Dealing with debt

3 Feb 12
Francis Maude

The Cabinet Office Minister outlines plans to reduce debt to government as a new taskforce publishes an interim report showing the current extent of the problem

Establishing the Fraud, Error and Debt Taskforce in 2010 was a no-brainer for ministers – we were only months into the job but we knew that every pound mattered and we were concerned about the level of losses due to uncollected debt owed to government.

The taskforce started by looking at fraud prevention, and in this area it has already saved £5m for taxpayers since 2010. Now it is turning a sharp gaze onto debt and has published interim recommendations for tackling the problem, focused on prevention and fairness.

For the first time we now have a clear picture of debt owing, and we now know that central government incurs losses in the region of £7-8bn every year. While there have been initiatives run by different government organisations to improve performance, we have been struck by the need for more join-up across the board and we believe there is much more that we could and should be doing.

We want to use the taskforce to make sure those departments with a good track record in this area share their expertise, resources and data to help drive improvements right across government.

Debt to government is a difficult and emotive subject – it arises in a number of ways: through non-payment or late payment of taxes, fines, licence fees and other charges, or through benefits and tax credits where an individual may not have had the entitlement to that money.

While fraud against the government is a deliberate act to defraud the public purse, debt can occur because people and businesses are in genuine hardship. There can be no doubt that in these cases, the government’s role is to support and guide – not simply chase for payment.

Yet at the other end of the spectrum, there are those who deliberately avoid paying even when they have the means to do so and this is where we want to see consistently tough action to recover that money. We want to explore how we can improve both the efficiency and effectiveness of our debt operations to do this.

A recent small pilot between the Department for Work & Pensions and Her Majesty’s Revenue & Customs found a 19% crossover where people in receipt of benefits had debts with HMRC. Asking those people if they were prepared to repay their HMRC debt gradually from their benefit on a voluntary basis resulted in 20% agreeing and an additional £61,000 recouped. The Welfare Reform Bill will allow this exercise to be repeated on a much bigger scale.

Departments are also already shifting to a greater use of external services, whether that is data analytics; use of credit reference agencies or debt collection agencies as well as looking at ways of increasing the skills and support for those staff that perform the vital role of processing and collecting debt.

We will innovate in our approach and we will support those who need it, but we will not accept high levels of debt in the public sector. We must continue to learn from current pilots, and strive to become best in class. We will not do this alone – we want to learn from those that do it well, whether that is local government, the private sector or even from other countries across the world that have devised innovative debt solutions.

Francis Maude is the Minister for the Cabinet Office

Did you enjoy this article?

AddToAny

Top