27 Apr 2020 | Posted In Money advice news

Think tank the Centre for Social Justice (CSJ) has published a new report: ‘Collecting Dust: a path forward for Government debt collection’.

As the report shows, recent years have seen a remarkable rise in the number of people presenting with problematic debts owed to government authorities (rather than, say, consumer debts for credit cards or personal loans). Analysis of Citizens Advice records shows that 42% of debt issues reported in 2018-19 related to debts owed to the government or other public bodies. This has risen from 21% in 2010-11, overtaking difficulties relating to consumer credit debts, which fell from 57% to 32% over the same period.

In response to the fact that the public sector has not yet mirrored the advances of the private sector when it comes to debt collection in recent years (with Councils being the nation’s largest commissioner of bailiffs, even though they only recovered 27p of every £1 referred last year), the CSJ is calling for a Government Debt Management Bill to bring cross-government debt collection up to speed. This would:

  1. Enshrine a set of binding Fairness Principles in law, which all government debt collection must comply with and drawing from improvements made in the private sector.
  2. Transform local government debt collection, updating existing legislation so that collection processes are made more effective and do not worsen the initial debt issue.
  3. Transform debt collection in the welfare system, so that historical welfare debts born of issues in the tax credit system are addressed and benefit deductions are made affordably.
  4. Transform debt collection in the justice system, removing the sanction of imprisonment for council tax debt and introducing an independent bailiff regulator.

According to CSJ, adopting the practices put to good use in the private sector would produce savings for the taxpayer and provide a clearer and earlier route out for those whose lives have been shattered by problem debt.

Read more here.