Subject: Corporate
Debt Management Policy
Date
of meeting: 20 March 2025
Report of: Cabinet
Member for Adult Social Care, Public Health & Service Transformation
Contact
Officer: Name: Graham Bourne
Tel:
01273 291800
Email:
graham.bourne@brigthon-hove.gov.uk
Ward(s)
affected: All
For general release
1.1
The council’s Corporate Debt Management Policy sets out the council's
ethical approach to effectively collecting income and the recovery of
outstanding amounts due to the organisation.
1.2
The council’s Corporate Debt Management Policy is reviewed annually to
ensure it reflects public sector best practice. This year it is recommended
that the policy is significantly restructured and updated to reflect latest
research evidence and ethical collection practice to provide assurance that, while
the council is vigorous in performing its duty to collect public debt, it is
equally diligent in doing so fairly and proportionately in keeping with its
stated ethical principles.
2
Recommendations
2.1
That Cabinet approves the revised Corporate Debt Policy as Appendix 4
and agrees that it is put into practice with effect from 1 April 2025 to
replace the policy last updated in 2021.
3
Context and background information
3.1
The council has a legal duty and responsibility 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.
3.2
The Corporate Debt Management Policy aims to promote and support best
practice debt management processes across all of the council’s main income
collection hubs to ensure the council minimises debt and maximises rates of
collection. The policy aims to ensure that all collection processes are
compliant with legislation and, additionally, for all stages of collection the
council adopts an approach that is fair and ethical, with a consistent approach
to assisting customers who are experiencing financial difficulty.
3.3
In creating and maintaining the policy, officers regularly monitor the
policies produced and updated by other authorities and monitor pilot approaches.
and research, including case studies provided by the Local Government
Association. The re-writing of the council’s policy draws on progressions and
refinement of other authorities’ approaches to ensure Brighton and Hove remains
at the forefront of best practice.
3.4
The technology that enables the council to effectively contact its
customers and monitor and manage its debt portfolio is also continuously
changing. As it does so, the way households respond, and their expectations of
the service provided changes too. The policy has been updated to support the
council’s adoption of new technologies while ensuring the needs of every
customer is still considered.
3.5
The policy supports the progression of using data analysis to understand
individual household circumstances, assess their ability to affordably meet
their financial obligations, identify potential entitlements to benefits and
prioritise where support and advice can be most effectively applied. Intervening
early in the debt recovery process is not only beneficial to those individual
households requiring support but also through establishing sustainable
repayment arrangements ultimately results in better collection performance.
3.6
The policy clearly defines in what circumstances debt will be escalated
and the controls in place to sure all enforcement action, whether action by the
council or agencies on its behalf, operate in full compliance with the law and
relevant regulations and fully comply with the ethical requirements of the
policy.
3.7
The policy demonstrates the council’s commitment to supporting Council Plan
priorities, particularly to contribute to a fair and inclusive city and
applying a one council, consistent approach across the council to debt
collection and recovery.
3.8
In summary, the main changes in this update and revision are:
·
Ensuring
that in-house and external debt collection practices, including enforcement
agents, include processes to identify hardship or vulnerabilities at the
earliest possible stage;
·
Note
that the council will continue the practice of not using enforcement agents or
taking control of goods for people on Council Tax Reduction (i.e. on welfare
benefits) and those identified through new processes to be in hardship;
·
To
reconfigure signposting and in-house support to ensure hardship and
vulnerability can be appropriately supported including advice regarding benefit
entitlements, financial management, debt management options such as Breathing
Space, and welfare/health support;
·
Increasingly,
using new technologies to gather and analyse data to filter, segment and prioritise
escalated debt so appropriate action or support can be put in place;
·
Assessing
the viability of new payment methods and aiming for greater consistency of
methods offered across all council debt hubs;
·
A
greater emphasis on one council working requiring sharing of debt information
across debt hubs to provide more holistic support and consideration of multiple
debt, subject to data protection limitations.
4
Analysis and consideration of alternative options
4.1
Some authorities maintain the approach that debt and welfare should be
considered as separate entities with debt pursued, and payment arrangements
dictated without regard to household circumstances. The justification for this
is anticipated better in year collection performance, often the main reported
measure for debt collection.
4.2
However public sector best practice studies support the view that an integrated
approach of considering welfare from the very outset of the debt collection
process, using data analysis and debt segmentation to match appropriate
recovery actions to household circumstances, providing support for households
to maximise their income and manage their finances effectively, and giving flexibility
to agree affordable and sustainable repayment agreements results in improved ultimate
collection performance.
4.3
There is a legacy perception that enforcement agents commissioned by the
council operate like doorstep bailiff companies. This is not the case, and the
agencies commissioned by the council have been through a rigorous procurement
process, providing evidence that they have in place necessary training,
accreditation, policies and practice that meet the standards set by the council
in its debt collection policy and contract specification. They are required to
be compliant with the Tribunals, Courts and Enforcement Act and various
government National Standards. The enforcement agencies operate on a scale
that has enabled them to develop data analytic models and tailored, ethical
debt escalation processes that the council could not, without incurring
significant additional investment and annual costs, replicate in effectiveness,
either in terms of either collection performance or effective welfare
identification.
5
Community engagement and consultation
5.1
The Council’s Poverty Reduction Steering Group is working on a corporate
welfare strategy. The Corporate Debt board has ensured that the Corporate Debt Management
Policy incorporates the Steering Group’s identification of best practice in
debt collection, that supports the council’s strategic objectives and
priorities.
6
Financial implications
6.1
Each year, the council now collects well over £500 million in taxation,
rents and other income from fees & charges. All funding sources, but
particularly major tax revenues, support the provision of vital council
services for residents of the city as well as providing funding for Police and
Fire services. Poor collection polices and performance can therefore have
serious impacts on the ability of these public sector organisations to provide
and maintain appropriate service levels and standards to meet their statutory
duties.
6.2
Ensuring that revisions and updates to the Corporate Debt Management
Policy are evidence-based is therefore critical to avoid potentially negative
impacts on collection performance.
6.3
Providing easy and effective ways to pay, including the ability to pay
by instalment, along with clear and accessible billing information, and modern
digital services ensures that council
processes do not themselves cause collection delays or the build-up of arrears.
Using data to identify low income
or struggling households and providing
early intervention and prevention will further help to avoid arrears build-up
and evidence shows should deliver better long term collection performance. The
revised policy embeds this approach.
Finance officer consulted: Haley Woollard Date
consulted: 14 January 2025
7.1
There are no legal comments. The policy is structured to comply with
legislative requirements. The decision to use a less draconian process is
within the decision-making prerogative of the authority.
Legal Officer consulted: Simon Court Date:
14 January 2025.
8.1
The equality implications and mitigations are outlined in the Equalities
Impact Assessment attached as Appendix 3. This is not a static position and as
information and evidence emerge the Corporate Debt Board will ensure the
council’s debt collection services adapt and improve their accessibility and
responsiveness.
9.1
A commitment within the policy to explore further usage of digital and
technical solutions contributes to minimising paper correspondence and
processes.
9.2
Sustainable, affordable, payment arrangements reduce paper intervention
and manual processing.
9.3
The council’s contracts with Enforcement Agents include a requirement
for the vehicle’s fleet to be transitioned to electric and/or low emission
vehicles.
10.1
The contracts with Enforcement Agents have secured funds being
contributed to the Council’s Fairness fund.
11
Public health implications:
11.1
There is an evidenced link between metal health and financial stability.
The best practice embedded in the updated Policy and the welfare support
structure designed to support it are sensitive to the health issues related to
debt. Staff are trained to be aware of potential health issues and possible
paths of referral for specialist advice and support.
12
Conclusion
12.1
The council aims to improve its collection performance while
continuously improving ethical standards and providing comprehensive welfare
support,
in collaboration with community and
voluntary sector partners, to households struggling to manage their debts. The
best way of achieving this is by
employing evidence-based best practice.
This best practice has been incorporated in the latest iteration of the policy
for approval by the Cabinet.
12.2
The council’s Corporate Debt Management Policy provides assurance that
the council’s debt recovery services are continuously improving, with
strategies that align to the Council Plan.
Supporting
Documentation
Appendices
1.
Relevant
Legislation to Debts Included in the Corporate Debt Policy
2.
Best
Practice – Writing off debts
3.
Equality
Impact and Outcome Assessment
4.
Corporate
Debt Management Policy