Agenda item

Report of the Head of Democratic Services

Geoff Walker, Director of Strategic Finance and Lisa Black, Head of Operations at Nottingham Revenue and Benefits Limited, presented the Panel with the following information on the collection of council tax:

(a)  Council tax collectable in 2015/16 after the award of Council Tax Support (CTS) is £112 million. Council tax is collectable from 134,462 domestic properties whereas 35,814 households are currently in receipt of CTS;

(b)  The average liability for a Band A property is £1,139 and the average amount payable by those in receipt of CTS is £228. Nottingham City Council has contracts with 3 separate enforcement agencies that are each held to account and monitored;

(c)  In 2013/14 there were 17,881 liability orders with a total debt value of £10.9 (10% of the collectable debt amount) referred to enforcement agents. In 2013/14 £2.3million was recovered by enforcement agents (2.3% of the collectable debt amount);

(d)  In 2014/15 there were 14,046 liability orders with a total debt value of £9.2 million (8.6% of the collectable debt amount) referred to enforcement agents. In 2014/15 2.2 million was recovered by enforcement agents (2.0% of the collectable debt amount);

(e)  Although only part way through quarter 2 in 2015/16, it is believed the figures will align with previous years. At quarter 2 of 2015/16, there have been 11,079 liability orders with a total debt value of £7.6 million (6.8% of collectable debt) referred to enforcement agents. At quarter 2 of 2015/16 £1 million has been recovered representing 0.9% of the collectable debt amount;

(f)  In March 2015, the Children’s Society published a report into the collection of council tax debt and the affect it has on children and young people. The report made a number of recommendations for local authorities in the collection of council tax. Following this, Nottingham City Council carried out a self-assessment against the recommendations in the Children’s Society report (‘The Wolf at the Door’);

(g)  The report recommended that councils should not engage bailiffs for collecting council tax debt for families with children. In practice, Nottingham City Council uses all available alternatives prior to the use of bailiffs, such as direct deductions from benefits or earnings. The Council has 7,600 households on direct deductions with a debt value of £1.7 million, with a further 10,228 number of accounts waiting for a direct deduction with a value of £3.04 million. There is also an opportunity for arrangements to be made to pay at any point during the recovery period prior to bailiff action is considered;

(h)  The report also recommended that families with children should be given at least one opportunity to bring their account back up to date and have their monthly instalments reinstated. Unfortunately, by law once a tax payer receives a final notice the right to instalments is lost. The Council will however, refer household that are struggling to pay to advice agencies. Council statistics show that 66% of referrals have resulted in alternative arrangements to pay being established and bailiff action having been avoided;

(i)  The Children’s Society also recommended that local authorities should improve the way in which they provide independent advice and support for families with children and vulnerable people who fall behind with their council tax. In response, it was reported that the Council invests £2 million in advice services across Nottingham and has a direct referral route for tax payers to access. The City Council also ensures that the availability of advice is clearly communicated at key stages of the recovery process;

(j)  The Children’s Society recommended that councils should always allow families to negotiate repayments, even when the debt has been referred to an enforcement agency. Nottingham City Council ensures that recovery routes allow citizens to enter into repayment arrangements throughout the process. Strict procedures are already in place with the Enforcement Agents to negotiate payment plans without having to visit a property;

(k)  The Children’s Society also recommended that local authorities should put in place a “breathing space” scheme for families with children under 18, which places accounts on hold while families receive independent and free debt advice. Nottingham City Council ensures that recovery action is placed on hold for 30 days when advice is being provided. The Council can then make the referral direct to Advice Nottingham to support the tax payer with access to advice. The report also suggested that care leavers should be eligible for 100% council tax support until the age of 21. Nottingham City Council’s current Council Tax Support scheme provides for up to 80% support for anyone who is eligible. Formal consultation on the scheme was undertaken when introduced and the decision was taken to introduce a scheme where everyone contributes something;

(l)  The report recommended that court proceedings should not be pursued if a repayment plan for council tax debt has been agreed and is being observed by the family or young person. In Nottingham, citizens are not subject to court proceedings if they maintain agreed payment plans, prior to a summons being issued. If there is a default, the Council will proceed with court action to protect the recovery position with a liability order;

(m)  Finally, the Children’s Society recommended that councils should review their council tax collection policy and include care leavers, families with children under 18 and families with disabled children as vulnerable. Nottingham City Council has developed routines, training and partnership relationships with advice services to ensure that recovery officers are able to recognise potential vulnerability based upon household composition and finances. The contracts that have been put in place with enforcement agents have clear guidance on the steps to be taken in the event that vulnerability is identified and households with financial vulnerability are provided with the opportunity throughout the recovery process to access support;

(n)  Nottingham City Council’s recovery process is based on the value of debt and the stage of recovery. Recovery routines are driven by payment against instalments and agreement plans. The minimum level of debt level that is passed to enforcement agents is £70. The minimum level of debt passed to agents varies across other core cities, for example, Newcastle City Council’s minimum level of debt referred to an enforcement agent is £10, whereas in Birmingham, the minimum level of debt referred to an agent in £150.

(o)  Along the route of recovery, debtors are provided with seven separate opportunities to address their debt and make arrangements for payment and enforcement agent costs are incurred at the 5^th stage of the process (Compliance Notice);

(p)  Throughout the recovery process there is the option for the debtor to indicate that they are having difficulty in meeting the costs. Nottingham City Council has a long standing relationship with debt agencies in the city, such as the Citizens’ Advice Bureau which provides for a direct referral into independent advice (together with a 30 day hold on recovery action). This protocol is maintained throughout the enforcement process;

(q)  Nottingham City Council requires enforcement agents to issue a 14 day notice letter, providing the debtor the option to make an arrangement with them or request an advice referral to a debt agency. This represents an additional step built in by the Council to ensure that the debtor is provided with a further opportunity prior to additional costs being incurred;

(r)  Fees are incurred at three points during the recovery process and Nottingham City Council has negotiated a lower court fee in the process of recovering costs. The court fees which are raised at summon stage are currently, £20 for debts less than £250 and £70 for debts greater than £250. The fees charged by enforcement agents are regulated by the Taking Control of Goods Regulations 2014 and have been set by the Ministry of Justice. Currently, a fee of £75 is payable for each outstanding liability order whereas in the past, one fee would cover multiple liability orders. Previously, Nottingham City Council made representations to the Ministry of Justice raising concerns about the impact this regulation;

(s)  Under the Regulations, the Compliance Notice Fee is set at £75; a visit fee is £235 and the fee for removing and selling belongings is set at £110.