Government losing up to £8bn on unpaid debts
By Vivienne Russell | 3 February 2012
Uncollected debt costs the government between
£7bn and £8bn every year, the Cabinet Office revealed today.
The interim report of the taskforce on fraud,
error and debt found that some £6.5bn worth of debts were written off last year,
often because businesses had become insolvent.
A smaller amount had to be written off
because of official error.
Total outstanding debt was £25.3bn at March
2011, of which the vast majority (95%) fell into three main categories: tax
debt, unpaid fines and repayments for overpaid benefits and tax credits.
Cabinet Office minister Francis Maude said it
was ‘mind-boggling’ that work on the state of government debt had not been done
before.
‘This report
is an early, interim report, but it shows clearly that we need a quicker, more
empathetic and accurate system to prevent so much debt accruing in the first
place. While there is lots of good practice, we have been struck by how little
joining-up exists – we need more data sharing across departments,’ he said.
The government will produce firm plans for
how to tackle debt in the summer. Maude said there would be support for people
and businesses in genuine hardship and thus unable to pay. But he warned that
those who deliberately avoided payments ‘should be prepared for a tough
approach’.
The taskforce is recommending a
cross-government approach focusing on two areas: improved collection of debt
through greater upfront compliance and ensuring the amount of debt progressing
through to the final stage of enforcement action is reduced.
Over the next few months, the taskforce will
negotiate a single commercial framework contract for debt collection agencies.
It will also ensure a consistent approach to legal sanctions and hardship
support for debtors across government departments.
