Greenwich Council to write off £1.3 million in bad debt

Greenwich Council are set to write off £1.3 million in bad debt from four organisations.

A council document reveals that the total amounts to be written off are:

• Greenwich Voluntary Action Council (GVAC) – £124,526.38
• Waterways Community Nursery (WCN) – £146,210.93
• Greenwich CCG – £326,279.10
• Wide Horizons – £700,000.00

GVAC

The report states that GVAC was failing to meet payment deadline to the council as far back as 2001 and failing to submit accounts in 2002/3, yet were able to continue utilising council services for some time afterwards.

“In June 2005 Hays Specialist Recruitment Ltd were granted a High Court Judgement for the sum of £15,796.45. Bailiffs attended the offices and levied on all goods.

In June 2005 GVAC owed the sum of £329,949 of which £203,140 related to estimated payroll costs for 2005/06. This figure took account of the funding of £121,220 for 2005/06.”

It appears the council was providing services despite years of financial mismanagement, with the council’s Cabinet only agreeing to stop funds and services on on 12th July 2005 after Greenwich Council looked into the group and found:

“GVAC was a failing organisation, financially insolvent and with little prospect of recovery of the amount owed to the Royal Borough:

• Board Members had not fulfilled their terms of reference and had failed to ensure proper governance of the organisation;

• There had been an ongoing failure by both the Board and their senior staff to develop sound financial, administrative and management
controls;

• GVAC’s financial records for 2003/4 were incomplete and in a state of disorder, with almost half of recorded payments unsupported by invoices or receipts and no records of cash expenditure.

The report then states:

“GVAC became insolvent on 26th August 2005. The position at that time was that GVAC owed the Royal Borough £124,008.25 for unpaid payroll costs and £518.13 for unpaid hall hire, catering and advertising.”

Waterways

This nursery was similar to GVAC in that it utilised Greenwich Council for payrolls yet failed to pay costs.

According to the report:

“Repeated efforts on behalf of the Royal Borough to establish a regular repayment schedule secured only minimal contributions to the outstanding debt and in some years the debt increased because of additional employee costs from sickness and maternity leave alongside weak financial systems and controls.

“When the nursery did take the action recommended by officers in 2004 such as increasing fee levels and improving the collection of fees and minimising arrears, this still did not result in any significant repayment / reduction of the debt.”

Like GAVS, it took some years before the plug was pulled while deadlines were missed.

Greenwich CCG

This debt on money apparently owed by Greenwich Clinical Care Group is far more recent and dates from 2018/19 and 2019/20. This debt arises due to “missing data relating to 32 clients”, and “the CCG have been unable to match the cost against commitments on their client”. That missing data has led to £213,370.73 for adult services being written off.

For children’s services in 2018/19, £112,908.37 is disputed by Greenwich CCG and “it has not been possible to obtain evidence to support payment“.

That appears to be two substantial mistakes. There is no information of who was at fault or why this occurred.

Wide Horizons

This is the largest total at £700,000 and relates to a charity which operated a Field Study Centre. Greenwich and Lewisham both lent the organisation £700,000 shortly before it entered liquidation in 2018.

The report states “the liquidator has now confirmed that it highly unlikely the Council will recover the outstanding loan amount.”

UPDATE: Greenwich Tories have called in the decision which will be discussed next week at an Overview & Scrutiny meeting.