Agenda item

[Tracey Richards, Recovery Manager, to present report]

Witness: Helen Child, Chief Officer, Citizens Advice Wolverhampton,

The report was introduced by Cllr Louise Miles, Cabinet Member for Resources.

The Panel welcomed Tracey Richards (Recovery Manager), Helen Child (Chief Officer, Citizens Advice Wolverhampton) and Claire Nye (Director of Finance) to the meeting.

The report provided an overview of the collection process for council tax in accordance with the collection and debt strategy and highlighted the current initiatives.

The report also described the use of enforcement agents in the collection process.

The Panel understood that there was national concern regarding collection and debt strategies and what appropriate action should be. The Panel noted that there had been a debate in the House of Commons around the issue. 

The Panel considered which area it would be best to focus attention on. The Director for Finance stated that the original remit had been around debt recovery and possibly the use of enforcement agents. It was suggested that there be an initial focus on Council Tax as this was of interest and was a general strategy and could be widened out.

The Panel considered the problem with taking a person to court for being in debt as this often just increased their debt further. 

The Panel considered that any budgeting advice provided should also include representatives from Wolverhampton Homes, noting that they were not regulated to provide debt advice.

If the Council were unable to collect all of the council tax in the year it becomes due, then this directly affects the Council’s budgets. It was however stated that most of the monies not collected in Year 1 were collected by Year 5.

The Panel agreed that there was a need to ensure that the Council respected the problems that people had so debt support was absolutely crucial. There were however also cases where people with adequate resources did not pay.

The Recovery Manager stated that the Council was reviewing the way it communicated with customers regarding council tax, recognising that customer behaviour was changing. Some authorities had reported an increase in customer engagement using texting, emailing and automated voice messages, which was being considered initially as a pilot by the Council.

The City of Wolverhampton Council was one also of 29 local authorities undertaking a pilot where council tax data was matched with Her Majesty’s Revenues and Customs (HMRC) to identify employment and latest address information. This would enable deductions to be taken directly from their earnings where vulnerability was not identified. The pilot was for 4,000 accounts which had a combined arrears value of £8.5 million. The Recovery Manager suggested a progress report on the impact of the HMRC pilot scheme could be presented to a future meeting of the panel.

The Cabinet Member agreed that collection was a balancing act and she was keen to look at whether the Council was signposting people effectively to the help that was available.

The panel expressed concern regarding liability orders and stated that when the cost of the enforcement agent was passed onto the debtor, then the original debt could grow quickly. The Recovery Manager advised the panel that there is a compliance charge of £75 for each liability order passed to the enforcement agents, with additional costs charged if progressed to enforcement stage.

The panel commented that it was thought correct that they should be charged but that it would be a kinder approach if people knew they would be charged from the start. People were often in debt for a reason. People did not generally withhold funds because then wanted to but because they could not pay, and the Council needed to consider how it could help these people to pay and to stop them getting into further debt.

Cllrs considered that early prevention was best and that it would be useful to understand which actions resulted in successful collection. 

It would also be useful to see the outstanding balance over a longer time period to see if this was going up or down and why.

The Panel queried whether there was any work being done to support people who were not claiming their entitlements as this could add to numbers going into debt.

The Cabinet Member stated that the government had given the Council the power to raise income through council tax, so it was the Council’s responsibility to collect it. It was often the same households year on year who were not able to pay.

The Recovery Manager stated that when the level of debt is at a lower level, there were reduced fees when issuing the summons, so that it was proportionate to the level of debt. The aim was to try and get people into the habit of paying; it was a priority debt and there were high repercussions for a household if they did not pay.

The Panel noted that attachment orders were a good idea as they could consider earnings and expenses. The Recovery Manager confirmed that there was a priority for attachment orders.

Some Cllrs considered that it might be useful to look at collection rates and debt recovery for people owing business rates as well as.

Mrs Child explained that the Citizens Advice Bureau was looking at both in work and out of work indebtedness as volatility of income was one of the main determinants along with zero-hour contracts and flexible working.

It was stated that it was generally the same households that were unable to pay with people with multiple years of council tax debt. This debt was the single biggest debt both in value and in the number of people who approach Citizens Advice. The change in council tax benefit to a council tax reduction scheme had made the system more complex and the spike continued to rise as universal credit made it even more complicated (about 50% of those in debt were also claiming universal credit); there was often nothing left after paying the bills to meet basic needs.

Housing costs were also wrapped up in universal credit, so people were not making a claim when they could, and it was one of the biggest unclaimed entitlements. There was a need to try and get social landlords to help education tenant regarding this. It was confirmed that advice was included in the council tax demands to encourage people to seek support and claim reductions.

The Panel considered the issue of Houses in Multiple Occupation where students did not have to pay council tax. The Panel considered that this could be an issue as landlords made extra money by splitting houses up and not paying council tax. The Director for Finance confirmed that this was national policy but that the Council was aware of where all of these properties were.

It was noted that the Local Government Association was looking into this issue.

The Recovery Manager confirmed that the Council did work with Wolverhampton Homes, through the money smart team, around discretionary housing payments.

The Panel considered that it might be interesting to look at where multiple debts occurred with a focus on council tax and business rates.

Resolved:     

1. That the arrangements included in the Collection and Debt Strategy for council tax arrears be noted.

2. The Recovery Manager to present a report to the panel on key findings from the HMRC pilot and also work done to support people with multiple debts, including business rates, to a future meeting.