District council writes off £1.35m of uncollectable debt

A small district council in Lincolnshire has written off £1.35m deemed as ‘uncollectable’ by officers.

South Holland District Council (SHDC) took the steps after debt assortment efforts failed ends in money owed not being paid.

The uncollectable debt pertains to a variety of completely different monetary issues – together with council tax, enterprise charges, sundry money owed and overpayment of housing profit. These occasions are unfold out over a 15-year interval.

Because the authority collects debt on behalf of a variety of completely different providers, SHDC’s private loss totals £578,000.

Uncollectable debt ‘causes’

Whereas writing off some money owed is inevitable as a result of issues reminiscent of insolvency and deaths, virtually £1.2 million (87%) of this complete equates to 1 unnamed giant enterprise fee payer that went into administration.

It’s understood this enterprise grew to become topic to formal insolvency motion throughout the 2020/21 monetary yr, with the ensuing dangerous debt regarding the 2019/20 and 2020/21 monetary years.

Debt regarding enterprise charges relates way back to 2014/15 whereas the earliest monetary yr contained inside the report dates again so far as 2007/8, and pertains to council tax owed by a person who has died.

Spectacular assortment charges

Whereas Councillor Paul Redgate, portfolio holder for Finance, Commercialisation, UKSPF and Levelling Up, described the monetary hit from uncollectable debt as ‘irritating and disappointing’, the authority can nonetheless boast a powerful assortment fee.

The collectable debt over the 2022-23 monetary yr equated to £87 million and, as compared, the quantity written off was 0.67% of this determine, leaving SHDC with a group fee of greater than 99%.

“It’s irritating and disappointing however we will’t management how companies function,” Coun Redgate mentioned.

“What we have to do is ready out good follow and accumulate monies as we will do and in addition be certain that, if there are any issues, companies get involved as early as potential.

“We’ve acquired to verify we’re prudent financially.

“At a time the place cash is tight, we’re all getting tighter budgets, however we additionally want to verify we place ourselves in the proper approach and tackle challenges.”

It’s understood SHDC’s assortment fee is in step with nationwide image though there are fears that, within the present financial local weather, insolvency could improve.

A report on the uncollectable debt write off shall be mentioned by councillors at cupboard on September 12.

They don’t seem to be the primary native authority to hit the information with debt just lately.

Birmingham Metropolis Council bankrupt

Birmingham Metropolis Council has successfully declared chapter after being hit with a £760m invoice to settle equal pay claims.

The Labour run council mentioned it had issued a piece 114 discover, confirming that each one new spending, except for defending weak individuals and statutory providers, should cease instantly.