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Tackling Debt Owed To HM Government. Sarah Storey, Cabinet Office Graham Cassidy, DWP Sue Batty, HMCTS Gordon Smith, HMRC. Background. The Cabinet Office have convened a Taskforce to drive down the levels of Fraud, Error and Debt in the public sector. - PowerPoint PPT Presentation
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Tackling Debt Owed To HM Government
Sarah Storey, Cabinet Office
Graham Cassidy, DWP
Sue Batty, HMCTS
Gordon Smith, HMRC UNCLASSIFIED
Background • The Cabinet Office have convened a Taskforce to drive down the
levels of Fraud, Error and Debt in the public sector.
• Focus on ‘overdue’ debt owed to Central Government (e.g. Departments and their partner bodies) by individuals and businesses
Phase 1 Phase 2 Phase 3
Gathering data and initial analysis
(Complete)
Identifying areas for action and piloting new
approaches(November 2011 – June
2012)
Implementation of new approaches
(June 2012 onwards)
UNCLASSIFIED
Key Facts • Around £26bn of overdue debt across central government
• This overdue debt is split between:
• Tax
• Benefits
• Fines
• Loans
• Sale of goods and services
• Suppliers
• Lots of existing contracts with debt collection agencies, credit reference agencies, consultancy and data services providers.
UNCLASSIFIED
Aims and outcomes
UNCLASSIFIED
How you can help us • Open Public Services White Paper committed us to look at “new
commissioning approaches” on debt management and collection.
• But we are in a tightly constrained budgetary environment
• So we are looking for innovative solutions, which tackles the “low hanging fruit” and longer term solutions
• So ideas and suggestions via our e-mail address: [email protected]
• 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 • 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 • 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? • 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
• 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
• Seeking to revolutionise fine collection through a potential innovative partnership with the private sector
• 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
• A pilot testing three private sector suppliers’ expertise and innovation against the collection of outstanding HMCTS aged debt
• HMCTS will use the outcomes of the pilot to influence future strategy
• Currently hold ~1.2m accounts over 12mths old totalling ~£420m
• Testing sample of 21,000 (£3.3m) accounts ranging in: age - (1 to 5 yrs)
value (£10- £800) and geographical location
Where next?
• HMCTS is currently finalising its future delivery model for compliance and enforcement activities - due early 2012
• 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
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Context: HMRC and Debt • 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• Jan 2011 tender process for DCAs
• June 2011 engaged 10 DCAs on a framework agreement
• Late 2011 Introduction of new computer capability to analyse and segment customers
• Campaigns Strategy continues to develop using analytics
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Where next? • Make it easier for those who want to pay on time
• Support those who contact us early
• Deter late payment
• Make greater use of a variety of ways of debt pursuit
What next?