of the Corporate Debt Collection Policy.  A document setting out an extract of equalities data from the Citizens’ Advice Bureau (CAB) project on Welfare Reform Awareness was tabled.

An officer made the following points about the report:

·                    the report provided an update on the measures undertaken to address the concern raised at the Scrutiny Challenge Panel, in November 2011, which focussed on the Council’s debt recovery process;

·                    the 4 main recommendations arising out of the Challenge Panel had been as follows:

-          identification of vulnerable residents and reviewing of their cases;

-          potential integration of all debt recovery services with the central   recovery service;

-          improved communication processes within the organisation and with   external agencies in order to facilitate a greater understanding of the level and impact of debt within the community;

-          improved it signposting for residents affected by financial/debt difficulties to sources of advice and advocacy in the borough.

·                    extensive changes to the benefits system as a result of the Welfare Reform Act of 2012 meant the loss of £8M, affecting approximately 12 thousand households, 7,000 of which previously received a 100% council tax rebate.  This worked out to an average reduction of £660 per household;

·                    the Council had a 97.7% in-year collection rate and a 98.5% overall collection rate over 2-3 years;

·                    in 2013/14, £3.8 m would be passported to residents under the localisation of benefits;

·                    Harrow had some collection challenges ahead as it had made provision for a 70% collection rate, whereas this figure was between 30-40% for most other London authorities;

·                    the council had set up a debt collection Sub-Group, which was working closely with bailiffs, the Citizens Advice Bureau (CAB) and other partner agencies.  It was focussing on the identification of and support for the most vulnerable residents through the following measures: an awareness campaign that included posters, leaflets and articles in the local press; surgeries held in Access Harrow and in Libraries; a telephone awareness campaign aimed at raising awareness and ensuring engagement.  The Sub-Group had agreed a set of procedures to be followed in relation to the debt collection process.  Additionally, debt recovery in relation to those in receipt of adult social care would be considered by Cabinet shortly.  However, the take up rate of the support offered by CAB and the Council among residents to date had been low;

·                    a corporate data sharing agreement was being developed and would be shared with Members once completed;

·                    housing was represented at a number of fora across the borough;

·                    there were increased resources to provide vulnerability support and to deal with the challenges of council tax collection in the future.

The Leader of the Council and Portfolio Holder for Performance, Customer Services and Corporate Services stated that resources were being used in a targeted way and the Council was implementing a light-touch approach when dealing with vulnerable residents.

The Chairman queried the flow chart relating to those eligible for short term allowances.  An officer advised that some arrows had been omitted from the flow chart and undertook to amend the flow chart.

The Chairman asked what measures were in place to ensure that the cost of pursuing non-payers did not exceed the cost of the original debt.  The officer advised that the recommendations from the Debt Collection Sub-Group focussed on a softer approach and summonses were intended as a deterrent and to ensure that residents engaged with the council or the relevant agency.  There was no formal policy in place yet, but a set of procedures were being developed.  Innovative methods such as the use of Experian, charging orders and financial checks would facilitate the debit collection process.

The Chairman asked how the Council was engaging with the 4,950 non-payers in 2013/14.  The officer advised that following consideration of these cases by the steering group, and some proactive engagement work by officers, that this figure had reduced to 3,900.  Data relating to these cases had been analysed and shown that some of these non-payers had changed circumstances and the amount they were liable to pay had to be adjusted and as such they had received new bills with new instalment dates.  Some instalments had not been paid because they were not yet due rather than because of deliberate non payment. Others had not paid because they were exempt, for example pensioners on 10% council tax support.  The Council had used a number of methods to engage with these residents and had offered them advice regarding any benefits they may be entitled to but were not claiming; used internal data and vulnerability criteria to assess their needs, and worked jointly with adult social care and housing to understand why they had not paid and how they could be encouraged pay in the future.

A Member asked what measures were in place to flag up those residents who having paid regularly for a number of years, then failed to pay and whether such cases would be escalated as a matter of course.  The officer stated that the software was not capable of flagging up such cases.  The Council had put the use of committals and bankruptcies on hold.  There was £4.5m owing in arrears plus £1m in collection costs.  In the first instance, officers would look at other possible options rather than resort to the immediate use of external agencies such as bailiffs.  The Council was evaluating all the possible repercussions of the welfare reforms and this would inform future debt collection policy.  The Member stated that the Council should avoid the use of extreme sanctions where possible, particularly since the overall amount of  arrears for some tax payers was small, perhaps only £150.  He added that the processes to be followed should be transparent and formalised and should not depend on the subjective judgement of individual officers.  The Chairman concurred with this view.  The officer stated that the process was evolving and would be reviewed and formalised to ensure a high collection rate was maintained.  The Corporate Director of Resources stated that he would ensure the process was reviewed and would look for check points to be put in place.

A Member asked whether the Equalities Impact Assessment (EqIA) relating to debt collection had been updated and whether vulnerable groups were offered a number of methods and venues to make payments.  The officer advised that some payment methods had been removed, such as the use of giros, however, the implementation of weekly payments, the use of direct debit and an automated telephone payment system were available. Kiosk payments had improved and increased, and additional kiosks might be installed in libraries in the future.  The officer undertook to circulate information relating to the EqIA to Members of the Committee.

A Member asked how residents in his ward, which was one of the most deprived wards in the borough, would be supported if they went into arrears and how they could access the various hardship funds available.  The officer advised that the Harrow Help Scheme and the Emergency scheme and a wider programme of support, which signposted internal and external sources of support, would be available to those in arrears.  There had been an increase from £300k to £1.2m in the funds to help those in rent arrears via Discretionary Housing Payments fund.  Advice about Debt management and credit unions would also be available.    The Chairman requested that a report be submitted to the Committee in due course relating to the effectiveness of the debt collection policies.

A Member asked how non-payers would be flagged up and treated.  An officer advised that current processes were cost effective, in that 80% of the process was automated and 20% carried out manually.  Additionally, the bailiffs had been working closely with the council, had amended their staff training to include awareness of the needs of vulnerable groups and those with mental health issues.  The Council issued 14 thousand reminders and 15 thousand summonses and did not have the resources to integrate safeguarding mechanisms into the debt collection process. 

The Chairman stated that a resident in arrears could visit their Ward Councillor, who could in turn request a review of the resident’s case, however, Access Harrow did not seem to have the authority to do this for residents.  The officer stated that he would look into the possibility of this being done.

A Member asked whether the charges levied by the bailiffs were open and transparent and whether the £125 summons costs could replace the bailiff fee fee and whether this amount covered the bailiff costs.  An officer advised that there had been a tendering exercise with the bailiff company.  The first and second letter fees were prescribed and other areas of reasonable costs had also been specified in the contract.  The bailiffs had agreed to provide some additional services at no additional cost.  Both the Council and CAB monitored these charges and the council sample checked the fees as part of its contract management process and this was reviewed by the Sub-Group. However, it may not be appropriate to use summons fees to cover bailiff costs as Harrow had a budgeted amount it needed to collect from summons fees to offset part of the costs of Council Tax administration, collection and recovery. In certain cases however, officers were exploring the possibility of using such fees to offset bailiff fees, for example regarding council tax payers previously receiving 100% benefit but now having to pay up to 22.5% of their council tax.

A Member asked that in view of the fact that collection rates were consistently high, whether there would be any value in carrying out additional case studies, focussing on lessons learnt and bad debt provision.   The officer stated that this would be reviewed with the Director of Finance and Assurance. The Chairman requested that a report be submitted to the Performance and Finance Scrutiny Sub-Committee regarding this.

A Member asked why autism had not been included as one of the vulnerable categories.  The officer undertook to look into this.

RESOLVED: That the report be noted.