The government has struck a deal with an American owned debt chasing company to try to recover £20 billion in unpaid taxes and student loans.
Ministers have created a joint venture with TDX Group – a leading ‘recovery management’ firm – to try to recover overpaid benefits and grants as well as the taxes and student loans.
But ministers would pass no comment on what proportion of the amount recovered will be paid as fees to TDX.
The new company – Integrated Debt Services Ltd (IDSL) – will be 75% owned by TDX with the government owning the remainder.
The move is being seen as the result of the government’s initiative to find different ways of working to save public money. In last month’s Autumn Statement, Chancellor George Osborne set a target of a further £10 billion in economies to be achieved by 2017-18.
IDSL will have six customers to start with:
- HM Revenue and Customs
- Department for Work and Pensions
- The Student Loan Company
- The Home Office
- The Legal Aid Agency
However, it is expected to actively offer its services to the wider public sector with the aim of growing its services.
Earlier this year the government was criticised by the Commons Public Accounts Committee for failure to establish a ‘cross government approach’ to managing debt and recovering more of what is owed to secure more money for the exchequer.
They claimed inaction had led to a large volume of old debts building up in a number of departments which were unlikely to be collected.
Cabinet Office minister Francis Maude said: “As part of our long term economic plan we are working to get a grip on the billions of pounds of uncollected debt owed to the government. Establishing this company is an innovative approach which will build a sustainable and world class recovery service for the public sector and intelligently tackle a complex problem.”
Local government minister Kris Hopkins said local authorities are also likely to benefit: “Improving tax collection and reducing arrears are key ways of making sensible savings to help keep overall council tax bills down and protect front line services. Every penny of tax not collected means a higher tax bill for the law abiding citizen who does pay on time.”
TDX is a Nottingham based firm which was bought out by American credit reference agency Equifax at the start of the year for £200 million. Managing director Mark Sanders said: “We look forward to partnering with the government to launch this service to recover unpaid debt owed to the state…… We believe our tailored approach is the key to delivery of a service which is effective and fair for all parties involved.”