The council has a legal duty and responsibility to the people of Brighton and Hove to ensure that it collects income and recovers debt efficiently and effectively to fulfil financial responsibilities to citizens and maximise its capacity to provide local services.
This Corporate Debt Management Policy aims to promote and support best practice debt management processes across all the council’s main income collection hubs to ensure the council minimises debt and maximises rates of collection. The council will ensure that all collection processes are compliant with legislation (see appendix a) and, additionally, for all stages of collection the council will ensure that the approach will be fair and ethical, with a consistent approach to assisting customers who are experiencing financial difficulty.
Ethical debt collection best practices advocate the principle of early intervention where customers are fully informed and supported in the early stages of debt collection to make sustainable, affordable payments. Where possible, the council aims to proactively prevent debt arising or escalating and will seek to keep citizens informed, and regularly reminded, so that they are fully aware of their obligations to the council and are able to make good decisions that avoid additional costs and pressures.
However, ultimately the council will, where appropriate, escalate recovery actions to recover hard to collect debt. When it does so, it will maintain its fairness principles while applying the correct legal options and ensure any agency acting on its behalf applies the same principles and consideration.
The council will maximise the level of income collected, through accurate and timely billing with effective recovery processes offering multiple, accessible ways to pay. It will further commit to continuously explore new payment methods introduced to the industry, analysing their relevance and ability to meet customer demand, instigating implementation where appropriate. Similarly, the Council will monitor new ways of regularly engaging customers and instigate implementation when it can offer enhanced services via digital contact or access to digital services.
The council will work to deliver a single view of debt solution that enables the council and customer to understand the cumulative debt any household or business with the council. This will enable:
The council will meet legislative requirements in respect of income collection and has an obligation to collect on behalf of other organisations. The Police and Fire Authorities have dependency upon Council Tax collection, and Central Government and the Fire Authority retain a proportion of Business Rates income.
This policy is aimed primarily at individual/household debtors (Personal Debt) but wherever possible and where legislation allows, the principles and objectives of this policy will also be applied to businesses/organisations from all sectors (Business Debt).
Debts applicable are all debts and income due to the Council, including but not limited to:
See Appendix A for more detail, including relevant legislation
The Council will work towards a coordinated approach when dealing with multiple debts and will consider the person’s circumstances, legislation, the level and priority of debt and the potential for financial hardship.
Where the council or its collection agent is pursuing multiple debts, unless the customer advises to the contrary, priority is given to debts where non-payment could lead to loss of the customer’s home or have direct implications upon an individual’s health and wellbeing.
Future State: the Corporate Debt board to define the priority debts based on the above approach and a debt hierarchy to be followed when recovering multiple debts.
The delivery of this policy is overseen and maintained by the Corporate Debt Board, which has senior management representatives from all income and debt collection services across the council and from IT & Digital, Legal& Democratic Services, and Financial as key support services. The board has assigned responsibility for all decision making regarding the management of corporate debt across the organisation, with escalations referred to the Director Property & Finance (Section 151).
Application of the Corporate Debt Management Policy will be in line with the delegated functions set out in the council’s Scheme of Delegation to Officers.
The Corporate Debt Board
The Corporate Debt Board delivers in line with five key principles that are intrinsic to the delivery of an ethical policy, namely to:
These principles are designed to ensure that while there is a financial imperative in debt collection, there is also a public sector responsibility to consider the whole picture and the potential impact of recovery and collection actions upon our citizens.
The Corporate Debt Board also has the primary requirement to:
The Corporate Debt Operational Group is a sub-group of the Corporate Debt board, where debt hub managers meet to collaborate, share knowledge, discuss processes, and best practice. This group make recommendations to the Corporate Debt Board regarding strategic decisions or policy changes.
This function operates to corporately provide the analysis and support to the debt hubs to enable them to deliver optimum performance and best practice. It oversees the management of hard to collect debt, and co-ordinates the management of the debt portfolio and relationships with outside agencies and legal advisory services.
The Corporate Debt Board will review the Corporate Debt Management Policy annually to ensure it remains aligned to strategic priorities and if changes are required, will report to cabinet seeking approval for a revised policy.
This policy underpins our processes and procedures and officers are expected to apply these principles as business as usual. Breaches and non-compliance of the policy will be reported accordingly, firstly by notifying the board, secondly referring to the Chief Finance Officer/S151 where deemed significant and/or recurring.
The delivery of this policy ensures:
Future State: research and analyse the potential usage of new products and techniques enabling early engagement and potential debt prevention
Future State: Assess the viability of new payment methods, analysis of relevance and requirement, deliver implementation projects. Aim to define a list of corporate payment methods, consistently offered across the debt hubs.
Future State: Optimise the value of the single view of debt software to engage with consolidated ethical campaigns and referrals.
*Parking debt/fixed penalty notices/debt incurred by way of fine is normally collected outside of this consideration where it relates to a legal penalty.
This policy aims to adopt fair, ethical, debt collection and recovery practices, including the aspirations to:
The council commits to working with central government initiatives. By aligning with a universal approach to public sector debt, the council will be providing a consistent approach to residents and businesses and operating in a manner that is commensurate with an expansive model of debt collection, if that opportunity arises in the future.
The council will seek to comply with all nationally approved debt recovery pre-action protocols and where complementary to this policy, also seek to comply with best practice protocols. This will include the following (the list is not exhaustive):
Effective use of enforcement agents can also be an important way of recovering debt where the Council is satisfied that there are no other appropriate mechanisms for recovering that debt, and enforcement agents can also play an important role in identifying potential vulnerabilities. We will use enforcement agents to collect debts only where there has been no engagement from the customer or where alternative recovery options have not been successful or are not appropriate. The Council will monitor their practice closely to ensure compliance with our standards and agents should be able to quickly identify vulnerability, referring these cases back to the Council and provide the Council with information that can be used to tailor subsequent action.
The following enforcement measures are applicable to:
The council will not refer council tax debt to enforcement agencies where the debtor is currently in receipt of council tax deduction unless there are exceptional, individual, circumstances identified by the Corporate Debt board.
When no other possible collection routes are available, the council will ensure that any enforcement agent activity meets the highest recognised industry standards of best practice. All service level agreements / contracts for enforcement agent services will reflect those standards. All enforcement agent services will be required to adhere to the standards of this policy. To ensure that the required standards are maintained, all agents/agencies will be required to:
The Council will only begin committal proceedings against any resident for Council Tax debt in the most exceptional of circumstances when all other enforcement options have been exhausted. Any actions of this nature would have to be authorised by the Director of Property & Finance (section 151).
The following enforcement measures are applicable to:
Best practice in collection emphasises the value of pre-enforcement actions and the diminishing use of invasive or punitive collection methods. This best practice is based upon better overall outcomes in terms of debt ultimately collected, and the impact of such measures in terms of stress and the longer-term welfare objectives of supporting households to have a platform of financial stability.
Therefore, the council’s debt collection emphasis is moving to ensuring it exercises a full range of pre-enforcement engagement with tenants to establish affordable, sustainable repayment arrangements and avoids further escalation.
The unlawful evasion of charges, taxation or fines reduces the financial resources available to the council and has a direct impact upon all residents, businesses and other organisations that rely upon council services.
Unlawful evasion or fraud to avoid payment will not be tolerated and where this is identified, the council will, in addition to taking action to enforce payment, seek to impose further penalties or sanctions. This may include prosecution for such offences.
Where this activity impacts upon other public bodies, such as HM Revenues & Customs and other authorities, the council will work with those organisations to seek legal remedy.
Where debts arise through evasion or fraud, the council will seek to recover payment in full as quickly as the law regarding the nature of the debt allows.
Where appropriate, the council will refer matters to the Police for criminal investigation. The council is also committed to fully supporting any investigation initiated by the Police, either in response to a referral or independently.
The council is fully committed to support the National Fraud Initiative (NFI) which uses data matching to identify potential fraud and error with referral to the Police or other crime investigation branches as appropriate.
Any disputes raised regarding the application of this policy should be raised with the Corporate Debt Manager, in the first instance; should the incident be service specific then this will be referred to the relevant council service. If the dispute cannot be resolved, then it shall be dealt with in accordance with the council’s Complaints Procedure.
Any dispute regarding an individual debt will be dealt with in compliance to the legal requirement of the collection of that individual debt. Any such dispute will only stop the continuation of the recovery process or legal mechanism if it is appropriate in the context of the specific legislation.
The council will collect and store personal data for the purposes of the effective billing, collection and recovery of sums due. Data retained for this purpose will be processed in accordance with the Data Protection Act 2018 and stored securely at all times. Data will be shared with agents or contractors appointed by the council for the purposes of the billing, collection and recovery of sums due. Data may also be shared within the council or with external organisations where the law allows and in particular, where it is in the interests of the debtor or where it will prevent fraud or the unlawful evasion of payment of sums due.
Further details can be found on the council's website.
The council has conducted an Equality Impact Assessment (EIA) in relation to the Corporate Debt Policy. (See Appendix c)
The EIA will be refreshed as part of the annual review of the Corporate Debt Policy.
The list below shows the legislation that determines income collection, debt recovery and enforcement activities for debts that are included in the Corporate Debt Policy. The legislation listed is not necessarily exhaustive and the council will use any appropriate legal means to collect income or debt:
Council tax income collection and associated court costs.
Personal
National Non-Domestic Rates collection and associated court costs.
Business
Housing Benefit Overpayments.
Personal.
All service income and debt not collected by other hubs, including:
Personal and business.
Generally, recovery is determined by the Local Government (Miscellaneous Provisions) Act (1976).
Some debt is also covered by specific legislation including:
Rental income collection and recharge debts.
Personal.
Rental income, service charge collection and recharge debt.
Personal.
Parking fine collection and associated court costs.
Personal and business.
Traffic Management Act (2004)
Collection of care charges.
Personal and business.
Care Act (2014)
Collection of leasehold fees.
Personal.
The Service Charges (Summary of Rights and Obligations, and Transitional Provision) (England) Regulations 2007.
The council recognises that where a debt remains unpaid after exhausting all appropriate recovery methods and is deemed to be irrecoverable, or where there are extenuating circumstances, the debt should be written off.
Robust debt recovery policies minimize the need for write-offs. These policies should include effective measures to prevent and manage debt, such as regular monitoring, correct invoicing or billing, and attempting communication with debtors at regular intervals of the recovery process using various channels.
Clearly define the circumstances under which a debt may be considered for write-off. This should include specific criteria based on factors such as the age of the debt (time limited), the debtor's personal and financial situation. These include for example; vulnerability (financial or otherwise), bankruptcy, deceased, absconded or incorrect billing.
Debt hubs should conduct regular reviews of outstanding debts to identify cases that meet the defined criteria for write-off consideration.
This can involve gathering information on their income, assets, liabilities, and any other relevant factors. The assessment should consider the debtor's ability to pay the debt. The availability of external and internal data should be sort.
Before proceeding with a write-off, exhaust all available avenues for debt recovery.
Establish a clear, documented approval process for writing off debts.
Maintain detailed documentation of the decision-making process for each debt write-off. This should include the rationale for the write-off, supporting evidence, and if relevant, any correspondence.
Regularly evaluate the effectiveness of the debt recovery and write-off processes. Identify areas for improvement, such as enhancing debt prevention strategies, consider the use of the latest in technological advances in customer contact. Adopting a culture of continuous improvement helps minimize the need for future write-offs.
Ensure that all debt write-offs comply with relevant legal and regulatory requirements.
It is important to note that debt write-offs should be approached judiciously, considering the impact on public funds and the council's overall financial stability. The goal should always be to recover debts wherever possible, while recognizing that there are circumstances where writing off debts is a necessary step in managing the council's financial affairs.