UK debt collection plan branded as a ‘failure’ by MPs

A group of MPs has called on the Treasury and Cabinet Office to come up with a better plan to help manage £22bn owed to the government. The committee has warned that failure to minimise the outstanding debt will have a direct impact on government borrowing in the future. Currently £15bn is owed to HM Revenue and Customs (HMRC) with the remainder being owed to departments such as the Department for Work and Pensions and the Ministry of Justice. The majority of monies owed comprise of unpaid fines and taxes to overpaid tax credits. However the government has come back to say that it has already done much to tackle the problem. “As part of our long-term economic plan, this government’s relentless focus on tackling fraud, error and debt has already saved £6.5bn,” a coalition spokesperson said. The MPs report showed that while funds owed to HMRC dropped by £5.5bn in the last four years, £3.5bn of this was due to written-off tax credits and other debt it has given up. “While the Treasury and the Cabinet Office say they are belatedly developing a cross-government strategy for debt, we are concerned that the centre [of government] has taken so long to drive improvements in debt collection, given that this should be a basic business activity, and given the huge volume of bad debts that are written off each year,” said the report. The committee of MPs has recommended that the Cabinet Office give targets to government ministries for improved management of debts and should start acting like “intelligent customers of debt collection agencies,” to improve the management of debts. The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article. Setfords Solicitors are a national full service law firm, with debt recovery solicitors in London and across the country.