South Tyneside Council bosses write-off £100,000 in 'irrecoverable’ debts

Senior councillors in South Tyneside have agreed to write off “irrecoverable” debts worth nearly £100,000.
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Earlier this week, South Tyneside Council’s ruling cabinet were presented with the latest report on “sums due to the council considered irrecoverable.”

The local authority regularly reviews debt levels, with cabinet approval being required to write off any sum exceeding £5,000 considered to be irrecoverable.

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The latest batch of debts includes nine individual cases split between housing benefit overpayments and unpaid business rates.

South Shields Town Hall.South Shields Town Hall.
South Shields Town Hall.

Councillor Joanne Bell, cabinet member for governance, finance and corporate services, introduced a report on the matter at Jarrow Focus on October 5, 2022.

All debts outlined were considered “uneconomical to pursue further at this present time”.

Cllr Bell said the council issues bills for more than £30million per year for business rates and pays out more than £20 million in respect of housing benefit.

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Despite collecting the “vast majority of monies owed”, the cabinet meeting heard, current laws “restrict the scope” of the council’s recovery efforts, as well as viability issues around pursuing debtors when firms fall into liquidation.

Cllr Bell added that while debts can be written off in the council’s accounts, “further recovery will be undertaken where new circumstances arise”.

According to a cabinet report, there were three South Shields cases and one Hebburn case linked to unpaid business rates where companies / individuals owed a combined total of £47,191.69.

In one case, a business linked to a South Shields night spot with a “history of transient occupation” was dissolved leaving a debt of £5,103.95, while another company was dissolved leaving £5,630.03 outstanding.

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A third case involved a company being placed into administration and then dissolved with a debt of £12,615.67.

The fourth case, linked to a sole trader in Hebburn, involved recovery action being suspended because the ratepayer was jailed.

When the individual was released, the report explains, South Tyneside Council worked with a neighbouring council to try and locate the debtor however “all enquiries proved unsuccessful”.

As a result, cabinet were asked to write-off a total of £23,842.04 for this case.

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Elsewhere, housing benefit overpayment debts totalled £50,685.01, with recovery action exhausted for a number of reasons.

This included customers dying without an estate or identifiable next of kin and one case where a debt relief order was issued, halting recovery efforts.

The individual debts for housing benefit overpayment ranged from a low of £5,885.47 to a high of £15,787.48.

The combined total of both business rate debts and housing benefit overpayment debts written off by the council was around £97,876.07.

A report prepared for cabinet confirmed that the cost of writing off debt is “met from the provision for bad debt set aside on the council’s balance sheet”.

It added that “future action may be taken to recover these debts dependent upon receipt of new information or a change of circumstances.”

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Councillor Ernest Gibson, cabinet member for transport and neighbourhoods, asked about the council’s response to collecting business rates.

This included whether council officers were “on the backs” of business rate debtors in the same way residents are pursued over unpaid council tax.

Cllr Bell, responding, stressed business rates were collected regularly and that the council “takes every step to recover money” from debtors before going into the write-off stage.

The cabinet member added businesses can accumulate large debts in a short period of time but that the council goes through a “rigorous process” to try and recover as much money as possible.

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Cllr Gibson also raised concerns about one venue repeatedly coming before cabinet over business rate debts and asked for this to be looked into.

Cllr Gibson added:”It’s never seemed to close, all it seems to do is just change the name above the door and I think we should be looking into that, because it’s just a ploy really”.