The cost of not reforming the Jurisdiction Order

2021 saw a gathering momentum for change to the High Court & County Court Jurisdiction Order 1991, which currently only allows for County Court judgments (CCJs) below £600 to be enforced by a County Court Bailiff (CCB).

A survey run by the High Court Enforcement Officers Association (HCEOA) in 2021 found very high support amongst court users to remove the £600 restriction to allow the option of enforcement by High Court Enforcement Officers (HCEO):

• Almost 99% support freedom of choice for enforcement
• 96% support a change in regulations to let them use an HCEO for debts under £600
• 97% are concerned about the backlog of cases in the County Court
• 86% are experiencing delays in the County Court and many have stopped trying to recover some debts altogether
• Only 5% think the current system is effective and meets their needs
• 35% would issue more claims under £600 if they could use an HCEO

So, what is the cost of doing nothing?

Economic factors

The primary cost of doing nothing to change the Jurisdiction Order is the negative impact on the economy, at both a macro and micro level.

Small and medium enterprises (SMEs) account for 99.9% of the UK business population (5.6 million businesses), 61% of total employment (16.3 million) and 52% of turnover (£2.3 trillion).

For SMEs, bad debt can be catastrophic. They lose money, which can mean increased prices to customers to cover losses; at worst it can close the business, with job losses and potentially unpayable debt.

Even for larger companies, the cost of bad debt will often also be incorporated into pricing. This can have a significant impact on consumer pricing, particularly at a time of high, and rising, inflation.

At a macro level, should the Jurisdiction Order be changes and those debts be paid, then business revenue will improve and corporation tax and VAT revenue to the Treasury will increase.

If there is the 35% uplift in claims that the survey indicated, that would also lead to considerable extra court fee income for the Treasury.

Reducing costs to the taxpayer

Unlike CCBs, who are civil servants, HCEOs are private businesses and cost the taxpayer nothing. Their income is derived from the enforcement fees set out in the Taking Control of Goods (Fees) Regulations 2014.

CCB capacity and landlords

As well as enforcing CCJs, County Court bailiffs also enforce orders for possession for private landlords.

There are long delays in the enforcement of possession orders by CCBs, which is why many private landlords turn to HCEOs to restart their revenue stream when they have tenants who fall seriously behind with their rent.

Changing the Jurisdiction Order would provide greater capacity for CCBs to support landlords.

Need for reform

Changing the Jurisdiction Order will require the development of a fee structure for these smaller debts, which can be discussed and worked through by the Ministry of Justice and the HCEOA, to ensure it is proportionate and takes into account the needs of debtors.

The process to transfer the CCJ up to the High Court for enforcement also needs automating to speed up access to enforcement for creditors.

In conclusion

Over ten years ago, the enforcement of employment tribunal awards was opened up to HCEOs, with no minimum award value, and this has worked very well.

The cost of not changing the Jurisdiction order is considerable – from a consumer to an SME to a large corporate, as is the lost revenue opportunity and potential cost-savings for the Treasury.