UK government is owed £22 billion, reveals Public Accounts Committee

The UK government’s Public Accounts Committee has revealed that the government is owed a remarkable £22 billion.

Around £15 billion of this total needs to be paid to HM Revenue and Customs (HMRC), while the rest is largely owed to the Department for Work and Pensions and the Ministry of Justice.

According to the committee’s report, the government is falling short of getting back what it is owed, resulting in higher borrowing and, consequently, holding it back from making real and lasting changes across all its departments.

For example, with £22 billion, it would be possible to build 1,500 new schools. It is also equivalent to a fifth of the total public funding that goes into the nation’s healthcare system.

Margaret Hodge, chair of the Public Accounts Committee, said that politicians have failed to deliver a “strategic, cross-government approach to managing that debt and getting more money paid to the exchequer”.

She explained that quite the opposite has materialised, describing the government’s approach as being one “characterised by neglect and periodic large write-offs”.

“Large volumes of old debts have been allowed to build up in departments, with 61 per cent of HMRC’s debt and 88 per cent of DWP’s debt over 180 days old as of 31 March 2013,” Ms Hodge went on to say.

“The older the debt the more difficult it becomes to collect. Some debt has sat in arms-length bodies like the Student Loans Company or Child Maintenance Enforcement Commission and is regarded simply as ‘terribly difficult’.”

The committee says that urgent action is necessary to readdress this outstanding issue and it is imperative that this government and the next one overhaul their approach to preventing, managing and preventing debt.

What is evident, the committee went on to say, is that there is a decided lack of strategy at a central level for cutting debt of this ilk. As one example of how in the dark politicians are, there is no official figure for the total amount owed to central government that has passed its pay-by date.

This report recommends that the Treasury establish a “comprehensive and effective strategy” for managing its debt as soon as is practically possible, while the Cabinet Office should deliver clearer guidance on what kind of saving it expects the government to make.