Report by Executive Director of Financial Services. Contact: Lynn Brown Ext: COPORATE DEBT POLICY

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1 1 Glasgow City Council Executive Committee ITEM 4 24 th August 2007 Report by Executive Director of Financial Services Contact: Lynn Brown Ext: COPORATE DEBT POLICY Purpose of Report: The purpose of this report is to seek approval for the attached Corporate Debt Policy. This provides an update to the Policy previously approved by Policy and Resources Committee in January Recommendations: Elected Members are asked to approve the Corporate Debt Policy at Appendix A. Ward No(s): Citywide: x Local member(s) advised: Yes No x Consulted: Yes No x

2 Corporate Debt Policy 1. Introduction and Background 1.1 In January 2000 a report setting out the key principles of a Corporate Debt Policy was approved by Policy and Resources Committee. Since that time this policy has formed the over-arching principles adopted by the Council in collecting debt. The policy has recently been reviewed to take account of changes including the Debt Arrangement Scheme and the Council s Financial Inclusion Strategy and issues raised through discussions with the Council s Debt Strategy Officer, other local authorities and the money advice sector. 1.2 A proposed Corporate Debt Policy is attached at Appendix A. The policy is a statement of good practice and its aim is to: Help to minimise overall indebtedness to the Council; Emphasise the prevention of arrears and promote intervention at an early stage in the recovery cycle; Provide assistance to citizens with genuine financial difficulties and take firm action against those who can pay; Ensure a consistent treatment of arrears by debt management staff, money advice staff, the voluntary sector and Council appointed debt collection partners; Avoid making conflicting demands on citizens; Complement the Council s Financial Inclusion Strategy. 1.3 In conjunction with updating of the Corporate Debt Policy, written guidelines for staff on debt recovery and payment arrangements have also been developed and will be implemented in a number of areas in Financial Services but mainly in the department s Debt Management team. This team was established following the approval of the initial report in 2000 and are responsible for collecting all overdue Council debts. This includes Council Tax, Non-Domestic Rates, Commercial Rents, Housing Benefit Overpayments and overdue Parking Tickets. The team are supported by dedicated Legal Services solicitors for cases where legal action is necessary. 2. Service Implications 2.1 Financial Implications: None. 2.2 Legal Implications: None. 2.3 Staffing Implications: Appropriate training will be provided to staff to ensure the Debt Management service is delivered in line with the Corporate Debt Policy. 2.4 Service Plan Implications: This policy is consistent with the Service aim of improving Council Tax collection. 3. Recommendations 3.1 Elected Members are asked to note the contents of the report and approve the attached Corporate Debt Policy.

3 Appendix A 1. Corporate Debt Policy 1.1 Context Having a Corporate Debt Strategy has been identified as an essential element in the coherent management of debt and in supporting the success of the Debt Arrangement Scheme. This document highlights good practice as has been identified by consultation with a number of local authority and voluntary sector practitioners in both the areas of Money Advice and Debt Collection. 1.2 What is corporate debt? The Council is responsible for the provision of a wide range of services to the citizens of Glasgow. These services are paid for locally by citizens via payment of council tax and or other council charges. The Council also collects Housing Benefit overpayments. Corporate Debt is the gathering together of debt owed to the Council in all of these categories to ensure a joined up approach to collection of outstanding monies and recovery of arrears 1.3 Why have a corporate debt policy? The Council has a duty to all of its citizens to collect outstanding council tax and other Council charges including Housing Benefit overpayments as quickly and economically as possible. The Council's ability to deliver services which meet the needs of the citizens of Glasgow depends heavily on its success in collecting revenues. The Council also has a policy to promote financial inclusion and in doing so to recognise the problems of multiple indebtedness, poverty and deprivation, and the need to break the poverty trap cycle by helping citizens to meet their liabilities in a controlled and managed manner. 1.4 What are the objectives of a corporate debt policy? A Corporate Debt Policy will - help to minimise the overall indebtedness to the Council of council taxpayers and other council charge payers ensure that a strong emphasis is given to preventing arrears from arising and that intervention takes place as early as possible in the recovery cycle ensure that citizens with genuine financial difficulties are provided with the necessary assistance to break the cycle of debt while firm recovery action is taken against those who can pay

4 ensure consistent corporate treatment towards the recovery of arrears of council tax and other council charges including Housing Benefit overpayments by council staff, council funded voluntary organisations, and council appointed debt collection agents or sheriff officers ensure conflicting demands from within the Council are not placed upon citizens who have multiple debts complement the Financial Inclusion Strategy of the Council including providing support to Credit Unions, investigating ways of increasing the number of citizens with bank accounts and identifying and promoting alternative affordable credit options for low income groups 2.5 How will a corporate debt policy work? A Corporate Debt Policy will operate through: the development of common service standards and procedures which reflect the objectives of the policy. These will apply to all Council staff involved in the billing, collection and recovery of council tax and other council charges including Housing Benefit overpayments together with the provision of benefits and money advice, the development of Service Level Agreements with council funded voluntary organisations which provide debt counselling and money advice services, and to council appointed debt collection agents or sheriff officers responsible for recovery of arrears. the Council working with partner agencies to improve the services available to citizens experiencing financial hardship, the standardisation of payment arrangements covering all corporate debt owed to the Council. a coherent approach across Council Services to the use of the available remedies (sequestration, DAS etc.) 2.6 How will a corporate debt policy be implemented? The Corporate Debt Policy will be implemented by - The Council Investigating and implementing methods of raising financial awareness amongst citizens in an effort to avoid unmanageable debt Ensuring debt collection activity takes account of all debts owed to the Council by that citizen Providing training to collection staff and benefits and money advisers on the policy Deploying computer systems that facilitate joined-up management of debts

5 Processing all new applications for benefit or discount within target timeframes Ensuring benefit and other awards are accurate by getting it right first time Ensuring prompt and accurate issue of bills with robust reminder systems for missed payments Promoting and providing benefits and money advice through Social Work Services, Homeless Partnerships and the Revenues and Benefits Service. Independent advice is also available from the Glasgow Advice and Information Network (GAIN) Using collection methods which are appropriate to the debtors circumstances. Ideally voluntary payment arrangement but legal action including sequestration may be required where such an arrangement cannot be reached Referring citizens with Council debts to money advisers and suspending recovery action for a period to allow a suitable payment proposal to be made Using Money Advice Trusts (MAT) /British Bankers Association (BBA) trigger figures and OFT Debt Collection Practice when determining acceptable payment arrangements Prioritising payment to the current year's debts first thus minimising additional charges and penalties being added to the debt Accepting payment over 52 weeks, 12 months of the year. Accepting payment by a variety of methods including direct debit, standing order, payment by telephone and internet, at post offices and local "paypoint" locations Implementing appropriate performance systems to monitor adherence to the policy and its procedures The payer Making early contact with the Council, the voluntary sector, or council appointed debt collection agents or sheriff officers. Complying with any requests for information to complete Benefit Claim forms to allow assessment of their entitlement and return renewal application forms for benefits issued periodically by the Council. Complying with any requested for information to support applications for discounts, exemptions or other entitlements. Supplying information to secure and keep up with agreed payment arrangements. Informing the Council, the voluntary sector, or Council appointed debt collection agents or sheriff officers of any changes in their financial circumstances.

6 The Voluntary Sector Providing specialist advice under the terms of a referral protocol to citizens facing financial hardship. Providing payment proposals on behalf of citizens which meet criteria of the Council including the prioritisation of ongoing Council Tax liabilities