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Council / Value of bad debt written off by council increases

AROUND £375,000 in ‘bad debt’ was written off by Shetland Islands Council during the last financial year – an increase of roughly £170,000 on the previous year.

Finance manager Jamie Manson told a meeting of the full council on Wednesday that the increase was “probably not unexpected”.

But he said it is too early to definitively decipher the impact the Covid pandemic has had on the figures.

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Manson expects that to become clear in the future when schemes like the furlough initiative come to an end.

So called ‘bad debt’ is money owed which the council believes it will not be able to collect, or is not cost effective to pursue. It writes off an amount every year.

This covers SIC income such as housing rent, council tax and non-domestic rates.

Highlighting widespread compliance the amount of bad debt for the last financial year equated to only 0.42 per cent of the £88.5 million-plus of income.

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Written off sales ledger debt during the year, such as unpaid invoices, was around £239,000.

This was an increase from £50,000 last year, and the most significant variation from 2019/20. Manson said this was partly due to social care invoices which become difficult to progress when an individual dies.

Another factor was a company going into liquidation.

The total value of written off council tax debt last year came to around £45,000, up from £36,000.

For non-domestic rates it was £47,200.

The written off debt for housing income was £44,093.

Council leader Steven Coutts said bad debt was always going to be a part of delivering services, but he added that locally it is managed well.

Shetland South members Robbie McGregor and Allison Duncan spoke up for early engagement with people who may struggle to pay.

Council chief executive Maggie Sandison said help was at hand for people needing help, particularly through the local Citizens Advice Bureau.

“We have a number of services that are there to support people who are needing additional financial advice,” she said.

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