Corporate Debt Management Policy

Contents

• 1. Purpose
• 2. Objectives and Outcomes
• 3. Debts to which this policy applies/does not apply
• 4. Priority Debts
• 5. Roles and Responsibilities
• 6. General Principles
• 7. Delivering the Policy
• 8. Raising Invoices
• 9. Methods of Payment
• 10. Breathing Space
• 11. Collection and Recovery
• 12. Refunds
• 13. Social Inclusion - ability to pay
• 14. Bad Debts Provision
• 15. Writing Debt Off
• 16. Monitoring the Policy
• Appendix 1 - Debt recovery processes by debt type

1. Purpose

This policy is designed to set out a framework for Oxford City Council (OCC) employees and provide clear guidance for all Council Officers on the recording, reporting, recovery, and monitoring of income.

This policy covers all debts shown in section 3 (A).

The Council has a legal duty to ensure cost-effective billing, collection, and recovery of all sums due to the Council.

All service areas must follow this procedure to ensure that the Council maximises income by using a co-ordinated approach whilst having due regard to the customer’s ability to pay.

2. Objectives and Outcomes

Objectives

• To treat customers fairly when assessing ability to pay.
• To identify and assist those who face difficulties in paying at an early stage and to actively encourage them to contact us to help to reduce the effect of debt on people on low income.
• To signpost potential debtors to advice agencies and other sources of support and do everything possible to encourage them to use them.
• To identify and reach agreements with customers who face barriers in understanding what is expected of them e.g., because of age, language, culture, or disability.
• To follow all appropriate legislative requirements and procedures in an efficient and effective way.
• To use all methods available to recover debts.
• To ensure that benefit entitlement is accurately and efficiently applied to maximize the debtor's income.
• To have a clear and justifiable enforcement process.

Outcomes

The outcomes expected from this policy are to:

• Establish the general principles of debt management across all services provided by Oxford City Council
• Ensure a consistent and fair approach to the management of debts across the authority.
• Set out provisions to assist customers to make payment agreements appropriate to their circumstances.
• Ensure individuals financial circumstances are considered on a case-by-case basis before enforcement proceedings are commenced.
• Identify and enforce against deliberate non-payers or people who delay payment without good reason.

3. Debts to which this policy applies/does not apply

A) Debts to which this policy applies

For the avoidance of doubt, this policy document applies to all debts and income due to the Council including but not limited to:

• Council Tax
• Business Rates
• Overpaid Housing Benefit
• Overpaid Council Tax Reduction
• Council Housing Rent
• Rechargeable repairs
• Residential Garage Rent
• Commercial Property Rent and Service Charges
• Leaseholder payments
• Commercial and Garden Waste Collection
• Sundry Debts (incl. licensing, statutory notices, sundry rents, subscriptions, etc.)
• Car parking excess charges
• Recovery of enforcement costs and civil penalties, including works in default
• Charging for discretionary services or any money due to the council under terms of an agreement to pay for goods, services, or property.

B) Debts to which this policy does not apply

• Oxford City Housing Ltd Trading as OX Place, rental income.
• Oxford Direct Services Ltd and Oxford Direct Services Trading Ltd excluding commercial waste collection.

These will be covered by each company’s own debt recovery policy, which have been agreed by the shareholders and relevant company boards.

4. Priority Debts

Priority debts are those debts, defined by the FCA Handbook (Priority Debts) can result in loss of essential service, loss of home or imprisonment.

Housing

• Mortgage/Rent
• Council Tax

Utilities

• Electricity
• Gas
• Telephone
• Water

Other

• Business Rates
• Child Support Agency deductions
• Court Fines
• Income Tax
• Maintenance Arrears
• Secured Loan
• VAT
• Council Sundry Debts

5. Roles and Responsibilities

Head of Financial Services

The Head of Financial Services is the Council’s Chief Financial Officer and has statutory responsibilities in relation to the council’s financial affairs.

In addition, under Paragraph 18.1 – of the Finance Rules within the Councils Constitution, the Head of Financial Services is responsible for regulating and controlling the finances of the Council and hence he/she shall be responsible for the proper administration of the Council’s financial affairs.

Heads of Service have responsibility for the raising and recording of debts in relation to Services they manage.

Income relating to all types of debt should always be handled in accordance with the Council’s Constitution and the Financial Rules.

Where the Council is made aware that a debtor owes multiple debts to the Council and unless the debtor advises to the contrary, debts will be considered in a priority order, to avoid the customer losing their tenancy, or going to prison for non-payment as follows:

• Rent Arrears
• Council Tax Arrears
• Business Rates
• Other

6. General Principles

The general principles adopted in this policy are as follows:

• To ensure a professional, consistent, and timely approach to debt recovery action across all the Council’s functions.
• To limit the circumstances in which credit is offered by considering the customer’s circumstances and ability to pay, prior to granting any credit terms, and to only extend credit to those customers in a position to pay the debt, in accordance with the Council’s terms.
• If the customer’s circumstances do not justify the granting of credit, payment in advance should be obtained for the goods/services.
• For some debts, particularly those paid periodically, such as garden waste, periodic rents, or licensing, the preferred method of payment is by electronic means and where possible direct debit should be selected.
• To promote a coordinated approach towards sharing debtor information internally and managing multiple debts owed to the Council.
• To improve the speed of collection and the levels of income collected by the Authority.
• To ensure that debts are managed in accordance with legislative provisions and best practice.
• To consider the impact on the debtor of the consequences of any recovery options pursued, including their mental wellbeing and the proportionality of the option chosen.
• To try and protect customers from undue financial hardship by ensuring realistic payment arrangements are agreed upon.
• Where appropriate, to encourage the debtor to contact relevant organisations for debt management advice, and to do everything possible to ensure they take up these options.
• To differentiate between the debtor who will not pay, and the debtor who cannot pay, and take appropriate action in either case.
• To maintain debt recovery procedure notes for staff and regularly update these, as well as provide face to face training, including as part of the relevant induction process.

7. Delivering the policy

Delivering the policy involves several processes which are explained in more detail below:

• Raising of invoices
• Methods of Payment
• Refunds and contras
• Collection and Recovery
• Social Inclusion – the ability to pay.
• Bad Debt Provision
• Writing debts off

8. Raising Invoices

Before providing requested goods or services to a company which amount to more than £10,000 for which payment will be invoiced, officers must carry out a credit check and/or company search to establish the financial standing of the organisation and if concerns are raised, a payment in advance should be sought.

Invoices should be sent to customers via secure email wherever possible. To this end, the relevant Service is responsible for obtaining the email address/s of all new customers at the point of agreeing to provide goods or service/s.

When charging for goods and services provided, the Council will make it as easy as possible for customers to pay by seeking to raise the invoice within 10 working days of delivering the service or goods or of the commencement of the period where service covers a period.

All invoices raised will as a minimum bear the correct logo, contact details, details and period of debt and methods of payment. Online and Direct Debit/ card payment will be promoted. Where legislation requires additional information to be provided with the invoice/ demand notice, this will also be included.

All invoices will have a unique reference so that the customer is able to quote the appropriate document number/s to enable their account to be accessed and credited quickly and accurately.

All information will be clearly written, without the use of jargon.

OCC will train staff who advise the public on debt matters to be aware of the benefits, discounts, reliefs, and exemptions that may be applied to ensure that take-up is maximized.

Staff responsible for the recovery of debt will all complete the relevant Safeguarding awareness training as part of their induction and will have regular refresher training in accordance with Council policy.

Staff will undertake other debt recovery training, on-line or delivered in person by our business partners, as part of their role to enable them to Identify vulnerability issues and their trigger points and identify ways to manage debt appropriately in these cases. Where necessary the Council will assist vulnerable customers by discussing their case with an appropriate adult, where authority to discuss has been obtained.

The supporting documents relating to a demand/ invoice must be made readily available to the Financial Services as and when requested. All documentation relating to a demand/ invoice will be kept in scanned image format in accordance with the services policy which is to hold supporting documents for a period of up to 6 years.

See the Oxford City Council Record Retention Schedule.

For debts under £20 alternative methods of payment should be sought such as by card/bank payment rather than by invoice.

9. Methods of Payment

The Council will promote the use of Direct Debit as a preferred payment method, maximising the use of this wherever possible. It will discourage the use of cash and cheque, by persuading customers to use more electronic methods of payment.

The Council will accept payment of debt by credit/debit card.

All Invoices/Demand Notices will include information on how and where payments can be made i.e., listing the options we offer, for example: -

• Bank account details for bank transfers.
• PayPoint
• Post Office
• Card Payments
• Automated Payments
• Internet Payments

Customers may request an instalment arrangement for debts which will be considered by the relevant service area. The instalment amount offered, and frequency of the payments, will be based on an assessment of the likelihood of the customer meeting the arrangement. The emphasis will be put upon Direct Debit payments when agreeing such arrangements.

Whatever the method of payment individuals must ensure that payments made reach the Council by the due date.

Housing Benefit overpayments will be recovered from on-going benefit where possible.

Council Tax Reduction excess payments will be recovered from the claimant’s Council Tax account where possible.

10. Breathing Space

If you live in England or Wales, you can get temporary protection from your creditors while you get debt advice and make a repayment plan. This scheme is called ‘Breathing Space.’

To apply for the ‘Breathing Space’ scheme, you need to talk to a debt adviser. They will apply on your behalf if it’s the right thing to do.

You can find a free debt adviser on the MoneyHelper website. You can get confidential advice online, over the phone or in person.

If you’re receiving mental health treatment and cannot speak to a debt adviser, someone else can do so on your behalf.

If you are accepted:

• You can get temporary protection for up to 60 days.
• You will still need to make your debt repayments.
• enforcement action cannot be taken against you.
• your creditors cannot contact you about debts included in your Breathing Space
• your creditors cannot add interest or charges to your debt.

If you are getting mental health crisis treatment, your protection from creditors will be longer. It will last for the length of your treatment, plus another 30 days.

11. Collection and Recovery

The collection of income in respect of invoices raised must follow a standard course, which fully documents the efforts made to settle the debt. It is recognised that certain debts such as Council Tax and Business Rates will have a more regulated period for recovery. The recovery process for each type of debt covered by this policy is shown in Appendix 1 with the following principles applying to unregulated debt:

• Invoices raised in respect of services delivered are normally due for payment immediately. The maximum payment terms are 30 days unless otherwise agreed with the Head of Financial Services.
• If no payment is received within 10 working days of the invoice date or agreed payment terms a reminder letter will be issued
• Where debts in respect of services provided remain unpaid after the first reminder, a second debt notice is raised, and the provision of further services will cease until the debt is paid.
• If no payment is received within 10 days of the reminder letter, a final demand will be sent.
• If no payment is received within 10 days further recovery action will be initiated which may include legal proceedings and/or referral to debt collection agencies

Where legislation permits, the Council will seek to levy and recover from the debtor all costs/fees that are legitimately due from the debtor to the Council or its agents. Only in exceptional circumstances, where it would not be in the public interest to pursue costs/fees will they be waived.

The Head of Financial Services will review the Enforcement Agencies to be used by the Council in respect of unregulated debt that remains unpaid after the final reminders have been issued and in respect of debt. Heads of Service will be expected to use agencies approved by Financial Services.

Once a debt is assigned to an Enforcement Agency for collection, it is the duty of the Revenues Service Delivery Manager to ensure that the agents behaviour conforms to the Taking Control of Goods: National Standards (GOV.UK website).

All debts will be taken into consideration when referring the debt for legal recovery. Where multiple debts are owed, the Council will endeavour to consolidate those debts before taking recovery action.

Deciding for people in arrears

We will encourage people to contact us early if they are having difficulty paying any debt to the Council and advise them where to get independent advice as appropriate. Many people are unaware of their rights and responsibilities and of the availability of a variety of payment options.

If people contact us as soon as they fall into arrears, we can discuss the situation and prepare a payment plan. This will help to keep people out of debt.

When people contact us, we will:

• comply with current service standards.
• check whether they should be paying less or nothing at all by ensuring that all the relevant benefits, reductions, discounts, reliefs, exemptions, and rebates are being claimed.
• advise on the most appropriate payment methods.
• make a realistic payment agreement if appropriate.
• advise them to contact an independent advice agency if appropriate.
• expect priority debts (see Section 4) to be given precedence over other debts.

All information collected by OCC is governed by The Data Protection Act 2018. This controls how your personal information is used by organisations, businesses, or the government.

The Data Protection Act 2018 is the UK’s implementation of the General Data Protection Regulation (GDPR).

12. Refunds

Where refunds are required from an OCC account, the officer responsible will check other areas of the Councils’ Business to ascertain whether any debt is owed to the Council for any other goods or services provided, and take that indebtedness into account, before making any refund. If another debt is owed, the customer will be advised that any credit will be used to offset that debt unless they advise us to the contrary.

Likewise, when a debtor is also a supplier to the Council, the Council will seek to offset any overdue debts owed to the Council from the monies owed to the supplier. All future supplier contracts should include a clause clarifying this right.

13. Social Inclusion and the ability to pay

Ability to pay is a paramount concern when considering debt recovery; we will also consider everyone's circumstances. For those that we identify as vulnerable we will work across service areas and with external agencies to achieve the best outcome, which balances the Council’s need to recover debt with the well-being of the individual/family.

Technology is developing constantly, and we are investigating the possibility of moving the debt collection service onto an intelligent and data-driven system which links all cases associated to a citizen to provide a single point to view and collect debt. The aim is to consolidate multiple notices and actions to provide an improved service and to safeguard citizens from unnecessary hardship.

We are signed up to the Citizens Advice Bureau (CAB) ‘Revised Collection of Council Tax arrears good practice protocol 2017’. This protocol has been developed through partnership work between the national bodies representing advice agencies and local government throughout England and Wales. It reflects best practice at local level and is intended to facilitate regular liaison on practices and policy concerning council tax debt collection. In setting down clear procedures and keeping them regularly under review all parties can ensure that cases of arrears are dealt with quickly and realistically whilst complaints are handled efficiently. We are signed up to the protocol as a public commitment to its principles of fairness, partnership working and transparency in local authority debt collection.

In addition we offer quarterly remote meetings with the advice agencies, were relationships are developed and case management issues discussed.

We also have a protocol with our Enforcement Agents for identifying and dealing with vulnerable cases. The Enforcement Agent will report any potential vulnerable cases to OCC after establishing the debtor or their partner falls into any of the established definitions of vulnerability.

A customer can be vulnerable in lots of different situations, for example if:

• disabled.
• or seriously ill.
• have mental health problems.
• have small children or are pregnant - especially if a single parent.
• Elderly.
• Cannot speak or read English well.
• Have been the victim of a crime.
• Become unemployed.
• A death in the family.

This is not a prescriptive list but potential indicators. All individual cases will be considered by senior officer and decided upon their merit.

An “income and expenditure” form will be used to ensure that collection officers can ascertain a customer’s total income and expenditure, and agree a consolidated affordable payment, which will clear all overdue sums over an appropriate period.

Council Tax hardship discount

Oxford City Council has the authority to reduce council tax payments in cases of hardship. We assess each application individually to decide if a reduction is warranted.

If you are facing financial hardship and believe you qualify for a reduction, please apply in writing. Detail your circumstances to help us understand your situation.

Our process for evaluating applications for discretionary reductions is outlined in the Discretionary Hardship Discount Procedure.

Hardship Relief (Business Rates)

We can offer hardship relief from business rates to businesses that are having temporary financial difficulties, where:

• the business owner would suffer financial hardship.
• it is in the best interests of the community.

This relief is offered on a temporary basis, and we need to see supporting information to help make our decision. You can apply for hardship relief using this application form:

Download the Business rates hardship relief application form

How we decide

Our Discretionary Rate Relief Policy sets out how we decide on awarding hardship relief.

Information and Advice

The Council provides information to all debtors on its website which covers all services and gives details on how to pay all debts under the relevant debt type. Information is also included on bills, statements, and letters. Information is available in a variety of formats and languages when requested.

Staff will promote the services of qualified debt advisers i.e., Citizens Advice Bureau, National Debt-Line, Neighbourhood Advice Centres, Money Advice (MA) etc.

Equality Statement

We will be consistent and fair in our dealings, "The Equality Act 2010 protects everyone from being discriminated against or treated unfairly for a reason related to one or more of nine protected characteristics that are set out in the Act; for example, your age, race, sex or disability.". Every person has one or more protected characteristics; so, the act protects everyone against unfair treatment.

In addition, the Public Sector Equality Duty (PSED) is a legal requirement placed on public authorities and organisations conducting public functions.

The purpose of the PSED is to make sure that public authorities and organisations conducting public functions think about how they can improve society and promote equality in every aspect of their day-to-day business. This means that they must consider, and keep reviewing, how they are promoting equality in:

• decision-making.
• internal and external policies.
• procuring goods and services.
• the services they provide.
• recruitment, promotion, and performance management of employees.

More information can be found on the Public Sector Equality Duty (PSED) pages of the Equality and Human Rights Commission website.

We will assist with Financial Inclusion by offering the right advice to enable debtors to maximize their income and to help prevent the build-up of debt.

When people get into arrears, we will:

• ensure that as far as possible, payment arrangements reflect the ability to pay as well as the level of debt owed.
• expect Priority Debts (see section 4) to be given priority over other debts owed to OCC.
• work with recognized advice agencies wherever possible to reach an acceptable arrangement for the recovery of the debt.

14. Bad Debt Provision

The Head of Financial Services in conjunction with Service Managers must ensure there is adequate provision for Bad Debts, in accordance with the Chartered Institute of Public Finance and Accountancy (CIPFA) Code of Practice on Local Authority Accounting in United Kingdom - A Statement of Recommended Practice.

Bad debts, which are usually an amount owed by a debtor that is unlikely to be paid, should be reviewed at least annually to establish if circumstances have changed and the debt is now recoverable. This is particularly relevant to debt incurred because of works carried out in default of statutory notices.

A separate bad debt provision is held for each service area so that any increase required in the provision will be charged to the service area concerned. Conversely, if the debt for which a bad debt provision is paid then the provision for that debt will be credited back to the account were the debt was originally raised.

15. Writing Debts Off

All debts of the Council will be acted on in accordance with its Financial Rules. If the debt remains unpaid, after exhausting all appropriate recovery methods, the debt should be written off. All requests to write off debts must be approved by the Head of Financial Services.

It would normally be expected that debts to be written off would consist of:

• Cumulative debts under £75, where no payment has been received within six months of sending the final demand.
• All debts where an Enforcement or Debt Collection Agent advises they are unable to collect, and all options are exhausted - in these circumstances the Head of Financial Services will deem it not cost-effective to pursue.
• All debts where Legal Services advises the debts are irrecoverable or that legal action is unlikely to be cost effective.
• Debtors who have absconded/ or have been unable to traced.
• Bankruptcy of debtor
• Limitations Act, where debt is older than 6 years old and no recovery action has commenced.
• Debt Relief Orders
• Debtor is deceased and there are insufficient funds in the Estate to clear the outstanding charge.
• The debt is uneconomical to collect meaning the cost of collection outweighs the value of the debt recovered.
• In cases of vulnerability and/or ill health/terminal illness where collecting the debt would cause further hardship (usually for benefit overpayment cases)

Once appropriate authorisation has been received and final authorisation for the write off obtained from the Head of Financial Services, the debt will be removed from the relevant accounting system and charged against the appropriate bad debt provision.

Where the Council collects debt on behalf of a third party e.g., Oxford City Homes Ltd T/A OX Place, it will have its own write off criteria separate to this policy.

Where circumstances change and it becomes possible to collect the debt then it will be written back on to the account and pursued.

16. Monitoring the Policy

It is the responsibility of the Council to ensure the policy is effective through the monitoring and complaints procedure, considering the indicators listed below:

1. Rate of collection.
2. Recovery of housing benefit overpayments.
3. Number of cases reaching each stage of recovery.
4. Number of cases where attachments of benefit/earnings are made.
5. Number of cases being referred to Enforcement Agencies.
6. Number of cases where recovery is suspended due to arrangements being made.
7. Number of cases with arrears outstanding at year end.
8. Amount of arrears outstanding at year end.
9. Number of complaints received where policy is not being followed.
10. Audit recommendations.

Appendix 1 - Debt recovery processes by debt type

Oxford Direct Services Ltd, Oxford Direct Services Trading and Oxford City Housing Ltd debts are not included in this policy and debt recovery is covered within each Service Level Agreement and debt recovery policy, which have been agreed by the shareholders and relevant company boards.