Fife Council writes off £5.48 million in bad debts

That included just over £2.8m of council tax – which represented the biggest portion of write offs - and £1.1m of rent money that officers decided there was no realistic prospect of collecting.

The total amount of bad debts written off came to £5.48m, an improvement from £6.94m a year ago, and the finance, economy and corporate services scrutiny committee was told that the practice is commonplace for local authorities. 

A report by Les Robertson, head of revenue and commercial services, said: “There will always be a small percentage of debt which will not be collected, usually between 1 per cent to 2.5 per cent of charges raised."

As well as council tax and rent, money that couldn't be collected included business rates and sundry debts. The level of debts written off accounted for 0.73 per cent of the total amount charged. 

Around half of the bad debts that were written off by Fife Council in 2022-23 was money owed in council tax. (Image: Newsquest)

The council insist they “actively pursue” the collection of all income due and take “robust action” against residents who choose not meet their obligations.  

However, Mr Robertson's report added that debt write off was unavoidable and occurred when individuals and businesses cannot pay what they owe. 

He explained that sometimes debtors move away and can’t be contacted for payment; there are people who pass away with debt to their name; and businesses that are liquidated with outstanding debts.  

READ MORE: Fife Council approve house at quarry after planning review

In these cases and others, the council can choose to write off the irrecoverable debt to help balance its books. 

“Write-off is only considered where there is no realistic hope of recovery or where it is not economic to pursue recovery further,” the committee was told.

Overall, Fife has seen a 21 per cent decrease in the total amount of debt written off this year compared to last. 

Rental income was one of the areas with the biggest debt write off decrease because less court action is being taken against tenants in debt. 

“It is expected when activity restarts this will revert to earlier levels,” Mr Robertson pointed out. 

Business rate write offs have also seen a notable decrease because more firms have managed to keep their doors open this year. 

“The level of (business rate) debt written off in 2022-23 amounts to £572,000 which is a significant reduction from the 2021-22 write off amount of £1.37m,” he said.  

“This is good news for Fife as fewer businesses in Fife have ceased trading and thus the lost revenues in terms of debt write off has reduced.” 

Council tax write offs have increased slightly from the previous year, but the totals are still “well within the bad-debt provision”. 

Mr Robertson said: “The increase in debt write off is due to the overall economic situation.

"Clearly the pandemic and cost-of-living crisis are going to affect ongoing debt recoveries.

“Council tax charges have [also] been increased. When the overall charge is increased, the level of debt write off will naturally increase due to the increased charges.” 

The council stressed that they offer “support to vulnerable customers who need it” during the process of debt collection and strives to support households struggling to meet their obligations through rent and council tax allowance schemes.