Hampshire County Council

Executive Member - Adult Social Care Item 2

26 May 2006

Write-off of irrecoverable debts

Report by the County Treasurer

1

Summary

1.1

The following decisions are sought:

The Executive member agree to write off the debts totalling £53,949.72 detailed within the report.

2

Reason

2.1

This decision supports Aim 5 of the corporate strategy (improving services) by making sure actions are taken to minimise income loss.

3

Other options considered and rejected

3.1

None

4

Conflicts of interest declared by the decision-maker or other Executive Member consulted

4.1

None

5

Dispensation granted by the Standards Committee

5.1

None

6

Reason(s) for the matter being dealt with if urgent

6.1

Not applicable

Approved by:

..........................

Date of decision:

Councillor Patricia Banks

Hampshire County Council

Executive Member - Adult Social Care

26 May 2006

Write-off of irrecoverable debts

Report by the County Treasurer

How the conclusion in this report fits with the Corporate Strategy

This scheme will impact on the delivery of the following Corporate Aims:

Aim 5 - improving services - by ensuring actions are taken to minimise income loss.

1.

Summary

1.1

2

2.1

2.2

3

3.1

3.2

4

4.1

4.2

4.3

4.4

4.5

4.6

4.7

4.8

4.9

4.10

4.11

4.12

4.13

4.14

4.15

4.16

5

5.1

5.2

5.3

5.4

5.5

This report identifies seven debts where it has not been possible to recover the amount due from the debtors and for which Executive Member's approval is required for write-off.

Introduction

Hampshire County Council's financial regulations and procedures set out the approval levels for debt write-off as follows:

Up to £1,000 - Chief Officers to record and write-off.

Between £1,000 - Write off to be agreed in consultation between the

and £5,000 Chief Officer and the County Treasurer.

Greater than £5,000 - Executive member approval to be obtained.

This report seeks the approval for the write-off of seven debts over £5,000 which are deemed irrecoverable, to a total value of £53,949.72. Of these, four debts relate to former residential clients, one is for a client who received both non-residential and residential care, one debt is for an overpayment of a direct payment and one debt relates to the non recovery of client contributions from a provider that went into administration. There is also a summary of the debts that have been written off during 05/06 which are less than £5,000.

Background

Income management procedures ensure that debts are minimised as much as possible and follow up action taken to recover debts is taken wherever possible.

The Financial Assessments Panel membership draws representation from Revenue Services, and Adult Services Devolved Finance Unit, from the County Treasurers Department, the Adult Services Department and Legal Services from the Chief Executive Department. The group reviews individual cases of debts greater than £2,000, makes recommendations and ensures further action is taken as required. These debts have been considered by Panel who have agreed that further action will not result in debt recovery.

Debts recommended for write-off

The following debts are recommended for write-off:

£

Client 1 10,350.75

Client 2 5,464.25

Client 3 5,228.21

Client 4 8,373.00

Client 5 6,315.44

Client 6 8,325.12

Client 7 9,892.95

TOTAL 53,949.72

Client 1 (deceased) - £10,350.75

The client moved from self funding to Social Services funded then was assessed as full cost when her spouse joined her in the nursing home (although he died shortly after).

When HCC was made aware that the client's property had been sold, she was invoiced, but it later transpired that the capital from the house had depleted below the capital limit for assistance and the debt was recalculated. The client had also been paying her own third party top up which depleted her funds further.

The client then died and her son questioned the debt, and provided a receivership statement with a balance of less than £100.

HCC efforts to enforce judgment were unsuccessful as the client's son (and appointee) lived out of the Court's jurisdiction.

Client 2 (deceased) £5,464.25

The debt occurred due to the balance of the assessed charge for care which should have been paid from the client's house proceeds being managed by a niece. Charges had been paid on time but then ceased.

Despite an attempt to trace the niece it was not possible to do so and therefore it was not possible to recover the debt via the County Court.

Client 3 (deceased) £5,228.21

The client had been in arrears and the debt was referred to a collection agency. The client then died and documentation was received stating that the client's estate was closed and that there were no funds.

Client 4 - £8,373

This client is supported by the Learning Disability Team but also has mental health problems.

The Department decided that because of issues relating to the capacity of the client to take action in this particular case would be detrimental to the health and care of the client. Therefore, a decision was made not to pursue this debt.

Client 5 (deceased) - £6315.44

HCC were informed by the home of outstanding client contributions following the client's death.

Arrangements were made with the client's son for payment but before any monies were received, he was declared bankrupt.

Client 6 (deceased) - £8,325.12

An invoice was raised to recover an overpayment of the direct payment scheme. The Area finance section had not been informed when the client died and his wife continued to draw on the account after her husband's death.

The Legal Practice collated relevant information in order to consider recovery options. Counsel's advice was sought, which concluded that although the client was legally liable to repay the debt, analysis of the client's means indicated that the client's widow's circumstances were such that recovery would not be cost effective. In view of the widow's financial constraints and as she was suffering from a depressive illness, counsel considered that criminal prosecution was unlikely. A criminal prosecution was not pursued.

The Financial Assessments Panel considered the opinion and agreed that it would not be cost effective to pursue this through the County Court or to support the administration cost of a weekly payment in the region of £3.00 per week. However, payment has not been forthcoming and it is now considered that the debt should be written off.

Client 7 - £9,892.95

Several legal entities were involved although the original contract was with a client which was established as a non-limited company. As this has gone into administration, legal advice was that the only possible route of recovery of the debt was with the directors personally if negligence could be shown. Due to lack of evidence regarding liability it was considered that the prospects of recovery were deemed very low.

Debts already written-off

The following debts totalling £154,472.26 have been written off during 05/06.

· 138 debts with a total value of £100,490.48 relating to clients in independent sector residential homes (Total 2004/05 218 debts - £285,278.46).

· 60 debts to the value of £21,789.74 relating to clients in County Council homes (Total 2004/05 73 debts - £19,546.18)

· 169 debts to the total value of £32,192.04 for non-residential charges (2004/05, 414 debts - £23,912.11).

Assuming the debts referred to above are agreed for write-off, the total write off figures for 2005/06 will be £208,421.98. This represents about 0.28% of the budgeted income for the Department. This compares with £328,737 for last year which represents 0.47%.

The target maximum write-off for residential care is 0.4% of income for the year and 0.5% for non-residential care. As with the last year the requests for write off is primarily against residential placements rather than non residential care.

The write off amount for 2005/06 is a 36% improvement on last year and represents a small fraction of income due which for 2005/06 is in the region of £74m. The Department continues to review debt recovery, information to clients and financial assessments procedures to ensure income collection is maximised.

Provision has been made in the Adult Services Department 2005/06 accounts for these debts if approved by the Executive Member.

6.

Impact Assessment

6.1

In compiling this report account has been taken of the requirements of the Corporate Equalities Plan and Race Scheme.

7

Consultation with Local Members

7.1

Not applicable.

Recommendation(s)

That:

1

The debts highlighted in paragraph 4 to be written-off.