Archived decisions
Hampshire County Council Executive Member for Adult Social Care Item 1 30 May 2008 Write-off of irrecoverable debts 2007/08 Report of the County Treasurer and Director of Adult Services |
Contact: Erica Meadus 01962 846195 [email protected]
1. Summary:
The following decision is sought:
a) The Executive Member agree to write off the debts totalling £49,992.65 detailed within the report and to note that the overall total debts written off in 2007/08 is within the target percentage.
.
2. Reason
2.1 This decision supports the corporate property of Maximising Well-Being 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 - none
5. Dispensation granted by the Standards Committee - none
6. Reason(s) for the matter being dealt with if urgent - not applicable
Approved by: ....................... Date: .......................
Councillor Felicity Hindson
Executive Member for Adult Social Care
Hampshire County Council Executive Member for Adult Services Item 1 30 May 2008 Write off of irrecoverable debts 2007/08 Report of the County Treasurer and Director of Adult Services |
Contact:
Kevin Armstrong, Assistant Head of Finance, Ext 7233, email: [email protected].
1. Summary
1.1 This report identifies five 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.
1.2 The report supports the corporate priority of Maximising Well-Being by ensuring actions are taken to minimise income loss.
2. Recommendations
a) The Executive Member agree to write off the debts totalling £49,992.65 detailed within the report and to note that the overall total debts written off in 2007/08 is within the target percentage.
3 Impact analysis
3.1 In compiling this report account has been taken of the requirements of the Corporate Equalities Plan and Race Scheme.
4. Introduction
4.1 Hampshire County Council's financial regulations and procedures, as amended in April 2007, set out the arrangements for debt write-off as follows:
Up to £1,000 |
County Treasurer to authorise |
Between £1,000 and £5,000 |
County Treasurer in agreement with the Chief Officer. |
Between £5,000 and £50,000 |
Joint report from Chief Officer and County Treasurer for approval by Executive Member |
Greater than £50,000 |
Approval by the Leader |
4.2 This report seeks the approval for the write-off of 5 debts over £5,000 which are deemed irrecoverable, to a total value of £49,992.65, which represents 0.06% of the budgeted income for the Department. Of these, four debts relate to former residential clients and one is for a client who received a direct payment. The report also provides a summary of the debts that have been written off during 2007/08 which are less than £5,000.
5. Background
5.1 Income management procedures ensure that debts are minimised as much as possible and appropriate action to recover debts is taken in all circumstances. Sometimes recovery is not achievable or would involve disproportionate legal and professional fees and staff-time to make pursuit of the debt cost effective.
5.2 The Financial Assessments Panel membership draws representation from Revenue Services, Adult Services Devolved Finance Unit, from the County Treasurer's Department, the Adult Services Department and Legal Services from the Chief Executive's Department. The Panel reviews individual cases of debts greater than £1,000, makes recommendations and ensures further action is taken as required. The following debts have been considered by Panel who have agreed that further action will not result in debt recovery.
6 Debts recommended for write-off
6.1 The following debts are recommended for write-off:
£
.
6.2 The client had a percentage share of a property. Legal Services were in the process of placing a charge on the property when the client died (April 1990). In 1990 Legal Services did manage to obtain a written "undertaking" from the client's son concerning payment of the debt from proceeds of the house sale.
6.3 In 1993, rather than sell the house, the client's grand-daughter said she wanted to buy the client's stake in the property. However, she refused to enter into a deed of charge with the Council that would provide security for the Council against the debt. Current legislation in the form of the Deferred Payments Scheme provides a greater degree of security than existed in 1993 when the process involved in obtaining a voluntary charge on property was time consuming and an enforced charge was only available when a debt had been incurred. The registering of debt against and Estate and searches of the Probate Registry is also much easier and efficient today.
6.4 After a number of years chasing the grand-daughter she stopped all correspondence with the Council. It was subsequently discovered that the property was sold in 1997/98 with the client's family retaining no interest in the property. Since then periodic attempts have been to trace the grand-daughter.
6.5 After a full review in late 2007 Legal Services advised that the original "undertaking" is probably unenforceable as it was not given by a solicitor. The time and cost of pursuing the family for the debt is deemed to be prohibitive. Also the debt could not be pursued as under Section 24(1) of the Limitation Act 1980 no action can be taken to enforce a judgement after six years.
6.6 The Panel agreed in September 2007 that the debt could not be pursued and recommended that it be written off.
6.7 The client became a permanent resident of a residential home in August 2003 but did not receive the first invoice for client contributions until 8 June 2006 covering the period from August 2003 to May 2006.
6.8 The client queried the invoice claiming that his then Care Manager had said that, taking into account his deteriorating mental state, there would be no charge. The client took the delay in raising the invoice as confirmation of that position. The client subsequently became fully funded by Health from 23 August 2006 and passed away on 22 June 2007..
6.9 Legal Services have been unable to obtain sufficient information from Care Management to refute the late client's claim regarding funding arrangements.
6.10 There is no record of Probate being registered and there is therefore no evidence of any Estate for the deceased client.
6.11 The panel agreed in September 2007 that in view of the lack of care management information and the delay in raising the invoice the debt should not be pursued.
6.12 The client went into residential care in November 2000. After chasing for some time for payment of the client contribution a letter threatening legal action was sent in March 2002. The client's grand-daughter, who appeared not to have any legal authority, replied that the client's money was being paid into a bank account that she could not access.
6.13 However, following the client's death in October 2003 the Pension Service confirmed that the grand-daughter was an appointee for pensions purposes and that the client's pension was being collected from the local post office. It appears that this had been used to pay the third party top-up as opposed to the client contributions.
6.14 In the absence of a will and with no member of the family coming forward to deal with the Estate, the bank froze the client's account and confirmed in writing that the County Treasurer would be informed if there was any change in the situation. However, in September 2007 in response to a routine check on the status of the account the bank declared that some sums had been distributed from the accounts. Because of Data Protection, obtaining information from banks is increasingly difficult but, it would be reasonable to assume that the distribution was probably in respect of funeral expenses which are the first call on the Estate.
6.15 In October 2007 following further correspondence the bank closed the client's account. At this point the account balance was £5,499.53. The bank sent a cheque to HCC for this amount. This left an outstanding debt of £6,512.05.
6.16 There being no evidence to suggest that there are any other assets available to meet the outstanding charges the Panel agreed in December 2007 to recommend that the amount of £6,512.05 be written off.
6.17 The client had been at a residential home from August 2001 and died on 24 December 2002. The client left a debt of £5,692.34 largely built up in the early part of the stay during which time the client's wife claimed not to have received the invoices for client contributions and had assumed that only payments to the home were due
6.18 Subsequent to the client's death periodic probate searches have proved unsuccessful. The conclusion is that there was insufficient assets to warrant seeking Probate registration.
6.19 In August 2004, following the client's wife death, Legal Services wrote to the late client's daughter asking for payment. In the absence of a reply the DWP was approached to confirm if the daughter had appointee status. However, the DWP advised they had archived the client's file and it would take some time to give the confirmation.
6.20 After many years of refusing to respond to correspondence on the debt the daughter made an offer in December 2006 to pay £10 a month. The offer was accepted but no payments were ever received.
6.21 Following final confirmation in November 2006 by the DWP that the daughter had no legal authority Counsel advised that it was unlikely that she could be pursued for the debt. It was further established that the daughter had no material assets, did not own her own house or have a job. In the circumstances it was agreed that it would be expensive and futile to issue legal proceedings against the daughter.
6.22 Direct Payments were paid to a Learning Disability client until 31 March 2005. However, in November 2004 the client's mother had moved the client into a private residential home without informing the care manager. After a protracted negotiation process it was agreed that Adult Services would fund the cost of the residential stay. As a result of the delay the payment was not made to the residential home until the March 2006 payment run, at which point the Direct Payment was stopped. An invoice for £20,321.28 was raised to the client's mother, who was acting on the client's behalf, for the period of overpayment of Direct Payments from November 2004 to March 2005.
6.23 The client's mother, however, had relocated to Spain leaving no assets and large debts including a debt to her bank, HSBC. The bank used the funds in the account that the mother was using for her son's direct payment to offset these debts.
6.24 Strenuous representations were made to HSBC by the Department and by Legal Services to persuade them that the funds in this account were for the sole purpose of the Direct Payments and should not have been used to offset the mother's debts.
6.25 The bank have confirmed that as the bank account was set up in the mother's sole name they did not have any way of knowing that the money was held in trust and thus acted legally when they used the funds in this account to offset the mother's debt.
6.26 The protocol for the setting up of bank accounts for Direct Payments is being reviewed as part of the end-to-end review of Direct Payments and in advance of the roll-out of Self Directed Support. This should ensure that this appropriation of client monies does not reoccur as bank accounts will be clearly marked as relating to the client.
6.27 The Panel agreed in February 2008 to recommend writing this off on the basis that there is no prospect of being able to pursue the client's mother for repayment of the Direct Payments monies.
7 Debts already written-off
7.1 The following debts totalling £158,288.38 (Total 2006/07 - £166,462.62) have been written off during 2007/08:
· 140 debts with a total value of £91,332.80 relating to clients in independent sector residential homes (Total 2006/07 127 debts - £108,131.74).
· 48 debts to the value of £29,143.35 relating to clients in County Council homes (Total 2006/07 52 debts - £26,922.46)
· 192 debts to the total value of £37,812.23 for non-residential charges (2006/07, 173 debts - £31,408.42).
7.2 Assuming the debts referred to above are agreed for write-off, the total write off figures for 2007/08 will be £208,281. This represents about 0.27% of the budgeted income for the Department. This compares with £247,027 for 2006/07 which represented 0.33% of the budgeted income.
7.3 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.
7.4 The write off amount for 2007/08 is a 0.06% improvement on last year and represents a small fraction of income due which for 2007/08 is in the region of £77m (was £74m 06/07). The Department continues to review debt recovery, information to clients and financial assessments procedures to ensure income collection is maximised.
7.5 Provision has been made in the Adult Services Department 2007/08 accounts for these debts if approved by the Executive Member.
LINK(S) TO CORPORATE STRATEGY | ||
Yes |
No | |
Hampshire safer and more secure for all |
√ |
|
Maximising well-being |
√ |
|
Enhancing our quality of place |
√ | |
Section 100 D - Local Government Act 1972 - background documents
The following documents discuss facts or matters on which this report, or an important part of it, is based and have been relied upon to a material extent in the preparation of this report.
NB: the list excludes:
1. Published works
2. Documents which disclose exempt or confidential information as defined in the Act.
(Quote list of documents here: either "none" if 1 or 2 above apply; or list the relevant letters, memos, etc. and their location)