5 August 2020
The Lord Alton of Liverpool
House of Lords
Oral question: Response to the report by the Centre for Social Justice ‘Collecting Dust: A path forward for government debt collection’ – 23 July 2020
Dear Lord Alton,
I read your comments on the oral question answered on 23 July about the Centre for Social Justice (CSJ) report, Collecting Dust: a path forward for government debt collection. I hope that the following letter and attached briefing is helpful.
CIVEA comprises 38 companies that make up over 95% of the entire enforcement industry. CIVEA’s members work to enforce civil debt on behalf of local authorities and Her Majesty’s Courts and Tribunals Service (HMCTS) including council tax, business rates, parking and traffic penalties, magistrates’ court fines and compensation, employment tribunal awards, child support payments, B2B and commercial rent arrears.
This amounts to over £500 million (half a billion pounds) of unpaid taxes and fines recovered each year at no cost to the public bodies themselves. Each year CIVEA members receive over 3.5 million warrants and court orders. Enforcement is a part of our social justice system, which is a last resort option for public bodies to recover outstanding debt.
The CSJ rightly recognises that in England and Wales the rise in household problem debt is largely due to debts owed to public bodies. However, it’s report suggests some significant knowledge gaps.
Where the CSJ report draws on nationally-accredited data it makes some pertinent points on the debate about household problem debt. It acknowledges debt collection agencies (DCAs) have achieved significant reforms in debt collection and comments positively about treatment of vulnerable customers.
I note your comments comparing debt collection in the commercial sector with public debt collections methods, particularly the use of pre-action protocols.
Much of the good practice identified within the commercial creditor market is already embedded within CIVEA member organisations. For example, engagement with the money advice sector, communication with customers, support for vulnerable people and affordability assessments for repayment plans. All of these practices can be seen in the enforcement industry and, as in private debt collection, have become integral to daily operations.
The fee structure is standardised and more transparent. Debtors are able to avoid incurring additional charges by engaging at an early stage and working with the creditor to reach a payment agreement. Approximately half of all paid council tax liability orders now incur only the Compliance Stage fee of £75, and do not have an agent visit. This is a sea change from before the 2014 regulations were introduced, when every single council tax liability order would have had enforcement visits undertaken (and charged for).
As well as being subject to highly prescriptive regulations under the Tribunals, Courts and Enforcement Act 2007 and Taking Control of Goods Regulations 2013, all CIVEA members must comply with an independently monitored code of practice that sets a new standard for bailiffs.
Those who oppose the resumption of enforcement are primarily concerned about council tax debt. The courts have a backlog, so there will be a lag of months before overdue council tax is enforced. The priority will be to enforce magistrates’ courts fines, traffic offences and other penalties. These are debts that were incurred prior to the lockdown restrictions and it will be many months before debts incurred as a result of the pandemic are enforced, assuming they are not paid on time. Of course, councils do not want to pursue people who can’t pay, but we need enforcement visits to be able to identify those in need and get them the appropriate support.
There are 150 councils at risk of financial problems, according to a BBC survey. One council reports losing £500m each month of lockdown in parking charges alone. A blanket ban on enforcement visits is a blunt instrument that puts more councils in jeopardy.
These are unusual times and the enforcement sector has led the way in publishing a post-lockdown support plan that enables councils to recover much-needed funds safely and responsibly. I attach a summary of the additional measures that have been put in place to protect staff and the public.
There will always be those who are uncomfortable that the government uses the courts process to recover its debt, but enforcement is complex, highly specialised, and essential work to ensure that taxpayers do not subsidise non-payers. I hope that this has provided a new insight to the enforcement industry. I would be happy to discuss this in more detail at your convenience. In the meantime, I wish you a peaceful and safe recess.
Chief Executive, Civil Enforcement Association
The Civil Enforcement Association
PO Box 745
Tel: 0844 8933922
Fax: 0844 8546322