NAO: incentivise debt recovery

The Treasury should consider implementing new “funding mechanisms that better incentivise departments to recover debt” as part of a clear strategy for reducing the amount of overdue debt owed to central government, according to a report published last week by the National Audit Office.

By Suzannah.Brecknell

24 Feb 2014

The estimated total sum of overdue debt owed to government in March 2013 was £22bn, according to the report. Last year, HMT announced that from 2015-16 DWP would be able to retain a proportion of debt it recovers beyond specified targets, rather than returning it all to the Treasury. A similar scheme is in operation at the justice department.

The report suggests that the Treasury should build on this work to further incentivise departments to recover debt.

Head of the NAO Amyas Morse said: “Government is owed a large amount of money but has yet to get to grips with how to manage that debt.” He added that “departments and the centre of government need to work together better to establish a common understanding of the costs and benefits of pursuing debt, and on that basis establish a shared strategy.”

See also: CSW's news feature on fraud, error & debt

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