Tackling Debt Owed To
HM Government
Sarah Storey, Cabinet Office
Graham Cassidy, DWP
Sue Batty, HMCTS
Gordon Smith, HMRC
UNCLASSIFIED
Background
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The Cabinet Office have convened a Taskforce to drive down the
levels of Fraud, Error and Debt in the public sector.
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Focus on ‘overdue’ debt owed to Central Government (e.g.
Departments and their partner bodies) by individuals and businesses
Phase 1
Gathering data and initial
analysis
(Complete)
Phase 2
Identifying areas for
action and piloting new
approaches
(November 2011 – June
2012)
UNCLASSIFIED
Phase 3
Implementation of new
approaches
(June 2012 onwards)
Key Facts
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Around £26bn of overdue debt across central government
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This overdue debt is split between:
• Tax
• Benefits
• Fines
• Loans
• Sale of goods and services
• Suppliers
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Lots of existing contracts with debt collection agencies, credit
reference agencies, consultancy and data services providers.
UNCLASSIFIED
Aims and outcomes
Prevention
Fairness
Effectiveness
Efficiency
UNCLASSIFIED
How you can help us
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Open Public Services White Paper committed us to look at “new
commissioning approaches” on debt management and collection.
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But we are in a tightly constrained budgetary environment
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So we are looking for innovative solutions, which tackles the “low
hanging fruit” and longer term solutions
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So ideas and suggestions via our e-mail address: [email protected]
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Face-to-face sessions available with the project team January-March
2012
UNCLASSIFIED
Department for Work and
Pensions
DWP and Debt what we have done
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Used debt collection Agencies (DCA’s) since 2004
Undertook a Joint procurement exercise with HMRC for DCA’s in
2010
Worked with HMRC using shared data and Credit Reference Agency
(CRA) data for analysis of joint Debt Stock
Looked at Debt sale and how we could use this
Introduced new legal powers to improve our debt collection
Improved debt collection year on year collecting £320m in 2010/11
Reduced operating costs by 10% year upon year
What we have learned
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DCA’s don’t have a “silver bullet” but have more options and better
processes that aid debt recovery
CRA data along with Segmentation and scoring are essential to
recovery
We can make efficiency savings by using our IT more productively
We can recover much more with new powers and working across
government boundaries
We can make efficiency gains by re-examining our current processes
We need to be better at route cause analysis and prevent the debt
from occurring
Where next?
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More use of DCA’s and different points in the our process
More integration and data sharing with other government departments
(OGD’s)
“lean” the current process from the point where debt occurs through to
recovery
Use all of our information (CRA, OGD’s DCA’s) to drive our strategies
Introduce or improve our technology to automate processes
Introduce a Debt Controller function that oversees the whole DWP
debt recovery strategy
We need to develop our new approaches in line with new DWP
strategies (Universal Credit etc).
Her Majesty’s Courts and
Tribunals Service
Context: HMCTS and Debt
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Financial impositions (fines) account for 70% of all criminal court
disposals
In 2009 there were 913,194 fines imposed by magistrates’ courts and
the average fine was £175
Current total fines imposed ~£330m, collections ~£280m per annum
Typical fine defaulter characteristics:
• Lead chaotic lives
• Transient
• Take active steps to avoid detection
In 2010/11 HMCTS expenditure on enforcement was ~£70m, with
~1800 administrative staff operating from 180 sites
As at 31st March 2011 the total amount of fines outstanding was
~£609m
Programme of activity (1)
HMCTS Fines & Compliance Services Project
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Seeking to revolutionise fine collection through a potential innovative
partnership with the private sector
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Required outcomes:
• Reduce overall costs
• Increase collections
• Improve infrastructure
• Increase levels of voluntary and supported compliance whilst
decreasing reliance on enforced compliance
• Increased use of automation and innovation
• Increased availability of data and management information
Programme of activity (2)
HMCTS - Aged Debt Pilot
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A pilot testing three private sector suppliers’ expertise and innovation
against the collection of outstanding HMCTS aged debt
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HMCTS will use the outcomes of the pilot to influence future strategy
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Currently hold ~1.2m accounts over 12mths old totalling ~£420m
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Testing sample of 21,000 (£3.3m) accounts ranging in:
age - (1 to 5 yrs)
value (£10- £800) and
geographical location
Where next?
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HMCTS is currently finalising its future delivery model for compliance
and enforcement activities - due early 2012
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Final outcomes of the Aged Debt Pilot will be evaluated February
2012 and will be used to inform future strategy
Her Majesty’s Revenue and
Customs
Context: HMRC and Debt
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Deal with all UK taxes direct and indirect
£468 billion receipts in 2010/2011
Campaigns based debt strategy
Targeted segmented letters to customers
Expanded telephone capability to handle enquiries
Further action; visit customer, court action or DCA
Debt balance March 2011 £18.4bn (reduction of >£3bn)
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Programme of activity
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Jan 2011 tender process for DCAs
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June 2011 engaged 10 DCAs on a framework agreement
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Late 2011 Introduction of new computer capability to analyse and
segment customers
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Campaigns Strategy continues to develop using analytics
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Where next?
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Make it easier for those who want to pay on time
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Support those who contact us early
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Deter late payment
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Make greater use of a variety of ways of debt pursuit
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What next?
Engaging with HM Government
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Any questions?
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Contact us at: [email protected]