Debt levels have come into the government’s focus in recent weeks. On September 21, a deadline passed for responses to a Cabinet Office on Government debt collection appeal and StepChange, the debt charity, was fairly critical of the state.
This, they explain, results in local authorities and government departments pursuing repayment plans in isolation from the wider context that is essential to determining fair outcomes for individuals.
Addressing this may be warranted, given that Money Advice Trust research shows that 41 percent of local authorities don’t have a vulnerability policy in place.
Peter Tutton, the Head of Policy, Research and Public Affairs at StepChange, commented on the steps that the government has taken thus far: “The Government has taken a hugely positive step in legislating for Breathing Space to allow people in debt a chance to see recovery action paused while they work with a debt advice provider towards a sustainable long term solution. It would be a tragedy if its own debt collection practices end up undermining the outcome.
“So now is the time for the Government to get its house in order on its own debt management practices.
“The current unhealthy relationship between government debt and poor collection practices exists across all areas, which is worrying given the high level of vulnerability among those who owe money.
“One example is starkly demonstrated by the over-use of bailiffs to enforce council tax arrears.
“Even the language of government debt collection is frequently toxic and counterproductive – frightening people away from engagement, rather than fostering it.”
“So much can be learned from the experience of the commercial credit sector, where a regulatory structure has been built that focuses on treating customers fairly and requiring forbearance under a clear, compulsory, and well-monitored framework in which information is shared to inform realistic repayment plans. It’s time to replicate this in the world of government debts too.”
To illustrate how these problems can affect individuals, StephChange shard the experience of Chrissie from Northumberland.
Chrissie, a StepChange client, detailed: “I have become very jumpy every time I hear a car or the doorbell, because I’m worried it will be bailiffs. My universal credit application was declined, so I’ve had to get food from a food bank and an emergency payment from the British Red Cross and am trying to apply for other grants to try and pay the money I owe. My local council has rejected my council tax support claim and has stated that I have to be on universal credit to be eligible.
“I recently rang HMRC about my working tax credit allowance after receiving a letter saying the final overpayment had gone up from £93 to over £750. This was due to an error made unknowingly by me at renewal, however, the adviser took the view that it was my responsibility to get it right (I explained I had not understood very complex system and had made honest mistake when answering questions that were not sufficiently explained) and suggested people just take the money and complain later. Now that coronavirus measures are being lifted I can be chased for this, but I still have no means to pay.
“I’m not someone who has ever been in this position before, especially considering I was an employment advice/welfare worker until I lost my job, but I still cannot find my way out of this. What must it be like for people without my background if I cannot do it?
“National and local government departments are not practicing what has been preached to other organisations and are showing little forbearance – people in my position are just expendable acceptable losses, and I’ve been further excluded by their insistence on doing everything digitally
“I have just turned 60 but cannot get my pension because I am female, and I have little chance of finding work. I think I may well be in poverty and in debt for the rest of my life now. It makes me extremely angry to be treated this way – It is like the Victorian attitude of the deserving and the undeserving poor.”