Managing debt owed to central government : seventh report of session 2014-15, report, together with formal minutes relating to the report

Individuals and businesses are in debt to government for overdue tax liabilities, benefits or tax credits overpayments and for other reasons, including outstanding fines and court confiscation orders.

There is no official figure for the total amount owed to central government that is overdue.

However, the National Audit Office estimated that overdue debt (money owed that is in arrears and legally collectable) was at least GBP22 billion at 31 March 2013.

HM Revenue & Customs (HMRC) was owed the majority of this debt (GBP15.1 billion), while the Department for Work and Pensions (DWP) and the Ministry of Justice (MOJ) account for nearly all of the remainder.

Debt owed to government has reduced by around GBP5.5 billion in the last four years.

But the Government has failed to take a strategic cross-government approach to managing that debt and getting more money paid to the Exchequer.

Failure to minimise debt impacts directly on Government borrowing.

The current climate of tight public finances must be an opportune time to make the lasting change to debt management that is needed across government. This will require prompt action to obtain repayments earlier, real co-operation across departments, better data for a more detailed understanding of debtors and their circumstances, and a more strategic approach to the use of debt collection agencies.

In this way Government could ensure a more effective approach to preventing, managing and recovering debt.