MPs have warned that the debt collection practices of Public Authorities risk pushing hard-pressed households further into debt and financial difficulty. The Treasury Select Committee found that local councils and central government was too quick to reach for bailiffs and 'over-zealous' in going after people in arrears.
The report highlights how people become over-indebted not just through conventional credit, but also through getting into arrears on bills, including those owed to central and local government, such as council tax. Witnesses heard by the inquiry from StepChange and Citizens Advice stressed that debts of this type were an important contributor to over-indebtedness and that they represent an increasing share of problem debts. Debt collection practices of public authorities were described as ‘worst in class’ with debts are often pursued over-zealously, uncompromisingly, and with routine recourse to bailiffs. The inquiry heard that 2.3m debts were passed to bailiffs by local authorities in 2016/17.
Matt Upton of the Citizens Advice Bureau, was one of the witnesses giving evidence to the inquiry:
"Lots of organisations have realised that incredibly aggressive collection methods are not effective in and of themselves at getting money in the door, because people do not respond well to some of those tactics."
The committee found that this approach risks driving the most financially vulnerable people into further difficulty and recommended that the public sector should raise its standards to the level of industry best practice, where respite gives the debtor time to take advice and formulate a payment plan.
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