Heather Jameson 27 April 2020

Debt collection needs reform, says think tank

Local government should follow the lead of the private sector when it comes to debt collection, the latest report from the Centre for Social Justice think tank has claimed.

The report cites Citizen’s Advice Bureau records which state 42% of debt in 2018-19 is owed to government or public bodies, up from 21% in 2010-11. In the same period, consumer debt dropped from 57% to 32% in the same period.

As the economic pressures caused by the coronavirus start to put pressure on family budgets, the problem of debt is set to be exacerbated.

According to the Centre for Social Justice, consumer debt collection has changed significantly over the past decade. It said: ‘Regrettably, these advances have not been mirrored by debt collectors in the public sector.

‘Councils are the nation’s largest commissioner of bailiffs, even though they recovered 27p of every £1 referred last year.

The Think tank has called for

Local government debt collection to be transformed and updated so it does not make debt problems worse

Transform debt collection in the justice system, removing prison terms for council tax debt and introducing an independent bailiff regulator.

A set of binding fairness principles to be put in law

Change debt collection in the welfare system, so historical debts around issues in the tax credit system are deducted affordably

The CSJ said: ‘With the lockdown not going anywhere soon, and the number of people in problem debt sadly set to rise, it is more urgent than ever to carve a new path forward for government debt collection.’

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