NEARLY £200,000 worth of bad debt has been written off by Herefordshire Council, which itself now owes £33 million in "ends meet" loans  from other authorities.

Between April and October the council wrote off 21 debts collectively worth £179,000.

The council's own collective capital and short term loan debt has crossed the £200 million mark.

Within the next four years, the capital debt alone could top £200 million.

Thirteen debt write-offs related to business rates collectively worth £104,000 and leaving the council liable for a percentage of the value.

Two cases were benefit overpayments worth £9,000.

Over the period there was one case exceeding £20,000.

That was the write off of £40,237 relating to commercial rent with the tenant going into receivership and no monies available for distribution to creditors.

In general, debts considered for write off fall into the categories of bankruptcy or liquidation, debt relief order, remitted by magistrates at a committal hearing, unable to trace debtors, debtor deceased with no estate, no further action possible.

The business rate write off amounts can be broken down to:

Bankrupt or  liquidation - 10 cases totalling £80,000

No viable recovery options - two cases totalling £19,000

Unable to trace company - one case totalling £5,000

For business rates, irrecoverable amounts are charged to the collection fund with the council liable for 49 per cent of the value of any amounts written off.

For benefit overpayments the council can claim subsidy from the Department for Work and Pensions on all recoverable amounts depending on the reason for the overpayment.

Generally, around 40 per cent is received back in subsidy.

Irrecoverable amounts for sundry debtors are recharged to the originating  department.

For bankruptcies and liquidations, a claim is lodged with the  receiver and no further effective action can be taken as, under current legislation, local authority debts are  non-preferential.

An individual with debts of less than £15,000 and a low income can apply for a debt relief order if they cannot afford to pay off their debts.

Council tax and business rates are, where possible, progressed to the  committal stage of recovery through the courts.

Although the Magistrates Court has the power to remit part or all of the debt, the amount remitted is written off.

The council’s finance procedure rules allow uncollectable debt under £150 to be written off by other service managers.

Other authorisations are:

Between £150 and £500 - revenues manager.

Between £500 and £2,000 - head of benefit and exchequer  services.

Between £2,000 and £20,000 - chief  finance officer (CFO)For write off of amounts exceeding £20,000 the CFO needs agreement from the cabinet member responsible for resources.

As at the end of October, the council itself owed over £33 million as short-term borrowing from other local authorities.

The eleven loans had an average interest payable rate of 0.49 per cent.

Loan periods and interest rates – including brokers commission of between 0.3 per cent and 0.10 per cent – ranged from 76 days to one year and 0.40 per cent to 0.58 per cent respectively.

Last month, the Hereford Times reported that the borrowing debt on the council’s capital programme alone could top £200 million within the next four years.

The potential for a £32 million rise on the present £168 million capital debt figure was identified in papers prepared for the general overview and scrutiny committee.

A quarter of the council’s assets are now  financed by debt, with the repayment rate running at £10 million a year.