Bad debt skyrockets as council writes off nearly £500k in six months

The figure compares to £560,000 written off during the entire previous financial year.

Bad debt skyrockets in East Lothian as council writes off nearly £500,000 in six months iStock

The amount of bad debt written off by East Lothian Council in the first six months of this year rocketed, with more than half put down to businesses going bust.

A report on debts of under £50,000 has revealed that between April and September the council wrote off more than £497,000.

The figure compares to £560,000 written off during the entire previous financial year.

And it reveals that the biggest cause of unpaid debts was debtors going into sequestration – the Scottish equivalent of declaring bankruptcy – or companies being liquidated.

The report saw £183,900 of unpaid council tax, £75,530 in business rates and £44,000 of unpaid rent from current council tenants written off during the first six months of this year.

It also included council house rent from former tenants of more than £7,000 and housing benefit overpayments of £32,000.

And it wrote off sundries of nearly £148,000.

The report, which has been lodged in the members library, said: “Across all areas, £191,082.84 was written off due to sequestration, £65,049.37 was written off due to company liquidation and £38,947.77 was written off as the debtor was deceased with no estate funds to cover the debt.”

It added: “A regular assessment of the outstanding debt is made and a list of debt that is not considered collectable is prepared.

“Any bad debts are written off against a bad and doubtful debt provision which is reflected within the annual accounts and is used to recognise the value of debts which are deemed to be irrecoverable.

“This is based on an estimate of income which is unlikely to be realised based on previous experience.”