Government targets billions of pounds of uncollected debt
Government will target billions of pounds of unrecovered debt through a new joint venture launched today with the private sector.
A new company - Integrated Debt Services Limited - jointly owned by the government and TDX Group, an Equifax company, will provide a single point of access to a wide range of debt management and collection services for a number of government departments and the wider public sector in 2015.
Debt owed to the government, which stands at some £22.6 billion, originates from many sources including unpaid fees, taxes, fines and loans, ineligible benefits or grants and unrecovered costs from court cases.
The government has reviewed how it collects debt and today a new ambitious approach has been launched.
The new company will use a range of proven and effective debt management services to support debt recovery with a focus on increasing returns, while using detailed analytics so that individuals are treated appropriately and fairly. It will provide government with the ability to access best-value private sector knowledge and expertise and departments are expected to sign call off agreements early in 2015.
The service will launch initially with 6 customers - HM Revenue & Customs, the Department for Work and Pensions, the Home Office, Student Loans Company, the Legal Aid Agency and the Driver and Vehicle Licensing Agency. However, it will also actively offer services to the wider public sector with an ambition to grow its services.
Government currently collects more than £40 billion of debt every year and already uses private sector organisations to deliver additional debt collection capacity.
This has historically helped government departments achieve significant improvements in debt recovery yields. However, this new strategic cross-government approach will focus on returning even more money owed to the Exchequer by offering 1 consistent tool for departments.
Minister for the Cabinet Office Francis Maude said:
As part of our long term economic plan we are working to get a grip on tackling the billions of pounds of uncollected debt owed to government. Establishing this company is an innovative approach which will build a sustainable and world-class recovery service for the public sector, and intelligently tackling a complex problem.
Managing Director of TDX Group, Mark Sanders, added:
Equifax, through TDX Group, looks forward to partnering with the government to launch this service to recover unpaid debt owed to the state. Our tried and tested approach uses data and analytics to build a fuller understanding of the individual in debt; we then apply the most appropriate and effective strategies using the best suppliers from the private sector. We believe this tailored approach is key to the delivery of a service which is effective and fair for all parties involved.
Local Government Minister Kris Hopkins added that local authorities could also benefit:
Improving tax collection rates and reducing arrears are a key way of making sensible savings to help keep overall council tax bills down and protect frontline services. Every penny of tax that is not collected means a higher tax bill for the law-abiding citizen who does pay on time.
It is important that councils are sympathetic to those in genuine hardship, are proportionate in enforcement and do not overuse bailiffs, and we have published guidance for councils to stop unjustified, aggressive collection practices. However, there is a significant potential source of income which councils across the country could use to support frontline services or freeze council tax bills next year, and this new service should help efforts to recover it.