Friday, 23 August 2013 10:07

Local authorities urged to 'manage debt collection more responsibly'

Local authorities have been urged to manage their debt collection processes more responsibly, in order to cut down on the 1.8 million instances each year in which bailiffs are hired to recover overdue council tax payments and similar arrears.

Figures from the Money Advice Trust show substantial regional variation in the use of bailiffs by local authorities - but hint at a worryingly high prevalence of bailiffs being used to collect county court judgments nationwide.

Most frequent among the reasons for calling in bailiffs are: council tax arrears; business rate arrears and overdue parking fines.

And while larger authorities understandably use bailiffs the most in volume terms - Birmingham over 82,000 times over the past 12 months, equivalent to 17% of the properties under its management - even smaller regions show high bailiff use in proportional terms, with Merthyr Tydfil racking up over 6,000 cases in 12 months, equivalent to 22% of its estate.

In proportional terms, the London Borough of Newham topped the table, with 55,652 bailiff referrals in 12 months, equivalent to 50% of its total number of properties under management.

Joanna Elson OBE, chief executive of the Money Advice Trust, says: "These figures make clear that something has to change. It is not economically or socially responsible for local authorities to continue to use bailiffs so frequently."

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Bailiff bounceback 

A BBC News at One report broadcast today noted that a significant percentage of cases referred to bailiffs are ultimately referred back to the local authority, or to a third-party organisation or charity, in order to set up mutually acceptable payment terms for the debt to be repaid in full, in a way the debtor can afford.

This suggests that, in those instances, the bailiffs are perhaps not the most pragmatic approach to recovering the debt - and other credit control and recovery procedures could work better.

For local authorities pursuing council tax, parking fine or business rate debts, effective credit control upfront could be the best place to start - particularly as the recently introduced Late Payments Directive made public authorities subject to 30-day payment terms as standard on their own payments for goods and services.

When payments go substantially overdue, sending in bailiffs can still seem like threatening behaviour, as evidenced by the BBC News at One interviewee who admitted she now fears leaving her house, or even opening a window, in case the bailiffs manage to gain entry in her absence.

A more approachable, understanding and flexible approach to debt recovery could be the best way of doing business in the 21st century, by allowing debtors to agree to acceptable repayment terms, reducing the risk of some or all of the debt going unpaid indefinitely.

This is good business sense not only for local authorities, but for all creditors who are keen to pursue client debts for recovery, without alienating the individual against wanting to clear their account.

By working with the debtor, rather than against them, you can manage any reputational risks, and recover the full amount owed while potentially - and only if you wish - retaining the individual or organisation's custom for future work.

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Our modest but highly skilled team has a combined total of over 150 years of experience in commercial credit management and B2B debt collection. From independent IT contractors to major film and TV publishers, Safe Collections has the knowledge and experience you need to get paid quickly and cost effectively.

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