Bosses at Dundee City Council have set aside £35 million for unpaid bills but are warning even that might not be enough.
Senior managers at the local authority have been asked to explain why they agreeing to a rising amount of unrecovered, or “bad” debt after the figure jumped £1m this year.
Officials have warned councillors of the potential for yet worse to come as the pandemic wrecks havoc on the local economy.
Bad debts can build up across a range of council areas. These include council tax, housing charges and business rates.
Fears pandemic will create bad debt bomb
A statement accompanying the local authority’s annual financial accounts said:
“A review of the different categories of debt has concluded that an overall allowance for impairment of £34.783m is appropriate.
“However, while representing our best estimate, in the current economic climate it is not certain that these allowances would be sufficient particularly given the economic impact of the Covid-19 epidemic.
“The level of provisions is partly a reflection of the difficult economic climate and the resulting increased potential for debtors to default on payment, particularly in light of the economic impact of Covid-19.”
No breakdown available
Labour councillor Kevin Keenan questioned the rising write offs in the 2019/20 financial year.
He asked for an exact breakdown of the debt during a meeting of the local authority’s scrutiny committee. Officials told him the detail was not immediately available.
Tackling the coronavirus crisis has led to nearly £33m in additional council spending. The local authority is chasing £19.5m to balance its books with a shortfall of more than £3m yet to be found.
Senior council officials ‘exhausting all possibilities’
Corporate services director Greg Colgan said he would provide more exact figures in due course.
He said: “Officers review outstanding debt and try proactively to chase this up and ensure we maximise any help and support for people.
“We also have a level of debt, particularly within council tax, from people who are deceased.
“We try to exhaust all possibilities for the collection of that debt. Sometimes that can be pursued for a long period of time. We try where possible to recover all debt before taking the view to write it off.
“The final sign off sits with myself. I will do an analysis of the debt, the level of debt, sampling what interaction the council has made to purse that debt, then finally signing it off.”
