Liverpool City Council has almost £230m of “bad or doubtful debts” that may need to be written off, the authority’s interim corporate director of finance and resources has warned.
In a written statement on the robustness of Liverpool’s 2023/24 budget estimates and adequacy of reserves, Ian Duncan outlined that the council has set aside £270m to “cover the cost of known liabilities in respect of previous years”. He stated that “by far the largest amount” of this money, £228m, is for “bad or doubtful debts” that the authority does not expect to receive payment on.
Duncan wrote in the report: “It is good practice to keep under regular review the need to write off bad debts, but this does not appear to have been done for some time.
“Consequently, the city council has some extremely old debt on its books, and it will be necessary to bring forward reports to formally write off debt.”
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According to Duncan’s report, bad debt provisions have been established at 82% of the authority’s gross outstanding debt for council tax and 83% of the gross outstanding debt for business rates.
This comes as Liverpool City Council announced its budget proposals for 2023/24. The authority outlined that as a result of “a better-than-expected” local government settlement and the government raising the council tax threshold to 4.99%, the amount Liverpool will have to save has been reduced from £73m to £49m.
The budget proposals and the statement by Duncan will be discussed at a meeting of Liverpool City Council’s cabinet on 24 February.
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