Government’s Debt Collection initiative has failed say MPs

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The Committee of public accounts has said that efforts to recover 22 Billion pounds worth of debt owing to the government have failed dramatically and a new plan needs to be devised according to a new report.

Over 15 billion pounds is owed to HM Revenue & Customs (HMRC) alone with the remainder largely owing to The department for Work and Pensions and the Ministry of Justice.

The committee has warned MPs that the failure to significantly reduce the amount of outstanding debt is having a direct impact on state finances in the form of increased government borrowing.

Money owed ranges from unpaid fines, over payment of tax credits and other similar sources of debt.

The government claims it has already taken big steps to tackle the problem.

“As part of our long-term economic plan, this government’s relentless focus on tackling fraud, error and debt has already saved £6.5bn,” a coalition spokesperson said.

“Before 2010, Whitehall did not know how much overdue debt was owed to government and departments weren’t working together to address it. We are turning debt management around but hardworking people expect us to do more and we will.”

The outstanding amount owing to the HMRC has actually dropped by 5.5Bn over the past 4 years but this is largely due to 3.5Bn being ‘written off’ for various reasons, according to the committees report.

“While the Treasury and the Cabinet Office say they are belatedly developing a cross-government strategy for debt, we are concerned that the centre [of government] has taken so long to drive improvements in debt collection, given that this should be a basic business activity, and given the huge volume of bad debts that are written off each year,” said the report.

The report also goes on to add that authorities need to re think their use of Debt Collection Agencies and Margaret Hodge MP, who chairs the committee said they were worried about debtors being pursued “inappropriately”.




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