Government to legislate on uncollected debt

| October 17, 2012
Government to legislate on uncollected debt

The Government is planning to introduce new laws allowing its departments to share information on individuals and companies that owe them money.

The proposal follows a review by the Cabinet Office’s Fraud, Error and Debt taskforce.

Around £20 billion is owed to the Government and more than £7 billion is lost each year through unpaid debt being written off, the taskforce reported.

The Government plans to introduce a single legal process allowing relevant information to be shared, in an effort to recoup some of the money which is currently lost.

The new system would also make it harder for criminal activity such as benefit fraud and tax evasion to go undetected.

Francis Maude, Minister for the Cabinet Office, said: “Because many debtors owe money to multiple departments, I am working closely with other ministers to find ways of aggregating these debts so we recover them in a single action – that would be simpler for Government and the debtor.”

The issue of how the data can be shared without compromising the Data Protection Act remains to be resolved.

Despite this, the Government is making it a priority to recover some of the debt, to help reduce the national deficit which currently stands at £81 billion.

Meanwhile, although overall levels of personal debt are falling, debt charity the Consumer Credit Counselling Service (CCCS) has reported a sharp increase in overdraft debt.

The average overdraft of a CCCS client has increased from £1,748 in 2007 to £2,082 in 2012.

The charity has also experienced an increase in the number of people seeking help with their overdraft.

69,663 people sought help from the charity over overdraft debt in the first half of this year alone, compared with 58,069 in the whole of 2007.

Overdraft debt is usually more expensive than borrowing on a credit card or through a personal loan.

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