Saturday, March 05, 2005

Creatively accounting for failure

When the Tories took control of the council, aided by their loyal Liberal Democrat poodles, they set about reducing the £13 million of council tenant rent arrears - a laudable aim. They started taking it out on the easiest targets and then brought payments forward to bring extra cash into the account. Then they sent threatening letters to all those in arrears, which mistakenly went out to many thousands of innocent tenants, as detailed in an earlier post of mine.

In the good old days, the council would rightly concentrate their fire on those tenants who refused to pay, but in the brave new world of the coalition, those who can't pay the whole amount now come in for the same forceful treatment. Back when Labour were in charge, if you agreed to make payments to reduce your debt - perhaps no more than a couple of pounds a week - and kept up to date, you were supported. That's the socially responsible way for a public-sector landlord to behave - indeed it is the way most lenders behave over debts.

However, as the council is now under new management, the totemic value of reducing that outstanding debt is approaching a fetish and there's a new twist to the way the books are cooked. You might think that a tenant who offers to pay a small amount to reduce their debt week by week should be applauded - after all, the council will get their money. You would, of course, be wrong. If you do it that way, the remaining sum of the debt remains on the arrears account. An evicted tenant won't pay anything to reduce the debt, but the total arrears get shuffled off to a different accounting point, thus reducing the £13 million headline total.

So, the officers are now instructed to pursue eviction in all cases where the tenant cannot make full settlement immediately, leading to large piles of cases being sent to the county court for judgement. Unfortunately, the judges are wise and compassionate human beings, so if the tenant offers to make a down payment on the spot and agrees to regular payments thereafter, the order to evict is denied. But still the cases come - in the sure knowledge that many will be thrown out and wasting the court's time and the taxpayers' money.

By the way, if you are evicted, you are regarded as intentionally homeless, so the council doesn't have to rehouse you. Nice, eh?

The council is also pursuing those who haven't paid council tax. Previously, if you were on benefit, the council would effectively amalgamate tax owed from previous years and take the maximum they could against a single debt - around £20 a month. Now, the council regards each debt as a separate entity, so pursue you for the maximum amount for each debt. This can quite easily mean that you end up paying £100 a month out of your £200 a month benefit, which is only going to drive you deeper into debt.

If you can't pay that, then the council will seek to have you locked up. This hasn't been used for many years, so some magistrates and court clerks didn't even know that they had the power to commit non-payers to prison, but the council are pushing it. So there you are - no threat to society, but being imprisoned for a debt. Victorian values in action, Charles Dickens would be proud.

You can understand how it happens - someone can lose a job or go through a divorce and the debt starts to mount. Suddenly, there are two blokes at the door and you have to choose to pay them or the council demand that has appeared on your doormat. Baseball bats are always more persuasive than red ink, so the council loses out. Rather than offering a helping hand, assistance with benefits and an agreed repayment scheme, the iron fist is cracking down on them.


Bob Piper said...

So that's what they mean by 'tough liberalism' eh?

john said...

Not as far as I know. Marcus got this wrong previously.

The change in terms of when rent was paid was linked to the new computer system (contracted by Labour). I would ask for any examples of eviction being the option preferred to a proper agreed payment schedule.

There were a small number of people chased for money who didn't owe any - nothing like was claimed by Matt and Marcus.

Zoe said...

The changes in rent payment dates has little to do with the evictions issue - a switch to a 'real time' system was quite sensible in my view, and makes tracking accounts and arrears much easier. The problems there arose becuase of the information that went out to tenants, which was not clear. Pursuing evictions as a means of reducing overall arrears is a different issue, as once a tenant is evicted, the arrears become former tenancy arrears and therefore can be written off. If you are going to reduce arrears quickly, then having people with arrears of £1000 paying them off at £2.80 per week deducted from their benefits doesn't work, despite the fact that it sustains the tenancy and ensures that the debt is actually repaid, albeit over a long period of time. So it's not uncommon for landlords to try and purge arrears via evictions - and given that judges are (mostly) quite reasonable to tenants in these cases, the easiest targets are some of the most vunerable people - particularly older, single men. I don't know if it's happening in the Housing Department yet, but it's not an uncommon strategy..

PoliticalHack said...

Is this about accounting or about people's homes? Last time I checked, the City Council was a social landlord, which should carry with it responsibilities beyond that of a commercial 'for profit' company.

In my view, the Council are putting the pursuit of arrears reduction ahead of the interests of some tenants. I specifically exclude those who won't pay, but I have been led to believe that there is a new aggression from the housing department.

John is in a far better place to examine those issues - a quick check with Housing on recent submissions to the county court should answer the question without asking me to identify sources (that would be unethical).

john said...

There is no need to identify sources. All I would ask is that I am sent details of cases where the tenants offered to pay over time, but this was refused.

It is the same as "put up or shut up".

Zoe said...

I have asked for a breakdown of court action and arrears levels, but I won't get it until the end of the financial year. Every case is different, but if there is a trend towards eviction rather than repayment plans, then it should be clear from the figures.

PoliticalHack said...

Thanks Zoe.

If I'm wrong, I'm happy to offer a correction - I do strive for accuracy in what I write.