Public bodies ‘over-zealous’ in pursuing debt

30 Jul 18

Councils and other government bodies are “over-zealous” and “uncompromising” in the way they pursue financially vulnerable people over unpaid debt, MPs have said.

In a report on household finance, the cross-party Treasury committee urged public authorities to raise their debt-collection practices to industry best practice levels.

“Debt collection practices of public authorities have been described as ‘worst in class’,” the committee concluded.  

“Debts are often pursued over-zealously, uncompromisingly, and with routine recourse to bailiffs.”

Public sector organisations were too quick to call in bailiffs and risked driving financially vulnerable people into further difficulty, the MPs added.

The report, published on 26 July, also urged the Treasury to report on the state of household finances at the Budget, identifying key risks and setting out a strategy to deal with them.

It was the Treasury, the MPs argued, that needed to ensure high levels of public indebtedness or low rates of saving do not threaten overall economic stability.

Other recommendations included extending automatic pension enrolment to the 12-million strong self-employed workforce, including gig economy workers.

It also noted that tax relief was not an especially effective way of encouraging vulnerable households to save, whereas cash bonuses and direct matching schemes were shown to have more impact.

The MPs said government should update Parliament on the impact of these saving-incentive schemes and consider widening eligibility criteria.

Committee chair Nicky Morgan said: “Over-indebtedness, lack of rainy day savings and insufficient pension savings are some of the weaknesses in the household balance sheet identified in this inquiry.

“The committee’s report makes a series of recommendations for the government to consider that would help households ensure that their finances are as resilient as possible.”

She added that government should not “pass the buck” to financial regulators or bodies responsible for providing advice and guidance.

  • Vivienne Russell

    Vivienne Russell is managing editor of Public Finance magazine and publicfinance.co.uk

Did you enjoy this article?

AddToAny

Top