Council steps up resources to collect unpaid debts

Middlesbrough Council is owed more than £67m

A cash-strapped council is chasing unpaid debts as figures show the local authority is owed more than £67m.

Middlesbrough Council found itself on the brink of declaring effective bankruptcy earlier this year, before accepting exceptional financial support from the government.

Some £36.8m owed to the local authority is uncollected council tax – a figure which has risen by £2.1m in the past year.

The council says it has increased resources in pursuing debt and will do so in a "firm but fair" way. However, when payment is not forthcoming, legal action will be launched.

A total of £8.4m is owed in business rates (up by £2.6m) and £15.5m is uncollected sums for paid-for council services, while the balance for housing benefit overpayments currently stands at £6.7m.

'Serious consequences'

The Labour-run council's finances and debts will be discussed by the Executive on Wednesday.

A report to the council leaders said council tax and business rates provided a significant source of funding, representing about 66% of the local authority’s revenue income stream.

Recovering debts is "a key workstream" in the council’s financial recovery plan, the report said.

Collecting council tax, which this year increased by the maximum amount of 4.99%, is expected to remain a challenge due to high levels of deprivation and benefit caseloads, alongside low levels of income.

In Middlesbrough, 85% of households fall into council tax bands bands A-C.

The council will "pursue debt in a firm but fair way," said the report.

"Where payment is not forthcoming the council will exercise its powers provided under the relevant legislation to enforce the debt.

"Some of these powers are significant and can lead to serious consequences such as attachment to earnings, removal of goods, forcing the sale of a property or even commitment to prison all of which are powers enshrined in law."

The report added that residents would be offered support to resolve debt problems.