The Government's announcement of a call for evidence on a six-week ‘breathing space' and statutory repayment scheme raises important questions for councils.
While offering a breathing space (during which individuals would be free from interest, charges and further enforcement action) and accepting repayment plans are nothing out of the ordinary for councils, the inclusion of council tax and other debts in a statutory scheme would mark a significant change in control, and possibly raise some concerns among councils already feeling financial pressure.
The proposals may be attractive to some councils if they offer a way of ensuring that debt owed to them is prioritised for repayment. As involuntary creditors who need to ensure continued provision of public services, councils may feel that repayment of debt owed to them should be prioritised. The call for evidence defines priority debts as those that have the most serious consequences, however priority debts are defined differently by other parties.
In developing their understanding of income and expenditure, and prioritisation for repayment, councils may find spending time in debt advice contact centres a useful exercise in gaining insight into existing processes.
Councils may also wish to explore the central government opportunities available under the Digital Economy Act 2017, which paves the way for greater data sharing across government and with relevant third parties to help build a clearer view of an individual's income and expenditure. The development of new processes for sharing data would help to determine the appropriate action for each individual, a vital aspect of treating people fairly.
There remains an additional question for councils to consider: if the terms of a statutory repayment scheme meant that a debt wouldn't be repaid in-year, and that arrears would continue to build, should councils be prevented from seeking repayment through taking control of goods? Enforcement action is a last resort for councils, but if an individual may have assets that could resolve their debt issues, what would be the appropriate course of action?
There are of course no simple answers when it comes to the matter of resolving debt, but councils will benefit from fully engaging with the development of the breathing space and repayment scheme, to ensure their questions are answered, and their voice is heard.
This column is brought to you by Marston Holdings
Pamela Mulcahy is communications and policy director at Marston Holdings
