By Vivienne Russell | 14 February 2014
At least £22bn is owed to government by businesses and individuals, yet Whitehall does not have an integrated strategy to manage this debt, auditors have concluded today.
In a report published today, the National Audit Office said attempts by the Treasury and Cabinet Office to highlight the issues and incentivise departments to address debt collection policies had made little impact. Efforts to develop a pan-government approach to debt management in 2012 were undermined by poor quality data, a lack of data sharing and inconsistent definitions, the watchdog said.
‘Government is owed a large amount of money but has yet to get to grips with how to manage that debt. It has not set out overall objectives and has no clear understanding of the financial risk that debt poses,’ NAO head Amyas Morse said.
‘The Cabinet Office has brought forward proposals for a more integrated approach, which the Treasury is now considering. Whatever the approach, departments and the centre of government need to work together better to establish a common understanding of the costs and benefits of pursuing debt, and on that basis establish a shared strategy.’
The report noted that £6bn of debt was written off in 2012/13 as ‘remitted’ or irrecoverable on the basis that it would not have been a good use of limited resources to try to recover it. Government accounts show losses of more than £32bn over the last five years,
Auditors criticised the government for allowing too much overdue debt to age, which leads to its value being eroded as older debt is more difficult to collect. Almost two-thirds (61%) of the debt owed to HM Revenue & Customs, for example, is more than 180 days old.
Responding to the report, a government spokesman said cross-government efforts at co-ordinating debt collection had improved and £6.5bn was saved last year.
‘Before 2010, Whitehall did not know how much overdue debt was owed to government. We are turning that around but hard-working people expect us to do more and we will,’ he said.
