Review of Debt Collection

Transcription

1 Nottingham City Council Overview and Scrutiny Review of Debt Collection Task and Finish Panel Spotlight on the City - Focus on Improvement

2 NOTTINGHAM CITY COUNCIL OVERVIEW AND SCRUTINY REVIEW OF DEBT COLLECTION REPORT OF THE DEBT COLLECTION TASK AND FINISH PANEL OCTOBER 2006

3 CONTENTS Page Number Chair s Foreword 1 Summary of Recommendations 2 1. Membership of the Panel 9 2. Background 9 3. Panel s Conclusions Key Findings: Council Tax Housing Rents Benefits Corporate Debt Policy Joint Working Awareness Raising and Access to Debt Support Record of Evidence Received Record of Other Activities Appendices Scope of Review 32

4 CHAIR'S FOREWORD The Panel has considered the effectiveness of Nottingham City Council in collecting the money it is owed and we recognise and acknowledge the good work already occurring. However, we believe that collection rates can and should be improved. A number of recommendations have been made in the report to improve efficiency of collection through initiatives such as sharing information, updating information more quickly and efficiently, and targeting known poor payers. There is considerable evidence that early intervention when debts begin to accrue is much more effective than any measures taken once the scale of debt has become unmanageable for the individual. Voluntary Agencies have a valuable role in working in partnership with the Council to help people to manage their debts, and a number of recommendations have been made to improve the effectiveness of these relationships. In this respect the Council s policy of treating debtors as won t payers rather than can t payers is counter productive. There is no evidence that this policy has any effect on the processes that are actually followed or on the subsequent collection rates. However, it does antagonise voluntary support agencies unnecessarily and appears to be solely intended to convey a message that Nottingham City Council is not a soft touch. Panel members have been unanimous in their support for a vigorous and robust approach to debt collection, including the use of legal recovery processes where necessary, but do not believe that it is helpful if the Council is perceived as making unjustified and prejudiced assumptions about debtors motivations. It is hoped that this report and its recommendations will go some way to ensuring the City Council is able to collect as much of the money that it is owed as efficiently as possible, whilst at the same time ensuring guidance, support and advice for those genuinely in need. I would like to thank the members of the panel who gave their time and commitment to the review and would like to give my personal thanks for the contributions of those people who have supported the process, provided information or attended panel meetings to give evidence. Councillor Tony Sutton Chair of the Debt Collection Task and Finish Panel 1

5 SUMMARY OF RECOMMENDATIONS All recommendations are directed to the Deputy Leader in the first instance, unless otherwise indicated. COUNCIL TAX - see page 12 for further information Recommendation 1 The panel recommends: (a) (b) (c) that the authority develops, and measures its performance against, a series of short, medium and long-term stretching targets to attain second quartile performance for the in-year collection of council tax by 31st March 2008, with a subsequent review for further stretch to attain top quartile performance by the end of that the authority develops area and ward level targets for in-year collection of council tax, to be monitored by central management, with further consideration given to the role of area committees in the receipt of information and the monitoring of performance against local targets in such a way as to enable them to provide assistance and support to the collection process. that stretching targets be established for the recovery of old council tax debt and that performance is monitored by management and reported to the Performance and Resources Standing Panel on a half-yearly basis. Recommendation 2 The panel recommends that consultation be undertaken at an area level to ascertain the most appropriate methods of communication for council tax related information. In doing so it is recommended that particular attention be given to the needs of the city's black and minority ethnic communities, given that they often reside within some of the most deprived areas of the city and may have particular communication requirements. Recommendation 3 The panel recommends that the Services Director for Income & Debt Collection, Cashiering, Payments and Payroll arranges a meeting with the Services Director for Neighbourhood Strategy and Support and the Services Director for Marketing and Communications to discuss the options for producing area-based targeted publications and information campaigns in relation to council tax (and benefits - see Recommendation 11 (b)), in the light of the outcomes of consultation. 2

6 Recommendation 4 The panel recommends that the dedicated web pages for council tax and debt recovery be improved to provide extensive information on services available and also to signpost customers to advice agencies etc. Recommendation 5 The panel recommends that the authority resumes previous practice and investigates the feasibility of following the Leeds City Council approach of electronically flagging the previous year s non-payers early and sending targeted correspondence to them early in the new tax year. Recommendation 6 The panel recommends that the authority increases the options for all customers to pay their council tax by Direct Debit in 12 monthly instalments, offering the same flexibility currently offered for 10 monthly instalments i.e. a choice of 5 different days for making payments. HOUSING RENTS - see page 16 for further information Recommendation 7 The panel recommends more rigorous monitoring and reporting of in-year and previous housing rent arrears to help further reduce the arrears base and to maintain a focus on upper quartile in-year performance. Recommendation 8 The panel recommends that in negotiations for the revised management agreement NCC gives consideration to introducing an incentive for the improved collection of housing rent by allowing Nottingham City Homes to retain a proportion of the amount collected above agreed targets, with any such money being invested in its services. Recommendation 9 The panel supports the proposal of the Interim Director of Nottingham City Homes to restructure the central rents team to improve its quality assurance role and to empower area rent collection teams to provide a bespoke service in keeping with the needs of the respective areas and in relation to the Central Rents Team and recommends that it be implemented without delay. Recommendation 10 a) The panel recommends that the issues impacting on the relationship between NCH and Housing Aid be referred to the Overview and Scrutiny Committee for its consideration of whether the matter warrants specific investigation, either as a bespoke piece of work or as part of the ongoing scrutiny of Nottingham City Homes. This is with a view to resuming the 3

7 arrangement whereby NCH notifies Housing Aid of at-risk tenancies where a suspended or postponed possession order had been granted, to assess support needed to conform with a court order and remain in residence. b) The panel further recommends that action be taken to ensure that vulnerable tenants are able to sustain tenancies through Floating Support from the start of the tenancy, and that Housing Aid works with the Supporting People team and Floating Support agencies to ensure that the differences between 'introductory' and 'secure' tenancies are clearly understood. BENEFITS - see page 18 for further information Recommendation 11 a) The panel recommends that the authority investigates methods to maximise benefit take-up by developing a city-wide, corporate approach and by using every opportunity to target those who are likely to be entitled to support, for example by including information on how to apply for benefit or seek advice when debt reminders are sent; and routinely asking questions when people present with payment problems, to ensure that all entitlements are accessed. b) Linked to Recommendation 3, the panel recommends that further consideration be given to establishing area based, targeted promotional materials to maximise benefit take-up. Recommendation 12 The panel recommends that the authority investigates methods to improve recovery of housing benefit overpayments, such as the approach of Sheffield City Council which employs a temporary worker to review records of old debts to check who has gone back on to benefit in order that claw back processes can be initiated. Recommendation 13 The panel recommends that the government grant for Discretionary Housing Payments is fully utilised for the benefit of citizens by adopting a more rigorous approach to its allocation and management, to include: undertaking benchmarking with other authorities to establish more consistent decision making; improving quality assurance processes for consistent and fair decision making; undertaking joint working with NCH and with advice providers in the city to maximise access to DHPs. 4

8 CORPORATE DEBT POLICY - see page 20 for further information Recommendation 14 The panel recommends that any reference to can t and won t payers be removed from the Corporate Debt Policy, to be replaced by more general statements emphasising that the City Council will rigorously pursue its debts and will provide the necessary support or signposting to aid customers who experience difficulty in managing their debts to the authority. Recommendation 15 The panel recommends that: (a) Relevant correspondence pursuing repayment of debt to the Council contains a clear statement about the costs that will be incurred and charged to the debtor if they do not pay their debt and, as a consequence, their case is referred to the bailiff. (b) Bailiff action is frozen in all cases where the client has agreed to make a payment, including the bailiff s fee, on condition that the client has not made a similar arrangement on a previous occasion and then failed to maintain further payments. In such circumstances clients who do not already have an agreement in place with the Council should be referred to a debt advice agency to set up an agreement. (c) The authority ensures a code of conduct for bailiffs is in place, with a clear complaints procedure for inappropriate or aggressive recovery techniques. (d) The authority establishes regular meetings between council tax recovery and bailiffs to ensure accountability and performance; and an annual meeting between bailiffs, officers, ward councillors and stakeholders to provide information on bailiff actions (including the number of actions, the number of complaints etc) and to raise any major issues arising from work with constituents and clients. Recommendation 16 a) The panel recommends that a process be established whereby, if the authority fails to make contact with a customer after a series of correspondence, specifically but not exclusively when introducing bankruptcy proceedings, an officer be instructed to visit the property to initiate contact and to ascertain whether the customer may be vulnerable and / or require additional support. b) The panel further recommends that the Deputy Leader allocates resources to fund a pilot scheme, in an area of acknowledged deprivation and low council tax collection rates within the city, to assess whether direct contact with customers can help increase levels of collection and prevent the need to resort to legal proceedings to recover debts owed to the City Council. Such a 5

9 pilot scheme should be evaluated after one year to determine whether such a proposal could be rolled out across the city. JOINT WORKING - see page 22 for further information Recommendation 17 The panel recommends that Nottingham City Council and Nottingham City Homes produce a joint protocol with Children s Services and Adult Services, Housing and Health to actively engage social workers and the Supporting People team at an early stage with vulnerable customers who may risk incurring rent and / or council tax arrears. Recommendation 18 The panel recommends that the Deputy Leader writes a letter on behalf of the City Council to the Information Commissioner expressing concern that the Council is unable to provide support to customers who are possibly those most at risk or vulnerable in the community due to the restrictions placed on the sharing of council tax information through council tax legislation and requesting that this be addressed to enable the City Council to give more assistance to its customers. Recommendation 19 The panel recommends that the City Council investigates the possibility of pursuing 'total' debt using the council tax office as the primary vehicle, which appears to be in line with legislation and could enable the council to improve collection rates. This would need to be tested at various stages with the Information Governance Manager but could prove a solution to the information sharing problem and help circumvent the major blockage that is council tax legislation. Capacity would also be an issue within the council tax team and may require sharing of resources or a corporate approach. Recommendation 20 The panel recommends as a long term goal the establishment of a mechanism whereby customers can discuss their total debt with the City Council at one point of contact, paying one sum which will be apportioned to various debt streams internally. Recommendation 21 The panel recommends that the Deputy Leader also gives consideration to making council tax a core function of the contact centre, with customer services advisors being employed primarily for council tax purposes, but also trained to deal with other debt streams. 6

10 Recommendation 22 The panel recommends that the Overview and Scrutiny Committee monitors development of the new call centre closely to ensure it delivers improved customer service in relation to income collection. Recommendation 23 The panel recommends that the authority investigates the use of AutoMate software to improve electronic business processes. AWARENESS RAISING AND ACCESS TO DEBT SUPPORT - see page 25 for further information Recommendation 24 a) The panel would like to emphasise the authority's role in general, and the role of Children s Services in particular, in promoting and developing good citizenship through work with partners to provide early education in schools and other settings to raise awareness and understanding of basic financial management and the risk of debt. It is recommended that the Corporate Director for Children's Services assumes the corporate lead officer role for coordinating this work. b) The panel seeks assurances from the Portfolio Holder for Children and Young People Services that debt management advice and support is part of the role of those responsible for the authority's looked after children so that they understand what is expected of them when they leave care and may possibly incur debt for the first time. Recommendation 25 The panel acknowledges the ongoing review of overall debt advice provision and recommends that the Portfolio Holder for Adult and Housing Services reports the outcomes of this work to the Overview and Scrutiny Committee at the soonest possible opportunity and in advance of any decisions taken. Recommendation 26 The panel recommends that the Portfolio Holder for Adult and Housing Services ensures that the new model of advice delivery in Nottingham commissions debt advice provision on the basis of outcomes and within an agreed performance management framework. Recommendation 27 The panel recommends that the authority improves access to debt support by: 7

11 (a) ensuring that the development of the new model of advice delivery (to be operational from April 2008) in Nottingham includes contracting debt advisors to deliver in local settings; (b) requiring Adult Services to develop and improve upon existing joint publicity and information sharing in multi-agency, locality based centres to reach vulnerable and elderly adults; (c) ensuring that advice literature is available in local and accessible settings e.g. medical centres; children s centres; libraries - this needs to be tracked to assess where the literature is most frequently accessed and to help target services in the future. 8

12 1. MEMBERSHIP OF THE PANEL Members of the panel were: Councillor Aslam Councillor Cowan Councillor Gibson - Vice Chair Councillor Liversidge Councillor Malcolm Councillor Sutton - Chair 2. BACKGROUND 2.1 This Overview and Scrutiny review began by bringing together two separate but associated pieces of scrutiny activity. At the same time as the Budget Sub-Committee was embarking on an investigation into housing rent arrears, councillors from the Liberal Democrat group requested a task and finish panel review of the City Council's wider social responsibilities in relation to debt collection, focusing on the support provided for those customers experiencing financial difficulty. 2.2 It was agreed that these two strands of activity be combined to create a formal task and finish panel review of Debt Collection, with a small panel of members established to determine the extent of the scope and requested to present recommendations for improvement to the Overview and Scrutiny Committee for its consideration, to be presented ultimately to the Executive. 2.3 The panel first met in May 2006 to consider its terms of reference, develop a draft scope for the review and to establish a meeting pattern that would see its activities completed within a short time scale. This was with a view to ensuring that recommendations impacting on finances or changes to services delivery, if brought forward, could be considered as part of the budget setting and service planning processes for 2007/ The panel met regularly from June to September, receiving evidence from a wide range of stakeholders. By the end of September sufficient evidence had been gathered for the panel to formulate a series of recommendations for improvement that could be included in its draft final report. 9

13 3. PANEL'S CONCLUSIONS 3.1 The anticipated outcomes for this review were twofold: to ensure the City Council had the right strategies and procedures in place to maximise income through its debt collection activities; and to ensure that systems and safety mechanisms were in place to provide the necessary guidance, advice and support for those in genuine need and who are unable to meet their debts to the City Council. 3.2 To deliver the review's anticipated outcomes the panel investigated how the authority currently collected its major debt streams. This work included an analysis of key performance information and comparisons with other similar authorities. The panel then considered whether the authority's approach, to include scrutiny of key policies and procedures, was sufficiently robust to support the outcomes that were expected. 3.3 The panel also assessed the consequences of City Council action, both in terms of the impact to the authority and to its customers. It is with these considerations in mind that the panel has reached the following conclusions and, using the wide range of information and evidence received, has produced a series of recommendations for improvement to address the major issues that arose as the review progressed. 3.4 The panel concludes that, although the City Council does have in place a number of initiatives to ensure it maximises collection rates for its main debt streams, particularly for council tax, the Council's in-year performance in this area falls behind that of similar authorities. The City Council has been steadily improving its collection rate for council tax and the panel recognises this as a positive step, but believes that more could still be done. 3.5 The panel requested input from Leeds and Sheffield City Councils, both high performing authorities in relation to council tax collection, in an attempt to learn more about what they do to collect money they are owed. In many ways it was pleasing to note that that Nottingham City Council has introduced as many, if not more, initiatives than both these comparator authorities and officers are commended for their innovation and ongoing work in this area. 3.6 Information on the impact of deprivation on collection rates suggested that there was some correlation between how deprived an area was and how much council tax could be collected. However, some of this evidence was contradictory and did not explain why levels of collection, taking deprivation into account, still did not meet anticipated levels within the city and other cities, such as Newcastle, were able to collect more than their relative deprivation would otherwise have indicated. The issue of deprivation is also used as one of the key reasons for not setting ambitious targets that will see the authority achieve top quartile performance, yet this is only one of a number of factors impacting on collection rates. 3.7 As a result of the evidence gathered it is clear that there is no single major action which will improve council tax collection rates. However, the panel recommends the introduction of a number of contributory measures that cumulatively, and when combined with rigorous policies and procedures, 10

14 could help the City Council achieve higher collection rates for council tax and in turn contribute additional money to the Council's budget to help deliver improved services. The panel believes that its recommendations in relation to council tax will help achieve this goal and challenges the authority to strive for top quartile performance, however difficult this may appear to be. 3.8 When considering the authority's social responsibilities, the panel was pleased to learn that the City Council does have a good working relationship with a range of voluntary and community sector advice providers throughout the city and that representatives meet on a regular basis to discuss the major issues of concern. One of the key problems identified through the panel's work was the capacity of advice providers to manage the volume of cases within the city, together with the fact that they dealt with a range of issues other than debt and there is only limited provision of specialist debt advice. It was also clear from the panel's activities that provision of debt advice is not robustly monitored, nor based on outcomes, so it is difficult to track how effective the service is in helping customers to alleviate their debt problems and reach workable agreements with the City Council to pay their debts. 3.9 There are of course tensions between the authority and the range of debt advice agencies, one of which is the authority's assumption that all debtors will be classed as 'won't' payers until they have been identified as 'can't' payers. The advice agencies do not dispute the fact that the City Council must pursue its debts, but believe that this approach is unhelpful, unnecessarily labelling many people in genuine difficulty, and the panel concurs with this view Another contentious area is the use of bailiffs. Of the numerous bailiff visits made each year, the overwhelming majority are undertaken in strict adherence to guidelines. However, a small number of cases have caused concern and these issues need to be addressed through the ongoing tendering process. One of the main causes of disquiet relating to the use of bailiffs is the considerable additional costs incurred by the debtor when a case is passed from the authority to a collection agency which, in essence, merely compounds the problems by requiring the customer to pay far more than the original debt The panel has listened carefully to the arguments and concludes that a balance needs to be struck between the accepted need to use bailiffs to recover costs from those who stubbornly refuse to pay and the need for the authority and advice agencies to work with customers to ensure they are provided with every opportunity to pay their debts before further action is taken. Once bailiffs do become involved, it is imperative that they operate to a strict code of conduct and that all charges are transparent This report contains a diverse set of recommendations, ranging from initiatives to increase the amounts of Discretionary Housing Payments made to support those most in need, through to reassurances that the authority's looked after children are provided with debt advice and guidance before leaving the City Council's care. Many of the recommendations are geared towards ensuring the authority is able to provide support to vulnerable customers directly, or signpost them to the voluntary and community sector for 11

15 advice and guidance, whilst at the same time ensuring that the City Council is not seen as a soft touch and will rigorously, and rightly, pursue money it is owed by those people who simply refuse to pay This is a difficult balance to achieve and the panel supports all those who work in this complex field. The panel is of the opinion that, although the authority currently manages to balance these competing aims satisfactorily, there is always room for improvement. The recommendations contained within this report provide a number of practical suggestions to stimulate this improvement. 12

16 4. KEY FINDINGS AND RECOMMENDATIONS Council tax debt and rent arrears form the largest proportion of debt type and are the main focus for recovery for the Council. The panel has therefore focused its efforts in these areas. The panel has received evidence on how the authority pursues the collection of sundry debt, another significant source of income, but has concluded that actions currently being undertaken to recover sundry debt are adequate, precluding the need to make further recommendations. Nottingham s rate of collection of Business Rates has improved in recent years, currently standing at 98.2% by the end of March Historically it has been the lowest compared with the other core cities and the rate of increase has not been as fast as some other authorities, e.g. Bristol, Derby, Liverpool and Newcastle. Although Nottingham s performance remains in the bottom quartile for unitary authorities, the panel agreed to focus exclusively on those payments and debts collected by the Council for which it receives money directly and which have a direct impact on the funds available to the City Council to be invested in service delivery. Approximately 21% of the Council s income is made up from council tax and housing rents. It is estimated that this will be the equivalent of 79.3m 1 council tax and 89.8m housing rents in 2006/ COUNCIL TAX 1 Although improving, Nottingham s council tax collection rates have been lower than other core cities over the last 5 years and the rate of increase hasn t been as fast as some other authorities. Performance remains bottom quartile when compared with other unitary authorities. Council Tax Collection Rates 2000/01 to 2004/ / / / / / /06 Nottingham 91.60% 91.70% 89.70% 89.80% 92.00% 93.16% Birmingham 94.66% 95.00% 93.90% 94.70% 94.90% 94.02% Bristol 94.20% 94.00% 94.40% 95.20% 95.30% 95.95% Derby 92.70% 90.90% 93.35% 93.55% 93.94% 94.56% Leeds 95.50% 96.00% 96.40% 96.20% 96.10% 96.28% Leicester 92.90% 89.00% 92.00% 90.20% 92.26% 93.83% Liverpool 94.48% 95.10% 95.86% 90.10% 93.00% 94.30% Manchester 94.20% 94.20% 87.90% 89.60% 90.30% 89.12% Newcastle 94.03% 94.30% 94.99% 95.57% 95.00% 94.30% Sheffield 91.70% 93.20% 94.90% 95.50% 95.51% 95.22% Core City Average 93.80% 94.19% 93.51% 93.33% 94.01% 94.07% Unitary Authority Upper Quartile 96.70% 97.10% 96.80% 97.20% 97.03% 97.64% Unitary Authority Lower Quartile not available not available 94.65% 94.46% 95.03% 95.55% 1 Net collectable council tax 13

17 The 93.16% collected by Nottingham City Council in 2005/06 amounted to a net collection of 69.3m. Net collection is the amount due minus exemptions, discounts and benefits. If all council tax due in 2006/07 was collected this would amount to 79.3m. The target 2 for collection in 2006/07 is 95% i.e. 75.3m. Each 1% increase in the collection rate in 2006/07 would add 793k to the authority s available income for investment in service delivery. Collection of arrears from previous years would increase this opportunity for investment total arrears stood at 19.8m at 31 st March It is accepted that there is a link between deprivation and council tax collection i.e. rates of collection tend to be lower the higher the deprivation index in a ward, although the correlation varies between authorities. In Nottingham there are a number of wards where collection is lower than would be expected, with Arboretum showing the biggest difference. The expected collection rate in 2004/05, if all wards matched the relationship between collection and deprivation, should have been 92.6% - the actual rate was 92%. The following table indicates that the link between collection rates and deprivation is not as clear as initially anticipated and varies across authorities: Expected Actual Difference Bristol 96.0% 95.3% -0.7% Leeds 96.1% 96.1% = Newcastle 94.7% 95.0% +0.3% Sheffield 96.0% 95.5% -0.5% 3 As higher performing authorities, Sheffield and Leeds City Councils were invited to present information to the panel on how they manage their processes to reduce council tax debt and, although there are some minor differences, all three authorities share very similar processes and have tried a range of methods to maximise income collection and minimise debt. However, both Sheffield and Leeds City Councils have developed local performance indicators in addition to working to challenging Best Value and corporate targets. In addition, Sheffield City Council debt is regularly reported to scrutiny members. Desired Outcome: To maximise debt collection across the whole of the city by ensuring that targets are ambitious and challenging. Recommendation 1 The panel recommends: (a) (b) that the authority develops, and measures its performance against, a series of short, medium and long-term stretching targets to attain second quartile performance for the in-year collection of council tax by 31st March 2008, with a subsequent review for further stretch to attain top quartile performance by the end of that the authority develops area and ward level targets for in-year 2 BVPI 9 Council Tax Collection % (in year) 14

18 collection of council tax, to be monitored by central management, with further consideration given to the role of area committees in the receipt of information and the monitoring of performance against local targets in such a way as to enable them to provide assistance and support to the collection process. (c) that stretching targets be established for the recovery of old council tax debt and that performance is monitored by management and reported to the Performance and Resources Standing Panel on a half-yearly basis. 4 The Council was one of the authorities consulted in the Audit Commission s study Improving Income Collection Efficient Collection of Council Tax, Housing, Rent and other income by Direct Debit May The report concluded that: - authorities need a better understanding of customers to aid targeting of Direct Debit (DD) and council tax benefit campaigns (including making use of customer views); - housing and finance departments need to work together through joint campaigns, sharing ideas and co-ordinating policies for all services; - changing payment routines must result in efficiency e.g. improving DD rates in more deprived areas will free up resources to deal with more complex debt issues; - challenging targets should be set to increase DD take-up; - increasing DD take-up must be balanced with the needs of the community and vulnerable groups in particular. Desired Outcome: To improve understanding of the customer base and raise awareness of all the options available for paying and repaying council tax. Recommendation 2 The panel recommends that consultation be undertaken at an area level to ascertain the most appropriate methods of communication for council tax related information. In doing so it is recommended that particular attention be given to the needs of the city's black and minority ethnic communities, given that they often reside within some of the most deprived areas of the city and may have particular communication requirements. Recommendation 3 The panel recommends that the Services Director for Income & Debt Collection, Cashiering, Payments and Payroll arranges a meeting with the Services Director for Neighbourhood Strategy and Support and the Services Director for Marketing and Communications to discuss the options for producing area-based targeted publications and information campaigns in relation to council tax (and benefits - see Recommendation 11 (b)), in the light of the outcomes of consultation. 15

19 Recommendation 4 The panel recommends that the dedicated web pages for council tax and debt recovery be improved to provide extensive information on services available and also to signpost customers to advice agencies, etc. 5 Collecting by Direct Debit (DD) saves councils approximately 5 per customer, contributing to year on year efficiency savings of over 50,000. Lower transactional and lower administrative costs, as councils need fewer staff to deal with DD than other methods of payment, releases resources to collect remaining debt. In addition, those paying by DD tend to keep paying. The target set in 2004 to collect 50% of payments by DD has been exceeded and replaced with a new target of 60% by The Council runs DD promotion campaigns on a regular basis - the January 2006 campaign to promote DD to current cash payers offered payment over 12 rather than 10 months for the first time, if taken on the 1 st of month. 76% of those responding opted for the 12 payments option. While costs are incurred in spreading payments over 12 months, the savings gained by switching to DD outweigh these. Responses were generally lower in more deprived wards. 6 In recognition of the fact that customers need to be offered choice and a range of methods of payment, new methods of payment have been introduced to give customers as much choice as possible. Last year customers could pay at Post Offices and PayPoint outlets for the first time. Payment by automated means over the internet has also been encouraged. In 2005/6 over 10,000 payments were taken by this method, amounting to 1.2million. 7 Leeds City Council uses electronic systems to identify last year s bad payers at the beginning of the new tax year and targets them early in the year to encourage prompt payment and avoidance of arrears. Desired Outcome: To maximise collection of council tax by improving methods of collection and giving customers a wider range of opportunities to pay the council. Recommendation 5 The panel recommends that the authority resumes previous practice and investigates the feasibility of following the Leeds City Council approach of electronically flagging the previous year s non-payers early and sending targeted correspondence to them early in the new tax year. Recommendation 6 The panel recommends that the authority increases the options for all customers to pay their council tax by Direct Debit in 12 monthly instalments, offering the same flexibility currently offered for 10 monthly instalments i.e. a choice of 5 different days for making payments. 16

20 4.2. HOUSING RENTS 1 Rent collection and payment of housing benefits performance has improved steadily. In 2005/6 Nottingham City Home s (NCH) performance was top quartile for current rent collection performance (excluding previous arrears) when compared with the Housemark ALMO benchmarking peer group. 2002/3: 95.72% 2003/4: 97.57% 2004/5: % 2005/6: % 2 In the same year NCH achievement for BV66a (the collection of rent and arrears) was just above the core city average and above Birmingham, Liverpool and Manchester. Progress is being maintained into 2006/07. However, NCH continues to face the challenge of collecting significant rent arrears from previous years. 2002/3: 87.00% 2003/4: 90.30% 2004/5: 93.01% 2005/6: 95.96% 3 The current management agreement between Nottingham City Council and Nottingham City Homes sets targets for collection of current rents and arrears. While NCH pays a penalty if it fails to reach the agreed targets, there are currently no arrangements in place whereby NCH is rewarded for exceeding agreed targets. Desired Outcome: To maximise collection of rent payments and arrears by improving monitoring processes. Recommendation 7 The panel recommends more rigorous monitoring and reporting of in-year and previous housing rent arrears to help further reduce the arrears base and to maintain a focus on upper quartile in-year performance. Desired Outcome: To maximise the collection of payments and arrears by offering an incentive to exceed agreed targets. Recommendation 8 The panel recommends that in negotiations for the revised management agreement NCC gives consideration to introducing an incentive for the improved collection of housing rent by allowing Nottingham City Homes to retain a proportion of the amount collected above agreed targets, with any such money being invested in its services. 17

21 4 NCH has sought to prevent rent arrears and support those with arrears through the role of the Housing Patch Managers (HPM), who spend approximately 40% of their time on collection. There are over 80 HPMs in 9 local housing offices, whose role was developed to deal with debt issues when responsibility for rent arrears transferred from the central team to local offices. A pilot in the north area of city has involved dedicating HPM activity to rent arrears management, which has had a positive impact on collection rates. The trend in high performing ALMOs is to use rent specialists, rather than generic officers, to manage debt. 5 However, a corporate decision on generic / specialist working is not considered necessary, rather a focus on what works in the local circumstances is proposed - it is results that are important, not necessarily the method used to achieve these. Expertise is held at the local level and this should determine the best approach for maximising rent collection and recoupment of arrears. Heads of Area Operations are therefore to be empowered to make their own decisions on how they can maximise rents performance within their operational business units and be accountable for the results. The central team will be used to hit local hot spots, but local operational boards need to be able to deliver the service they feel is right for the area and to be judged by results. 6 In addition it has been recognised that, in order to support the work of the operational business units, the Central Rents Team (CRT) will require strengthening, as it is currently unable to provide the quality assurance role it was originally envisaged to be able to offer and that is expected in terms of having consistent practices and procedures. In order to provide more and better support to local offices, to the staff in the CRT and to achieve the Housing Income Management Key Deliverables, NCH proposes to restructure the CRT. Desired Outcome: To maximise collection of rent payments and arrears by both improving central services and responding to local needs. Recommendation 9 The panel supports the proposal of the Interim Director of Nottingham City Homes to restructure the central rents team to improve its quality assurance role and to empower area rent collection teams to provide a bespoke service in keeping with the needs of the respective areas and in relation to the Central Rents Team and recommends that it be implemented without delay. 7 NCH recognises that there a number of vulnerable tenants who are in need of various levels of support to enable them to manage their finances and to avoid getting into debt. Early intervention and referral to relevant support agencies e.g. Sure Start, is part of the role of Housing Patch Managers. 8 One area of particular concern has been the position of introductory tenants who get into arrears at the beginning of their tenancy and where the 18

22 court has no power to suspend an order, whatever the mitigating circumstances. Legislation now allows for Introductory Tenancies to be extended for a maximum of 6 months beyond the original tenancy anniversary, which will assist tenants who have got into arrears by giving them more time to clear the debt, so allowing the tenancy to become secure. However, it must be made clear to all tenants that any arrears that do accrue during an introductory tenancy must be paid in full and arrangements for payment cannot be made. New tenants are now offered an appointment with a debt advice service advisor to assist with budgeting for the costs of their new home and HPMs undertake visits four weeks after the tenancy commenced bi-annual tenancy visits are also being introduced. 9 Throughout 2005 and 2006 non possession legal proceedings have been taken against lower level arrears cases to avoid eviction. All at-risk tenancies (under 19yrs, over 60 yrs, long term ill or disabled) where a suspended or postponed possession order had been granted were forwarded to homelessness prevention officers at Housing Aid to assess support needed to conform with a court order and remain in residence. However, this arrangement was suspended by Housing Aid in April Desired Outcome: To avoid eviction and homelessness as a result of rent arrears by ensuring that support for at-risk tenants is maximised. Recommendation 10 a) The panel recommends that the issues impacting on the relationship between NCH and Housing Aid be referred to the Overview and Scrutiny Committee for its consideration of whether the matter warrants specific investigation, either as a bespoke piece of work or as part of the ongoing scrutiny of Nottingham City Homes. This is with a view to resuming the arrangement whereby NCH notifies Housing Aid of at-risk tenancies where a suspended or postponed possession order had been granted, to assess support needed to conform with a court order and remain in residence. b) The panel further recommends that action be taken to ensure that vulnerable tenants are able to sustain tenancies through Floating Support from the start of the tenancy, and that Housing Aid works with the Supporting People team and Floating Support agencies to ensure that the differences between 'introductory' and 'secure' tenancies are clearly understood. See also Recommendation 17 below. 4.3 BENEFITS 1 A number of people who get into debt are entitled to benefit, but are either unaware of their entitlement or need support to access their entitlement. For many older people there is still a stigma associated with claiming benefit of any kind. 19

23 2 Sheffield City Council s recovery of housing benefit overpayments is up to approximately 70% per year use of a debt collection agency and employing a temporary administrator annually to go back through records of old debts to check who has gone back on to benefit and then setting them on to claw back have been the most successful approaches. 3 Direct Housing Payment (DHP) is a separate benefit with separate guidance intended to help with a shortfall in a customer s income in order to ensure that a rent liability is met. A customer must be in receipt of housing or council tax benefit for the same period that the application for DHP is claimed. There is no fixed period for a DHP; the level and the duration of the award are entirely at the discretion of the local authority. 4 The Government allocates the local authority an annual amount that can be spent on DHP. A local authority is permitted to spend above the annual amount allocated by the Department of Work and Pensions (DWP) up to the threshold limit. However, any expenditure above the DWP allocation must be met from the General Fund of the local authority. 21,000 of a 70,000 budget (with a maximum allowed spend of 176,000) has been committed to date this year (2006/07). 5 The level of unsuccessful applications is high. Since April, the Housing Benefit service has received 164 applications for DHP, 41% of which has resulted in a successful DHP award. The majority of DHPs are made to private sector tenants. 6 There are currently no national standards for assessment of DHP entitlement and Nottingham City Council has not undertaken any benchmarking to date. Desired Outcome: To support those in danger of incurring debt to avoid debt by maximising take-up of benefits and to maximise the Council s income by recovering old housing benefit debt. Recommendation 11 a) The panel recommends that the authority investigates methods to maximise benefit take-up by developing a city-wide, corporate approach and by using every opportunity to target those who are likely to be entitled to support, for example by including information on how to apply for benefit or seek advice when debt reminders are sent; and routinely asking questions when people present with payment problems to ensure that all entitlements are accessed. b) Linked to Recommendation 3, the panel recommends that further consideration be given to establishing area based, targeted promotional materials to maximise benefit take-up. Recommendation 12 The panel recommends that the authority investigates methods to improve recovery of housing benefit overpayments, such as the approach of 20

24 Sheffield City Council which employs a temporary worker to review records of old debts to check who has gone back on to benefit in order that claw back processes can be initiated. Recommendation 13 The panel recommends that the government grant for Discretionary Housing Payments is fully utilised for the benefit of citizens by adopting a more rigorous approach to its allocation and management, to include: undertaking benchmarking with other authorities to establish more consistent decision making; improving quality assurance processes for consistent and fair decision making; undertaking joint working with NCH and with advice providers in the city to maximise access to DHPs. 4.4 CORPORATE DEBT POLICY 1 The Council s Corporate Debt Policy acknowledges the statutory obligation to recover monies legitimately due. It assumes all individuals and commercial payers are won t payers until identified as can t payers, but will distinguish between the two and will offer help to those seeking it due to financial difficulties. The authority will manage debt as one council and will take a partnership approach to recover debt e.g. with bailiffs and tracing and collection agencies. The Council faces the dilemma of how to collect income as quickly as possible and meet targets, while being sensitive at the same time. 2 Representatives of advice providers in Nottingham (ABA Probation Service; St Ann s Advice Centre; Meadows Advice Group; Nottingham Law Centre; Nottingham and District CAB) noted that most debt problems arise as a result of a change in circumstances, no matter what these might be, e.g. frequent breaks in benefit claims, and that it is not safe to assume that all individuals are won t payers until they are identified as can t payers. Desired Outcome: To recognise the dual role of the Council to maximise debt recovery, while treating its customers sensitively. Recommendation 14 The panel recommends that any reference to can t and won t payers be removed from the Corporate Debt Policy, to be replaced by more general statements emphasising that the City Council will rigorously pursue its debts and will provide the necessary support or signposting to aid customers who experience difficulty in managing their debts to the authority. 3 If no arrangement is made to repay debt and no deduction can be made from earnings or benefits, the debt will be passed to a bailiff to collect. The bailiffs will add their costs to the debt to be recovered from the taxpayer. 21

25 These additional costs are set out in regulations. If the outstanding tax refers to a closed account and the forwarding address of the taxpayer is unknown the debt is passed to a trace and collection agency. 4 The level of taxes collected by bailiffs has increased as shown below. Council Tax recovered by bailiffs 2003/04 to 2005/06 YEAR Total collected by Bailiffs (,000) 2003/04 1, /05 2, /06 3,175 5 If the bailiff is unable to collect the debt the case is referred back to the Council. The Council has several options to recover the debt Committal - debtors can be imprisoned for up to three months. Bankruptcy the debt needs to be at least 750 and the debtor needs to own a property, or have other significant and realisable assets. Charging Order the debt needs to be at least Commencing with committal or bankruptcy action will, in some cases, result in an arrangement for payment being made. 6 Advice agency representatives reported a number of cases where bailiffs had used inappropriate and / or aggressive recovery techniques, placing those in severe financial hardship under further undue pressure. They proposed monthly meetings between council tax recovery and bailiffs to ensure accountability. 7 Advice agency representatives also note that, while bailiff action can be frozen when an agreement is reached with Nottingham City Council (and the client s income and expenditure have been explored in relation to making repayments), this option has not been extended to those who do not have an agreement in place, but who are willing to make direct payment to the Council. Desired Outcome: To ensure the use of bailiff action maximises income collected through a responsive, sensitive service. Recommendation 15 The panel recommends that: (a) Relevant correspondence pursuing repayment of debt to the Council contains a clear statement about the costs that will be incurred and charged to the debtor if they do not pay their debt and, as a consequence, their case is referred to the bailiff. (b) Bailiff action is frozen in all cases where the client has agreed to make a payment, including the bailiff s fee, on condition that the client has not made a similar arrangement on a previous occasion 22