Archived decisions

HAMPSHIRE COUNTY COUNCIL

Decision Report

1. Executive Summary

1.1. This report identifies two individual debts where it is considered there to be little or no prospect of recovering the amount due from the debtors, and for which the Executive Lead Member's approval is required for write-off.

1.2. The individual debts amount to £6,180 and £46,984.40; a total value of £53,164.40.

2. Contextual information

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

· Up to £1,000 - County Treasurer to record and write-off

· Above £1,000 and up to £5,000 - write-off to be agreed in consultation between the Chief Officer and the County Treasurer

· Greater than £5,000 up to £50,000 - Executive Member approval to be obtained

· Above £50,000 - Leader approval to be obtained.

2.2. Income management ensures 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.

3. Debts recommended for write off

3.1. The following debts are recommended for write off:

Debt 1 - £6,180.00

3.2. In August 2002, two cheques amounting to £6,216.00 were issued to a former care leaver in error. This error occurred when the wrong vendor record was selected when the payment was processed.

3.3. This person had formerly been looked after by Hampshire County Council and received financial support as a care leaver up until March 2002. Upon identification of the error (in September 2002) an invoice was immediately issued to recover the incorrect payments. Unfortunately upon receiving the cheques, the former care leaver banked these and spent the money believing that the payment was a gift. A repayment plan was agreed and, to date, payments totalling £36.00 have been received. No payments have been received since November 2006.

3.4. Further attempts were made to recover the remaining £6,180.00 of the debt but in July 2007 the former care leaver become insolvent and was registered as bankrupt. In view of this position the debt is considered to be irrecoverable.

Subsequent Action Taken

3.5. This error occurred prior to the introduction of SWIFT and SAP. The processes and authorisation controls which are now in place (including selection of vendors and SAP payment processes) should ensure that an error of this kind could not occur again.

3.6. However, all staff involved in the payment of invoices have also been made aware of the importance of checking that the invoice details match that of the vendor selected in SWIFT or SAP before any payment is released.

Debt 2 - £46,984.40

3.7. In April 2004, an invoice was raised to a Local Authority for £46,984.40 in respect of the management fees for two children in their care who were placed with Hampshire Foster Carers during the 2002/03 and 2003/04 financial years.

3.8. In these instances a procedure[1] exists outlining the process which should be followed by the family placement teams in respect of negotiating with the other Local Authority purchasing manager regarding the management fee which will be charged. This includes the need to draw up a formal contractual agreement between Hampshire County Council and the other Local Authority.

3.9. Unfortunately in this instance no contractual agreement was drawn up with the Local Authority and they have, therefore, disputed the charge on the basis that there was no discussion or agreement on their part to pay this management fee as part of the overall placement cost. The Local Authority have reimbursed Hampshire County Council in full for the weekly foster allowance payments made to the foster carers.

3.10. In addition, further investigation of this case has revealed that the original invoice was drawn up for the wrong amount. The periods of placement with the Hampshire County Council foster carers for the two children spanned a number of shorter periods between the years 2001/02 to 2004/05. The daily rate charged was also incorrect for the periods in question. Based on this updated information, the amount of the charge should have been £39,908.57 rather than the £46,984.40 actually charged, resulting in the Local Authority also being overcharged by £7,075.83.

3.11. Consultation has taken place with a Senior Legal Officer in the Chief Executive's Department regarding this case and it is considered that in the absence of any formal contractual agreement this debt is unlikely to be recovered and should, therefore, be written off.

3.12. The number of children in the care of other Local Authorities placed with Hampshire County Council has been minimal. However, in view of the amount of the charge involved, even a single case presents a lost opportunity to recover the full cost of providing a foster care placement if procedures are not followed.

Subsequent Action Taken

3.13. In view of the issues highlighted from this case, the current procedure (number 25/04) is in the process of being reviewed and, once completed, training will be provided to all relevant staff involved to ensure that similar issues do not occur in the future.

3.14. Formal recording of all agreements with other Local Authorities will also be maintained by the Family Placement service to ensure that full documentation is available to inform future disputes.

3.15. The review of this procedure is scheduled to be completed by the end of September 2009.

4. Finance

4.1. Any write-off must to be charged back to the appropriate revenue budget. Provision has been made in the revenue account for these debts being written off.

5. Recommendation

5.1. That the Executive Lead Member for Children's Services approves the write-off of the two individual debts of £6,180 and £46,984.40.

CORPORATE OR LEGAL INFORMATION:

Links to the Corporate Strategy

IMPACT ASSESSMENTS:

1. Equalities Impact Assessment:

1.1. Equality and diversity objectives are not considered to be adversely affected by the proposals of this report.

2. Impact on Crime and Disorder:

2.1. Crime and disorder objectives are not considered to be adversely affected by the proposals of this report.

3. Climate Change:

a) How does what is being proposed impact on our carbon footprint / energy consumption?

· No impact

b) How does what is being proposed consider the need to adapt to climate change, and be resilient to its longer term impacts?

· No impact