Cabinet Office minister Francis Maude has revealed plans to make it easier for departments to work together to reclaim more than £25bn of money owed to government.
Maude said the coalition would introduce legislation next year to enable departments to share information on people and businesses that owe the state money.This comes after the Cabinet Office’s Fraud, Error and Debt Taskforce found that more than £7bn was being lost each year through unpaid debt being written off across government, often because businesses had become insolvent.
According to the taskforce, 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.
Maude said that many debtors owed money to multiple departments, and a new law will make it easier for arms of government to share information.
Although some data sharing between departments is already allowed, there are at least 80 different legal ways to access different bits of data, each with different restrictions.
The new legislation will create a single legal process for all the appropriate information to be shared in each case. A consultation on proposals for legislation will be held next year.
As well as helping to crack down on those avoiding payment, it would also help government understand debtors’ circumstances so more effective action could be taken to recover money, Maude said. For example, it could end situations where one single mother was chased by 22 different parts of government.
Debtors who try to beat the system will find it much harder while those in genuine hardship will get the support they need to clear their debt, he added. ‘My department has found that over £7bn is lost through uncollected debt being written off every year – that’s a staggering £400 per working household. And government as a whole is owed £20bn – enough to pay for the Olympic Games twice over.
‘For years government has done all too little to collect the huge amounts of debt which it’s owed. That’s just totally unfair to the hard-working honest people who are paying their taxes and doing the right thing. That’s why we will act to enable data sharing to catch the cheats, while also understanding who is in real hardship and needs more time or support to pay.’
Maude also revealed that a summary of each department’s uncollected debt would be included in their individual online quarterly data summaries in the future.
