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Council / SIC writes off bad debt

Lerwick Town Hall. Photo: Shetland NewsLerwick Town Hall. Photo: Shetland News

SHETLAND Islands Council wrote off nearly £120,000 in ‘bad debt’ during the last financial year.

Finance manager Jamie Manson told a meeting of the full council at Lerwick Town Hall on Tuesday that this amounted to 0.14 per cent of the £85 million-plus the local authority collects each year in payments like rent, non-domestic rates and council tax.

Bad debts are where “all efforts to recover the debt have been exhausted and the prospects of recovering funds are negligible or nil”, with the council having to write off money each year.

Westside councillor Theo Smith suggested there was a perception in the community that the council was a bit of a “soft touch” when it came to chasing debt – and he called on officers to go that bit further in pursuing the cash.

Just over £40,000 of the written-off debt in 2018/19 related to 53 former housing tenants, with the money often unable to be recovered due to the person being deceased with no estate or being untraceable after leaving Shetland.

There were 67 cases of council tax debts, which amounted to just over £19,000.

The sum of £46 was written off in the council’s harbour account.

Smith questioned if there is a distinction between people who genuinely can’t pay a debt and those who won’t pay.

Chief executive Maggie Sandison said the council engages with people who owe money, but there “comes a point where pursuing a smaller debt in the courts will cost more than the debt itself”.

The local authority offers some debtors flexibility over payments, such as staggering them over time.

Smith said that he thought pursuing debts strongly is the way to go – even if it is just to make a statement.

“It’s commonly known that some people think that the council is a soft touch,” he said.

“I do think that people that can pay a debt should be made to pay a debt.

“Even if it costs us a little bit more, just to make a point that we are not a soft touch.”

North mainland councillor Emma Macdonald asked whether written off debt can be “written on again”.

Manson said that can be the case, with the finance chief using the example of someone with debt moving back to Shetland and being picked up on the electoral roll.

Lerwick North member John Fraser, meanwhile, said the 99.86 per cent collection rate was “quite a phenomenal figure”.

Manson said that Shetland Islands Council was in the “top end” of all local authorities in Scotland when it came to the amount of money it recovers.