CIVEA continues calls for support of CRAR specialist firms

CIVEA continues calls for support of CRAR specialist firms.

The Civil Enforcement Association (CIVEA) has maintained its stance opposing recent extensions to the Commercial Rent Arrears Recovery (CRAR) moratorium and is asking for more to be done in support of specialist enforcement firms that have remained unable to work since the first coronavirus lockdown.

Specialist enforcement firms undertake CRAR on behalf of local authority clients, enabling council landlords to collect rent owed to them by business tenants. CRAR only applies to landlords of commercial properties and rent must be in arrears for at least 554 days. This would not affect firms that remained closed due to the pandemic because it can only be used where a business is open and trading.

In June, the Government backtracked on its promise not to extend the ban on CRAR for a fifth time since March 2020, announcing it would keep measures in place until at least March 2022. Many small businesses, often those that were prohibited by law from working for two years, are still facing financial ruin. If the situation does not improve, there will be a knock-on effect on local services because local authorities rely on CRAR to recover a debt owed by local businesses. According to the National Audit Office, the pandemic’s cost to councils was almost £7billion last year, with almost an additional £3billion forecast for the 20/21 financial year. This is before any consideration of unpaid penalty charge notices, commercial rent and non-domestic rates arrears.

Business tenants are aware that the only available recourse for their local authority landlord is the legal route. However, this is not viable because of the backlog of cases going through the courts. This will also restrict how quickly enforcement action can be started once approved, meaning companies can continue trading rent-free for even longer. A small family firm that CIVEA represents lost 95% of its income as a result of extensions to the CRAR ban. They have not benefited from any of the sector-specific assistance which has been afforded to the likes of the leisure and hospitality sector. The money it has cost to keep staff on full salaries and counter the loss in turnover cannot be recovered and will be written off.

Russell Hamblin-Boone, CEO of the Civil Enforcement Association explained, “It is essential that specialist firms are supported so that they can survive to meet the demand for rent collection for council landlords. It is wrong that some businesses are operating rent-free at a time when our councils are struggling to generate revenue for essential local services. Some CIVEA members have been unable to work since March 2020 and the impact on their business has been devastating. Comparatively, members that do not specialise in CRAR have been back working for the past year and have played a pivotal role in debt recovery. We have written repeatedly to the government about this crisis, but despite assurances that firms collecting CRAR would be taken into consideration, there has been little or no support on offer. This has to change, or else when the ban lifts and the influx of CRAR cases are finally released, there will be few of the suppliers still operating to fulfil demand. This would put even further strain on local authorities, that remain desperate to claw back overdue rent and fill the huge gap in council budgets.”

CIVEA recognises the struggles of problem debt post-pandemic that many small businesses face. However, CRAR collections is one of the few sectors that has been prohibited by law from working for two years, while other businesses have enjoyed grants and bounce back loans.

Calls for support of CRAR specialist firms is just one of the ways meaningful change is being promoted across the enforcement industry. The Centre for Social Justice’s (CSJ) report, “Taking Control for Good”, announced plans for an Enforcement Conduct Authority (ECA). The ECA has been proposed to act as a new, independent and fully funded industry oversight body. The ECA is set to be launched later in 2021.

ENDS

NOTES TO EDITORS

CIVEA is the principal trade association representing civil enforcement agencies employing around 2000 certificated enforcement agents that operate in England and Wales. CIVEA represents 40 companies that make up over 90% of the entire enforcement industry.

CIVEA’s members work to enforce civil debt on behalf of local authorities and Her Majesty’s Courts and Tribunals Service (HMCTS) including council tax, business rates, parking fines, magistrates’ court fines, employment tribunal awards, child support payments, B2B and commercial rent arrears. This amounts to over £500 million (half a billion) of unpaid taxes and fines recovered each year at no cost to the public bodies themselves. Each year CIVEA members receive over 3.5 million warrants and court orders.

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