DELEGATED POWERS REPORT NO. 1565 SUBJECT: Temporary Accommodation Arrears Write Offs Control sheet All of the following actions MUST be completed at each stage of the process and the signed and dated report MUST be passed to the Governance Service for publishing All reports 1. Governance Service receive draft report Name of BGO Andrew Charlwood Date 30/01/2012 2. Governance Service cleared draft report as being constitutionally appropriate Finance clearance obtained (report author to complete) Name of BGO Andrew Charlwood Date 30/01/2012 Name of Fin. Officer Alex Altman Date 16/01/2012 3. Staff and other resources issues clearance obtained (report author to complete) Name of Comm. Officer Date N/A 4. Strategic Procurement clearance obtained (report author to complete) 5. Legal clearance obtained from (report author to complete) 6. Policy & Partnerships clearance obtained (report author to complete) 7. Equalities & Diversity clearance obtained (report author to complete) 8. The above process has been checked and verified by Director, Head of Service or Deputy (report author to complete) 9. Signed & dated report, scanned or hard copy received by Governance Service for publishing 10. Report published by Governance Service to website Name of SPO Mick Stokes Date 02/02/2012 Name of Legal officer Bob Huffam Date 12/01/2012 Name of P&P officer Andrew Nathan Date 12/01/2012 Name of officer Andrew Nathan Date 12/01/2012 Name Cathy Osborn Date 16/01/2012 Name of BGO Paul Frost Date 02/02/2012 Name of BGO Paul Frost Date 02/02/12 Officer reports: 11. Head of Service informed report is published and can be implemented. Name of BGO Date N/A Cabinet Member reports: 12. Expiry of call-in period Date N/A 13. Report circulated for call-in purposes to Name of BGO N/A Business Management OSC members & copied to Cabinet & Head of Service Date
ACTION TAKEN UNDER DELEGATED POWERS BY OFFICER (EXECUTIVE FUNCTION) Subject General Debt, Housing Revenue and General Fund (Temporary Accommodation) Write Offs Officers taking decision Deputy Chief Executive and Chief Finance Officer Assistant Director Legal Date of decision 01 February 2012 Summary Officer Contributors Status (public or exempt) Wards affected Enclosures Reason for exemption from call-in (if appropriate) To approve the write off of the Council s Temporary Accommodation rental arrears (< 5,000) for 2005 totalling to 313,153.36 less 16,377.29 of write back credits. To approve the write off of the Council s Private Sector Tenancy Scheme unrecoverable rent and deposits (<5,000) for 2005 totalling 86,744.52 Cathy Osborn, Interim Head of Housing Rashmikant Mandalia, Team Leader, Housing Management Public All Schedule listing the amount to be written off Appendix A:- Nightly Purchase Appendix B:- Rent Deposit N/A Contact for further information: Rashmikant Mandalia, Team Leader, Planning, Housing Management (0208 359 4805) Serial No. 1565
1. RELEVANT PREVIOUS DECISIONS 1.1 Delegated Powers Report No 1253, 2 February 2011 authorising write-off of Statute Barred Temporary Accommodation arrears of 1,365,587.25 less credits of 162,211.02 1.2 Delegated Powers Report No 1255, 2 February 2011 authorising write off of Statute Barred Private Sector Tenancy Scheme debt of 761,928 2. CORPORATE PRIORITIES AND POLICY CONSIDERATIONS 2.1 The write-off proposal helps meet the Corporate Plan 2011-13 priorities of Better services with less money by limiting the costs of pursuing debt that is ultimately irrecoverable. 3. RISK MANAGEMENT ISSUES 3.1 The recommendation to write off these debts recognises that there is no longer a realistic possibility of economic recovery. All appropriate avenues have been exhausted in attempting to recover these sums. 3.2 I consider the issue involved is unlikely to raise significant levels of public concern or give rise to policy considerations. 4. EQUALITIES AND DIVERSITY ISSUES 4.1 It is considered that this matter is not likely to neither have an impact on the Council s statutory duties under the Equality Act 2010 nor compromise the commitment outlined in the Council s Equality Scheme 2007/08-2010/11. 5. USE OF RESOURCES IMPLICATIONS (Finance, Procurement, Performance & Value for Money, Staffing, IT, Property, Sustainability) 5.1 The sum of the debt written off relates to the financial year 2005. It is important to note that the amounts proposed for write off are within the existing bad debt provision covering nightly purchase and hostels of 3,302,747 and Private Sector Tenancy of 847,715. The proposed write off represents 1.2% of the 2010/11 temporary accommodation rental income. 6. LEGAL ISSUES 6.1 The Limitation Act states that contractual debts must be claimed within six years of accruing, or be statute barred. 6.2 The Head of Legal Services has been consulted in this process.
7. CONSTITUTIONAL POWERS 7.1 Constitution, Part 3, Responsibility for Functions, Section 6.7: the Chief Finance Officer has the powers set out in the Financial Standing Orders and in particular subject to details being incorporated in the next available budget report being submitted to Resources Cabinet Committee on the action taken, to write off individual debt amounts of up to and including 5,000 (including cancellations of penalty charge notices or any other sums due to the Council), in consultation with the Assistant Director Legal. 8. BACKGROUND INFORMATION 8.1 This section covers write offs of people placed in Temporary Accommodation in bed and breakfast and Hostel as emergency accommodation for the period of financial year 2005 and the write offs of deposits and rent advances paid to landlords and estate agents to facilitate the granting of private sector tenancies to homeless households, who the council either had or would have had a duty under The Children s Act 1989 or Housing Act 1996 Part VII for the financial year 2005. See below for the breakdown of debts. 8.2 All of debts are already Statute Barred by 31 December 2011. This means that the Council is legally unable to recover any monies from occupants for service and accommodation charges in Temporary Accommodation and any monies from landlords and estate agents for rent deposits and advances. Private Sector Tenancy Scheme arrears 8.3 The Rent Deposit scheme provided households with private sector tenancies, thus council avoided using more expensive nightly paid emergency temporary accommodation. This resulted in substantial savings for the council and a better quality of life for the clients, who were able to choose the type and location of their accommodation. This also allowed them to remain and maintain an essential support network and links in the community. 8.4 When the private sector tenancy scheme was set up in 1994, it was initially intended to deal with a small number of households referred to Housing by Social Services in discharge of their obligations under The Children s Act 1989. However, as pressure grew on the Housing Service to meet ever increasing demand, the scheme was expanded to offer a wider section of clients with housing needs the opportunity to obtain accommodation of their choice in the private sector with financial assistance from the council. This enabled hundreds of clients to resolve their housing situation without relying on the council s limited housing resources. The scheme not only enabled the council to prevent homelessness but also greatly assisted in reducing the number of households accepted as homeless from 1,101 in 2003 to 231 in 2010. In addition the number of households placed in emergency more expensive temporary accommodation has reduced from 1,426 in 2002 to 364 in 2010. 8.5 The Private Rented scheme assisted homeless clients to find alternative accommodation in the private sector by offering financial assistance, which until 2008, consisted of a deposit equivalent to four weeks rent, and four weeks rent in advance if the property was located within the borough of Barnet. 8.6 The debts have arisen for several reasons:
(i) (ii) (iii) The rapid expansion of the scheme in response to central government target of halving the number of clients in temporary accommodation by 2010 led to a huge increase in the number of private sector lettings under the scheme, with a corresponding large number of deposits and rent advance paid out. To cope with the demand of the scheme, a dedicated Housing Benefit Officer (HBO) was funded from 2009, which proved effective in increasing the recovery rate for the rent in advance to 98%. Prior to 2009 there was no HBO in place. The scheme was originally set up as a cost neutral budget. 8.7 Attempts were made to recover the debt by writing to the landlords and Estate Agents once it was established that the tenancy had ended. However, these met with limited success as there were counter claims for damages caused by the tenants. In deciding against any further recovery action, consideration was given to the resource implications, which based on a previous recovery exercise (involving 250 letters sent to landlords and Estate Agents that resulted in the return of two deposits), would far outweigh any expected successful outcomes. Temporary Accommodation arrears 8.8 Attempts to trace individuals in order to collect debts have included searches of the internal systems, enquiries made with agents, visits and letters sent out. Having regard to cost effectiveness, the extent of tracing activity will correspond to the amount of individual debt, with a greater number of checks being carried out in respect to larger debts. Due to the Council s updating of various Information Technology systems, it has also been very difficult to trace the movement of people where there is no access to pre-existing systems. 8.9 The debts are as a result of charges made against individuals or families for services and accommodation. They were individuals or families with low incomes who originally presented themselves as homeless to the Council for assistance. They had been placed in emergency accommodation whilst their applications were assessed. Most individuals income was dependant in state benefits and there were often delays in claims for benefits causing debts to be incurred. Some people subsequently moved out of their accommodation without leaving a forwarding address. It has therefore proved difficult to find households from whom to recover the debts. 8.10 There are rent accounts which have credit balances, also Statute Barred which are being requested to be written back amounting to 16,377.29. The credit balances could have been due to Housing Benefit Overpayment or where tenants have overpaid and not requested the monies back. 8.11 These write offs of Rental income need to be taken in context and by comparison to the debt budgeted for each financial year. The rental income for the Temporary Accommodation (excluding Regeneration Buybacks) was 7.8m in 10/11. The amount collected exceeded budgeted yield for each year, which is set at 95%. This is due to improved systems and procedures been put in place to maximise the collection rate and ensure the bad debt is kept within the budget. Currently the collection rate is 97 per cent and been improving each year since 2003.
8.12 The Breakdown of the debt is as follows Nightly Purchase Accommodation: Debt accrued Amount Nightly Purchase 280,508.72 Hostels 32,644.64 Total 313,153.36 Credits accrued Amount Nightly Purchase - 10,908.41 Hostels - 4,711.62 Private Sector Leasing - 757.26 Total - 16,377.29 Debt profile: Number of Cases Nightly Purchase 0-50 18 50-100 146 100-500 205 500-1,000 65 1,000-4999.99 84 Total 518 Hostels 0-50 17 50-100 12 100-500 23 500-1000 8 1000-4999.99 13 Total 73 Credit Write Back Nightly Purchase 0-50 51 50-100 20 100-500 28 500-1000 2 Total 101