Report to Write of Bad Debt by qby13102

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									Report to:              Executive Member for Regeneration

 Date:                  31st March 2008


Report of:              CHIEF EXECUTIVE OF                       Report No:
                        BOLTON AT HOME

Contact Officer:        EDWARD MELLOR, FINANCIAL                 Tele No:        5660
                        SERVICES MANAGER

Report Title:           Former Tenants – Bad Debt Write Offs 2007-2008

Confidential /          (Non-Confidential) This report does not contain information which
Non Confidential:       warrants its consideration in the absence of the press or members of the
(delete as approp)      public.

Purpose:                To provide the details of the Former Tenant Debt to be written of in 2006-
                        2007.



Recommendations:
                        The Executive Member for Development and Regeneration is asked to
                        note the write off of £522,928.93 representing 1,010 cases under £5000
                        and approve the writing off of £16,657.36 representing 3 cases over
                        £5,000.



Decision:




Background Doc(s):



(for use on Exec Rep)
Signed:
                        Leader / Executive Member                    Monitoring Officer

Date:

Summary:
(on its own page
with background docs)
EXECUTIVE SUMMARY

The report gives details of the Former Tenant Debt to be written of in 2007-2008 and requests that
the Executive Member for Development and Regeneration notes the write off of £522,928.93
representing 1,010 cases under £5000 and approve the writing off of £16,657.36 representing 3
cases over £5,000.
1.    INTRODUCTION

1.1    The report gives details of the Former Tenant Debt to be written of in 2007-2008.

2.     Background

2.1    The current procedure for writing off arrears requires the approval of the Executive Member
       for Development and Regeneration for cases of more than £5,000. Cases below £5,000 in
       value can be written off with the delegated authority of the Director of Finance (BMBC) and
       the Chief Executive (BH).

2.2    It should be pointed out that although the account is written off for accounting purposes, in
       line with audit recommendations, records of the debt are retained and if the tenant
       subsequently returns in future years the debt is written back to the account. The recovery
       action taken to date has involved both the Bolton at Home Income Management team and
       external firms which specialises in debt recovery. A separate report will be brought to a
       future meeting setting out proposals for amending the debt collection procedures. These
       will include a proposal to carry out tracing of former tenants on a regular basis where debt
       has been written off.

3      Debts recommended to be written off in 2007-2008

3.1   The Executive Member for Development and Regeneration is requested to note the write off
      of £522,928.93 representing 1,010 cases under £5000 and approve the writing off of
      £16,657.36 representing 3 cases over £5,000..

3.2   A area / district split of the debt written off is given below:


                                                      Annual Total 2007-2008
         Area                     Under £5,000                  Over £5,000                Total
                             No           Amount          No        Amount           No      Amount
 Benjamin Court / Clare
 Court                        115           £21,337.47      1            £5,015.80     4       £26,353.27

 Gypsy Site                    11            £7,500.95      0                £0.00     1           £7,500.95

 Council House/Flats          884         £494,090.51       2           £11,541.56   135      £505,632.07

 TOTAL                       1010         £522,928.93       3           £16,557.36   140      £539,486.29


3.3    The figures for write-off are in line with that anticipated and reflected in the HRA Quarterly
       monitoring reports. Although £539k will be written out of the accounts in 2007/2008 there
       will be at least £40k which will be written back into the accounts. This relates to debts
       previously written off, where tenants have subsequently been traced or have expressed an
       interest in having a council house again. The final figures for the re-instated debt will not be
       known until year end however for accountancy purposes they will be netted off the actual
       debt written off.
3.4   All of the above arrears relate to former tenants. In the calculation of the bad debt provision
      for housing, former tenants arrears are provided for at the rate of 90%. In effect this means
      that in accounting terms 90% of the debt has already been treated as uncollectable.
      Therefore the effect of writing these debts out of the accounts is that an additional 10%
      charge will be made to the Housing Revenue Account. This equates to about £54k which
      was all anticipated when the quarter 3 HRA monitoring report was written.

3.5   Further details about the movement in Former Tenant Arrears are provided in Appendix 1.
      Although the level of write-offs is still high, a substantial portion of the annual write-off figure
      in each of the last 3 years and gone towards reducing the year on year level of former
      tenant arrears. The underlying level of annual write-off has dropped significantly in
      2007/2008 to around £300k from a level of around £430k in each of the last 2 years.

4.    Recommendation

4.1   The Executive Member for Development and Regeneration notes the write off of
      £522,928.93 representing 1,010 cases under £5,000 and approve the writing off of
      £16,657.36 representing 3 cases over £5,000.


Edward Mellor - Financial Services Manager (Bolton at Home)
                                                                                     Appendix 1

            Movement on Former Tenant Arrears over the last 3 years

                  Former tenants arrears at          31/03/2005          1,908,057

                  Payments recovered                                      -204,139
                  Transfers from current arrears                           565,291
                  Write-offs                                              -823,889
                  Other adjustments                                         64,070

                  Former tenants arrears at          31/03/2006          1,509,390

                  Payments recovered                                      -200,626
                  Transfers from current arrears                           567,663
                  Write-offs                                              -667,476
                  Other adjustments                                         71,018

                  Former tenants arrears at          31/03/2007          1,279,969

                  Payments recovered                                      -205,093
                  Transfers from current arrears                           502,944
                  Write-offs                                              -540,003
                  Other adjustments                                          3,425

                  Former tenants arrears at          06/03/2008          1,041,242


                           Former tenants arrears at year end
2,000,000

1,800,000                                      Former tenants arrears at year end

1,600,000

1,400,000

1,200,000

1,000,000

 800,000
               31/Mar 05        31/Mar 06          31/Mar 07             06/Mar 08
                     Write off of Former Tenant Arrears split between
                    underlying level of annual write-off and write-off of
                                        historic debt
                0
         -100,000         2005/06            2006/07              2007/08
                                                                  -301,276
         -200,000         -425,222           -438,055
         -300,000
         -400,000                                                 -238,727
         -500,000
                                             -229,421
         -600,000         -398,667
         -700,000
                                          Write-off of old uncollectable debt
         -800,000
                                          Underlying level of annual write-off
         -900,000


Conclusions

     The figures in the table show that a consistent level of payment is still being
      recovered annually from the remaining former tenant accounts.
     In 2007/2008 for the first time, the value of the transfer from current tenant arrears
      to former tenant arrears looks like it will fall. This indicates that of the tenancies
      which terminated in 2007/2008 there was a lower level of arrears outstanding on
      these tenancies, linking to the success in bringing current tenant arrears down. The
      success in reducing current tenant arrears should see further reductions in the
      transfers to former tenant arrears in future years.
     The underlying level of write off of former tenant arrears has fallen significantly in
      2007/2008.
     The write-off of old uncollectable debts should start to reduce significantly each year
      as we reach a level of FTA debt which is traceable and collectable.

								
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