Agenda item

Notice of Motion Regarding "Moving Towards An Ethical Debt Collection Policy and Ending The Use Of Bailiffs" - Given By Councillor Sophie Wilson and to be Seconded by The Lord Mayor (Councillor Sioned-Mair Richards)

That this Council:-

 

(a)     believes that, due to the ideologically driven actions of the Government over the past decade, alongside a crisis in global capitalism, ordinary people in Sheffield are facing a cost of living crisis and looming recession, and that, as a result, household debt has grown to unsustainable levels;

 

(b)     notes that over half of all adults in the UK are in debt or seriously worried about falling in to debt;

 

(c)      further notes that last year, Citizens Advice estimated that 3.5 million people were in arrears with their council tax across the country;

 

(d)     believes that the Autumn Budget has made clear that the Government are not interested in helping residents or councils deal with the cost of living crisis and the increase in debt, instead pushing councils to increase council tax, further exacerbating the financial struggles of ordinary people and attempting to pass the blame for financial hardship on to Local Authorities;

 

(e)     notes that Citizens Advice estimate that 33% of council tax problems are caused by the way that councils collect the payment;

 

(f)       further notes that analytics group Policy in Practice have recently presented evidence that stricter collection policies, including bailiff use, do not increase collection rates;

 

(g)     recognises that being visited by bailiffs is a distressing experience which can be devastating for people’s mental health, and notes that over 50% of people in debt have mental health problems and people in debt are 8 times more likely to think about suicide;

 

(h)       notes that residents who face bailiff action are also liable for the fees they charge, which begin at £75 for the ‘compliance stage’ of enforcement (receiving a letter), and often rise to an average of £310 during the lifetime of a debt, and believes that, in Sheffield, this only serves to increase the level of indebtedness of many of our residents and siphons money out of our local economy, harming the city at large;

 

(i)         notes that in April 2018, Hammersmith & Fulham London Borough Council announced an end to bailiff action, and they have subsequently seen a rise in council tax collection rates;

 

(j)       further notes that Southwark LBC, Newham LBC and Bristol City Council have also recently implemented more ethical debt collection policies;

 

(k)      also notes that The Trussel Trust has reported in their ‘State of Hunger’ report that local government debt leads people to destitution and foodbank usage;

 

(l)       notes that the Debt Justice Campaign, using the National Audit Office’s calculations to the Financial Conduct Authority, estimates that over indebtedness is costing the local and national government £9.7 billion per year in extra health, social care, employment and housing support, and believes that pushing residents into debt and poverty is a false economy for Sheffield;

 

(m)    also believes that ending debt collection practices such as bailiff use, makes financial sense; and

 

(n)     requests that the Strategy and Resources Policy Committee considers whether to add to its work programme consideration of what an ethical debt collections policy could mean in Sheffield, including, but not limited to:-

 

o   Payment Flexibility

o   Greater discretionary support

o   Identifying Vulnerable households and data sharing between departments

o   Establishing whether or not residents can afford repayments

o   Ensuring everyone in debt is given free local debt advice

o   Removing in year collections targets

o   Having an irrecoverable debt policy which mitigates for that fact that a percentage of debt will not be recovered

o   Ending Bailiff use

o   Starting open communication with Hammersmith and Fulham Council to get feedback on how their policy is having a positive effect on the council’s finances and the wellbeing of their residents

 

Minutes:

8.1

It was moved by Councillor Sophie Wilson, and formally seconded by The Lord Mayor (Councillor Sioned-Mair Richards), that this Council:-

 

 

 

(a)      believes that, due to the ideologically driven actions of the Government over the past decade, alongside a crisis in global capitalism, ordinary people in Sheffield are facing a cost of living crisis and looming recession, and that, as a result, household debt has grown to unsustainable levels;

 

 

 

(b)      notes that over half of all adults in the UK are in debt or seriously worried about falling in to debt;

 

 

 

(c)      further notes that last year, Citizens Advice estimated that 3.5 million people were in arrears with their council tax across the country;

 

 

 

(d)      believes that the Autumn Budget has made clear that the Government are not interested in helping residents or councils deal with the cost of living crisis and the increase in debt, instead pushing councils to increase council tax, further exacerbating the financial struggles of ordinary people and attempting to pass the blame for financial hardship on to Local Authorities;

 

 

 

(e)      notes that Citizens Advice estimate that 33% of council tax problems are caused by the way that councils collect the payment;

 

 

 

(f)       further notes that analytics group Policy in Practice have recently presented evidence that stricter collection policies, including bailiff use, do not increase collection rates;

 

 

 

(g)      recognises that being visited by bailiffs is a distressing experience which can be devastating for people’s mental health, and notes that over 50% of people in debt have mental health problems and people in debt are 8 times more likely to think about suicide;

 

 

 

(h)      notes that residents who face bailiff action are also liable for the fees they charge, which begin at £75 for the ‘compliance stage’ of enforcement (receiving a letter), and often rise to an average of £310 during the lifetime of a debt, and believes that, in Sheffield, this only serves to increase the level of indebtedness of many of our residents and siphons money out of our local economy, harming the city at large;

 

 

 

(i)       notes that in April 2018, Hammersmith & Fulham London Borough Council announced an end to bailiff action, and they have subsequently seen a rise in council tax collection rates;

 

 

 

(j)       further notes that Southwark LBC, Newham LBC and Bristol City Council have also recently implemented more ethical debt collection policies;

 

 

 

(k)      also notes that The Trussell Trust has reported in their ‘State of Hunger’ report that local government debt leads people to destitution and foodbank usage;

 

 

 

(l)       notes that the Debt Justice Campaign, using the National Audit Office’s calculations to the Financial Conduct Authority, estimates that over indebtedness is costing the local and national government £9.7 billion per year in extra health, social care, employment and housing support, and believes that pushing residents into debt and poverty is a false economy for Sheffield;

 

 

 

(m)     also believes that ending debt collection practices such as bailiff use, makes financial sense; and

 

 

 

(n)      requests that the Strategy and Resources Policy Committee considers whether to add to its work programme consideration of what an ethical debt collections policy could mean in Sheffield, including, but not limited to:-

 

 

 

·       Payment Flexibility

 

·       Greater discretionary support

 

·       Identifying vulnerable households and data sharing between departments

 

·       Establishing whether or not residents can afford repayments

 

·       Ensuring everyone in debt is given free local debt advice

 

·       Removing in year collections targets

 

·       Having an irrecoverable debt policy which mitigates for that fact that a percentage of debt will not be recovered

 

·       Ending Bailiff use

 

·       Starting open communication with Hammersmith and Fulham Council to get feedback on how their policy is having a positive effect on the council’s finances and the wellbeing of their residents.

 

 

8.2

Whereupon, it was moved by Councillor Minesh Parekh, and seconded by Councillor Bryan Lodge, as an amendment, that the Motion now submitted be amended by the addition of new paragraphs (n) to (r) as follows, and the re-lettering of existing paragraph (n) as a new paragraph (s):-

 

 

 

(n)      believes that identifying issues early is of primary importance, and notes that a report on the review of the Council's debt management policy will be the subject of a report to the Strategy and Resources Policy Committee in the new year;

 

 

 

(o)      notes the work of the Council’s cross-party Cost of Living Crisis Group, and the dedicated work of council employees in supporting residents through financial hardship, and believes that debt collection and the use of bailiffs, and its implications, need to be considered by this Group in investigating the adoption of an ethical debt collection service;

 

 

 

(p)      notes recent research from Martin Lewis’s Money and Mental Health Policy Institute which found that 15% of people with mental health problems had missed at least three payments on one council tax bill, compared to 4% of people without a mental health problem;

 

 

 

(q)      believes that it is important to make the distinction between those who can’t pay debt, and those who won’t, when using bailiffs and that targeted support is essential as well as a compassionate understanding of each individual’s circumstances, be that financial, social or health related;

 

 

 

(r)       believes that in the private rented housing sector, some tenants are at the mercy of rogue landlords and exorbitant rents, trapping people into a spiral of debt;

 

 

8.3

It was then moved by Councillor Shaffaq Mohammed, and seconded by Councillor Alan Hooper, as an amendment, that the Motion now submitted be amended by:-

 

 

 

1.       the deletion, in paragraph (a), of the words “alongside a crisis in global capitalism”;

 

 

 

2.       the addition of new paragraphs (m) and (n) as follows and the re-lettering of original paragraphs (m) and (n) as new paragraphs (o) and (p):-

 

 

 

(m)     notes that the Council has agreed to continue providing the Citizens Advice Bureau with grant money of £827k per year, and notes that Citizens Advice is currently not providing face to face support in most areas of Sheffield;

 

 

 

(n)      welcomes the good work that Local Area Committees are doing to re-establish face to face advice services, and believes that providing face to face support is crucial to helping residents facing complex debt issues;

 

 

 

3.       the substitution, in the new paragraph (o) [original paragraph (m)], of the words “reducing the Council’s use of bailiffs over time”, for the words “ending debt collections practices such as bailiff use”;

 

 

 

4.       the substitution, in the new paragraph (p) [original paragraph (n)], of the words “Reducing the Council’s use of bailiffs over time”, for the words “Ending bailiff use”; and

 

 

 

5.       the addition, in the new paragraph (p) [original paragraph (n)], of new bullet points as follows:-

 

 

 

·       Creating a targeted approach to tax collection, as has been trialled in Lewes District Council and Eastbourne Borough Council, to identify residents who are genuinely struggling to pay their debts versus those who have the ability to pay

 

 

 

·       Working closely with mental health services to provide additional assistance to people with mental health needs who are in council tax arrears

 

 

 

·       Working with the Citizens Advice Bureau to re-establish self-referral and face to face support for complex debt

 

 

 

·       Fully implementing the Stop the Knock campaign’s “Six Steps for Local Authorities”, which consist of:-

 

 

 

(i)     making a clear public commitment to reduce the Council’s use of bailiffs over time;

 

 

 

(ii)     reviewing the Council’s signposting to free debt advice, including phone/online channels;

 

 

 

(iii)    adopting the Standard Financial Statement to objectively assess affordability;

 

 

 

(iv)    putting in place a formal policy covering residents in vulnerable circumstances;

 

 

 

(v)    exempting Council Tax Support recipients from bailiff action; and

 

 

 

(vi)    signing the Council Tax Protocol and reviewing the Authority’s current practice against the ‘Supportive Council Tax Recovery’ toolkit.

 

 

8.4

After contributions from one other Member, and following a right of reply from Councillor Sophie Wilson, the amendment moved by Councillor Minesh Parekh was put to the vote and was carried.

 

 

8.4.1

(NOTE: The result of the vote was FOR - 59 Members; AGAINST - 0 Members; ABSTENTIONS – 0 Members.  Councillor Lewis Chinchen voted for, but abstained on paragraph (o) of the amendment.  Councillor Sophie Wilson voted for, but against paragraph (q) of the amendment.)

 

 

8.5

The amendment moved by Councillor Shaffaq Mohammed was then put to the vote and was carried in part.  Parts 1, 3 and 4 of the amendment were lost and Parts 2 and 5 of the amendment were carried.

 

 

8.5.1

(NOTE: The result of the vote was FOR - 46 Members; AGAINST - 10 Members; ABSTENTIONS – 1 Member.  The Labour Group Members voted for, but against Parts 1, 3 and 4 of the amendment.  Councillor Lewis Chinchen abstained, but voted for Parts 1 and 2 of the amendment.)

 

 

8.6

The original Motion, as amended, was then put as a Substantive Motion in the following form and carried:-

 

 

 

 

 

RESOLVED: That this Council:-

 

 

 

(a)      believes that, due to the ideologically driven actions of the Government over the past decade, alongside a crisis in global capitalism, ordinary people in Sheffield are facing a cost of living crisis and looming recession, and that, as a result, household debt has grown to unsustainable levels;

 

 

 

(b)      notes that over half of all adults in the UK are in debt or seriously worried about falling in to debt;

 

 

 

(c)      further notes that last year, Citizens Advice estimated that 3.5 million people were in arrears with their council tax across the country;

 

 

 

(d)      believes that the Autumn Budget has made clear that the Government are not interested in helping residents or councils deal with the cost of living crisis and the increase in debt, instead pushing councils to increase council tax, further exacerbating the financial struggles of ordinary people and attempting to pass the blame for financial hardship on to Local Authorities;

 

 

 

(e)      notes that Citizens Advice estimate that 33% of council tax problems are caused by the way that councils collect the payment;

 

 

 

(f)       further notes that analytics group Policy in Practice have recently presented evidence that stricter collection policies, including bailiff use, do not increase collection rates;

 

 

 

(g)      recognises that being visited by bailiffs is a distressing experience which can be devastating for people’s mental health, and notes that over 50% of people in debt have mental health problems and people in debt are 8 times more likely to think about suicide;

 

 

 

(h)      notes that residents who face bailiff action are also liable for the fees they charge, which begin at £75 for the ‘compliance stage’ of enforcement (receiving a letter), and often rise to an average of £310 during the lifetime of a debt, and believes that, in Sheffield, this only serves to increase the level of indebtedness of many of our residents and siphons money out of our local economy, harming the city at large;

 

 

 

(i)       notes that in April 2018, Hammersmith & Fulham London Borough Council announced an end to bailiff action, and they have subsequently seen a rise in council tax collection rates;

 

 

 

(j)       further notes that Southwark LBC, Newham LBC and Bristol City Council have also recently implemented more ethical debt collection policies;

 

 

 

(k)      also notes that The Trussell Trust has reported in their ‘State of Hunger’ report that local government debt leads people to destitution and foodbank usage;

 

 

 

(l)       notes that the Debt Justice Campaign, using the National Audit Office’s calculations to the Financial Conduct Authority, estimates that over indebtedness is costing the local and national government £9.7 billion per year in extra health, social care, employment and housing support, and believes that pushing residents into debt and poverty is a false economy for Sheffield;

 

 

 

(m)     notes that the Council has agreed to continue providing the Citizens Advice Bureau with grant money of £827k per year, and notes that Citizens Advice is currently not providing face to face support in most areas of Sheffield;

 

 

 

(n)      welcomes the good work that Local Area Committees are doing to re-establish face to face advice services, and believes that providing face to face support is crucial to helping residents facing complex debt issues;

 

 

 

(o)      also believes that ending debt collection practices such as bailiff use, makes financial sense;

 

 

 

(p)      believes that identifying issues early is of primary importance, and notes that a report on the review of the Council's debt management policy will be the subject of a report to the Strategy and Resources Policy Committee in the new year;

 

 

 

(q)      notes the work of the Council’s cross-party Cost of Living Crisis Group, and the dedicated work of council employees in supporting residents through financial hardship, and believes that debt collection and the use of bailiffs, and its implications, need to be considered by this Group in investigating the adoption of an ethical debt collection service;

 

 

 

(r)       notes recent research from Martin Lewis’s Money and Mental Health Policy Institute which found that 15% of people with mental health problems had missed at least three payments on one council tax bill, compared to 4% of people without a mental health problem;

 

 

 

(s)      believes that it is important to make the distinction between those who can’t pay debt, and those who won’t, when using bailiffs and that targeted support is essential as well as a compassionate understanding of each individual’s circumstances, be that financial, social or health related;

 

 

 

(t)       believes that in the private rented housing sector, some tenants are at the mercy of rogue landlords and exorbitant rents, trapping people into a spiral of debt; and

 

 

 

(u)      requests that the Strategy and Resources Policy Committee considers whether to add to its work programme consideration of what an ethical debt collections policy could mean in Sheffield, including, but not limited to:-

 

 

 

·       Payment Flexibility

 

·       Greater discretionary support

 

·       Identifying vulnerable households and data sharing between departments

 

·       Establishing whether or not residents can afford repayments

 

·       Ensuring everyone in debt is given free local debt advice

 

·       Removing in year collections targets

 

·       Having an irrecoverable debt policy which mitigates for that fact that a percentage of debt will not be recovered

 

·       Ending Bailiff use

 

·       Starting open communication with Hammersmith and Fulham Council to get feedback on how their policy is having a positive effect on the council’s finances and the wellbeing of their residents

 

·       Creating a targeted approach to tax collection, as has been trialled in Lewes District Council and Eastbourne Borough Council, to identify residents who are genuinely struggling to pay their debts versus those who have the ability to pay

 

·       Working closely with mental health services to provide additional assistance to people with mental health needs who are in council tax arrears

 

·       Working with the Citizens Advice Bureau to re-establish self-referral and face to face support for complex debt

 

·       Fully implementing the Stop the Knock campaign’s “Six Steps for Local Authorities”, which consist of:-

 

 

 

(i)     making a clear public commitment to reduce the Council’s use of bailiffs over time;

 

 

 

(ii)     reviewing the Council’s signposting to free debt advice, including phone/online channels;

 

 

 

(iii)    adopting the Standard Financial Statement to objectively assess affordability;

 

 

 

(iv)    putting in place a formal policy covering residents in vulnerable circumstances;

 

 

 

(v)    exempting Council Tax Support recipients from bailiff action; and

 

 

 

(vi)    signing the Council Tax Protocol and reviewing the Authority’s current practice against the ‘Supportive Council Tax Recovery’ toolkit.

 

 

 

 

8.6.1

(NOTE: The result of the vote was FOR - 56 Members; AGAINST - 1 Member; ABSTENTIONS – 0 Members.  The Liberal Democrat Group Members voted for, but abstained on paragraph (a) and voted against paragraph (o) and bullet point 8 in paragraph (u) of the Substantive Motion. Councillor Lewis Chinchen voted against, but for paragraphs (m), (n), (p), (r), (s) & (t), and bullet points 1 to 7 & 9 in paragraph (u) of the Substantive Motion and abstained from voting on paragraph (q) and bullet points 10 to 13 in paragraph (u) of the Substantive Motion.)