A total of 13 debt collection firms have bid for the chance to reclaim £5 million from residents who have failed to pay council tax.
Stoke-on-Trent City Council is reviewing bids from the companies who will attempt to claw back the unpaid tax on the authority’s behalf and claim a proportion of money reclaimed as a fee.
But the authority is owed more than £19 million in unpaid council tax dating back to the 1990s, and cabinet members are poised to sanction officers to write off millions of pounds in debt which is now deemed ‘uncollectable’.
They will meet next month to discuss writing off some of the authority’s ‘bad debts’, and plan to repeat the process regularly to avoid a repeat of arrears spiralling to record highs.
But any move to write off debts is likely to prove unpopular in the wake of citywide cuts of £24 million for 2011/12.
Jim Gibson, chairman of Chell Heath residents’ association, said:
“It is ridiculous. There are people who only owe a few pounds being chased, but when they come to write this off there will be people who owe hundreds and get away with it. It beggars belief that they let the amounts get so high before they start to do something about it.”
Concerns have also been raised that Government welfare cuts – combined with a 3.49 per cent tax increase imposed by the council – will prompt an increase in the number failing to pay.
National changes to the welfare system are set to leave the council with a gap of at least £5.6 million between the amount paid to 33,000 city council tax benefit claimants and the Government funding the council will receive to pay the benefit from next April.
Thousands of working age residents face a 35 per cent reduction in tax benefit to cover the shortfall.
Councillor Dave Conway, leader of the opposition City Independent group, said:
“No matter how much is collected by one of these agencies, there is going to be a cost. What we still haven’t been told is what that cost will be – and how much is going to be written off. People are going to struggle to pay the bills because everything is going up – council rent, council tax, food, gas prices. The council should have accepted the Government’s money to freeze tax because at least that money was guaranteed.”
Deputy leader Councillor Paul Shotton, cabinet member for finance, said:
“We have improved the debt collection performance of the council over the last 18 months. This was a key objective for us and we are committed to try and recover all debts that are owed to us wherever possible. We now have more rigorous enforcement processes in place and these are having a positive impact.”
“It’s important that we recognise that keeping irrecoverable debt up to 18 years old on our systems, that has been returned as ‘uncollectable’ by our debt collection agencies, is not sustainable or appropriate. The council now has a clear programme in place to consider these bad debts on a regular basis. A report on debts for write-off will be considered in September.”
