Agenda item

The Head of Revenues and Benefits presented a report which provided an update on the Breathing Space Debt Respite Scheme.

The Debt Respite Scheme (Breathing Space Moratorium and Mental Health Moratorium) (England and Wales) Regulations 2020 - SI 2020 No 1311 were made on 17 November 2020 and came into force on 4 May 2021.

The regulations gave people legal protection from most creditor action for 60 days while they received advice and entered an appropriate debt solution.  The Creditors could not take up the recovery process within this time.  This would include residents who were debtors of South Kesteven District Council, for example, Council Tax, debtors invoices, Housing Benefit Overpayment, Rent etc.

An internal office team had been established to ensure that debtors were assisted through their journey.  Each case was monitored for the 60 days, with a review mid-term and at the end of the period before confirming a debt resolution plan.

Since the regulations came into force, South Kesteven District Council had  received 37 Breathing Space notifications, all of which had a Council debt, totalling £118,250.  The level of individual debt ranged from £234.56 to £18,034.

Actions following the 60 day period took a two-step approach.  Non-enforceable debt created a debt solution plan following written contact with the debtor.  Debts such as rent arrears and summons required engagement with the debtor.  If there was no response, the process moved to court proceedings having ensured the debtor received plenty of notice.

Going forward, the aim was to establish consistency and continuity in respect of all applications.  In response to a question it was confirmed that there was no funding available to support the additional work this was putting on the Council.

A Member asked how big the debt problem was compared to last year, pre-covid and how residents would learn of the availability of Breathing Space.

It was confirmed that the debt was larger this year due to the suspension of all debt recovery processes during the pandemic lockdowns.  SKDC had the highest number of residents applying for debt respite in the County and received applications directly as well as from Citizens Advice and StepChange.

It was explained that there had been a spike in numbers within the first six weeks of the scheme starting and the overall levels of debt were higher than would normally be expected due to the suspension of the recovery process during 2020.  It was confirmed that the Breathing Space scheme was publicised on the SKDC website and through contact with staff from the recovery team.

A Member questioned the nature of the debt of £18,000 and asked what type of debt it was and how it had accumulated.

It was confirmed the amount was higher due to the pandemic delaying the recovery and summons process.  It was noted that a substantial part of the debt was Housing Benefit overpayment but also included Council Tax and rent arrears.

A Member asked what the specific role of debt advisor covered within the process and what level of contact the Council had with them.

It was confirmed that debt advisors were regulated and they were instructed by the debtor.  Contact was maintained by SKDC with the advisors through email and reviews were requested mid-term and then after 60 days.

A Member queried why in some cases, a debt solution wasn’t reached after 60 days and what triggered the resolution process.

It was confirmed that a response was not always received and this made it difficult to assess what had happened.  The requirement and aim was always a debt solution but the high volume of cases had increased the difficulty.

A Member was concerned that five days was a short period to action a plan.

Assurance was given that a pre-contact period of 10 days was established before the five day period was invoked but that this was still in an infancy stage.

A Member asked who bore the cost of recovery and at what point a debt was written off.  The Member also queried whether in some cases the cost of recovery may be higher than the cost of a debt.

It was confirmed that the recovery cost was entirely the duty of SKDC and that further information will be obtained as part of a follow up report later in the year.

It was AGREED that the introduction of the Debt Respite Scheme (Breathing Space) along with the financial impact and arrangements put in place to enable the Council to respond to the legislative requirements be noted.