21st September 2022
Why should local authorities consider moving collection services in-house and take a welfare-led approach?
Councils have traditionally outsourced collection of council tax arrears and parking fines to specialist enforcement agents. But since regulatory changes implemented in April 2014 (The Taking Control of Goods Regulations 2013) and the enactment of Part 3 of the Tribunals, Courts and Enforcement Act 2007, many councils have sought to form their own in-house enforcement teams to ensure a more customer-centric approach to debt collection, as well as to generate much needed revenue.
What are the benefits of in-house enforcement?
Engaging with citizens on a daily basis, local authorities understand the need for fair collection. That’s why councils who set up their own enforcement teams often have customer-focused objectives in mind. At Southwark Council, for example, a primary driver for bringing enforcement in house was to align the activity with its welfare-led approach to customer interactions.
“We built our own team and processes to get away from a siloed approach to collections that treats each debt in isolation," said Charlotte Acutt, Operations Manager for Income at Southwark Council.
That was a key consideration, as it's not unusual for Southwark customers to have more than one debt — for example, around a third of those with rent arrears also have at least one other debt. "We wanted to identify customers with multiple debts, and use technology to link their debts together to gain a holistic view of their situation," she added.
The customer at the heart
Councils that approach enforcement in the same way that Southwark do, aim to step in at an early stage of the process to distinguish those who can't pay, from those who won't pay. A council will typically hold wide-ranging information about each debtor, enabling a holistic view of their debt (which may span several council departments) and their overall situation, and allowing for more informed and customer-specific decision-making.
Debtors identified as vulnerable can be provided with additional support. For example, this may involve giving them additional opportunities to engage with the council before costs start being applied to their debt; extended payment arrangements or signposting them to debt charities for more help.
If a customer has more than one type of debt, the council may work with them to tackle their global debt in the most affordable way, as happens at Southwark: “Having a clear picture of each person's overall circumstances lets us take a more customer-centric approach to collections.”
Internal enforcement offers an additional revenue stream. By concentrating collection effort at the compliance stage, you can drive cashflow earlier in the process, as well as benefitting from the associated fees.
Given the enormous financial pressure councils are under, and the increased requirement to act more like commercial entities, this potential additional income could make in-house enforcement operation an attractive proposition.
Ready to transform?
If your council is ready to transform its enforcement approach by setting up an in-house team, here are five steps that can help you get the best results.
Step 1 Gain approval for your business case
Well before your anticipated go-live date, circulate a robust business case to gain member and stakeholder approval for the initiative.
Step 2 Understand your business model
Make sure the reasoning for bringing enforcement and debt collection in house is clear and well understood. Prioritise your objectives — for example:
- Are you focused on generating additional revenues?
- Are you keen to intervene early with debtors and improve engagement at the compliance stage?
- Do debtors typically have more than one debt — in which case, are you counting on developing repayment plans for covering several council departments e.g., housing rent, council tax and parking fines?
Your business model will take account of factors such as the typical profile of your customers, the most common debt types, and the level of deprivation in your area.
Step 3 Train your team
If you recruit enforcement agents who don't yet have the Level 2 Award in Taking Control of Goods, you'll need to get them trained and qualified. Once qualified, they can apply for their enforcement agent certificate.
It's worth extending this training to the back-office staff in your team so that they can deal professionally with debtor communications, and understand what enforcement agents can and can't do in the field.
Step 4 Retain your commercial agent agreements
Even when you bring enforcement work in house, consider retaining your agreements with external (commercial) enforcement agents. You can then call on them for additional support when you need it, for instance:
- When you have a high caseload or need additional resilience due to team shortages
- To collect out-of-area debts
- To work recycled cases to ensure all avenues have been explored before debt is written off combines
Step 5 Invest in the right technology
You'll need to make sure you have the right technology and equipment to support the work of your team. For your back office, this means implementing effective enforcement software; while your enforcement agents will need formal ID cards, and tablets or other smart devices. Agents may need additional kit such as vehicle clamps, body-worn cameras and stab-proof vests.
Taking a welfare-led or citizen-centric approach helps to mitigate the worry and fear that can come with debt. Councils can advertise their focus on early intervention and affordable repayment plans. Both of which can deliver benefits in terms of citizens trust and increased engagement levels, both digitally and in-person.
Councils that bring enforcement in house can generally expect to see additional income — whether that's net income generated by enforcement fees or increased levels of recovered debt. A council may even be able to take on enforcement work for neighbouring councils, creating a further revenue stream.
Ultimately, a welfare-led approach enacted by an internal enforcement team can have long-term benefits too, as it can prevent poor outcomes downstream, such as homelessness, which no council wishes to see.
Time to act
Given the intense financial and service delivery pressures that many councils find themselves under in the wake of the COVID-19 pandemic, can you afford not to explore the prospect of bringing your enforcement services in house?