Anger at scale of debts which are left uncollected by Government

The Public Accounts Committee found that while the amount owed to the Government had fallen in recent years that was in part down to the taxman writing off £3.5 billion of debts as “uncollectable”.

Tax, overpaid tax credits and fines are some of the biggest sources of unpaid debts to the Government which were estimated at around £22 billion last year.

Committee chairman Margaret Hodge said: “In the current climate of tight public finances, that’s just not good enough, and urgent action is required.

“Government must get better at preventing, managing and recovering debt.

“The Treasury and key Government departments have a job to do to get on top of this and get money owed flowing into the coffers.”

The committee found that 61 per cent of HM Revenue and Customs debt and 88 per cent of the money owed to the Department of Work and Pensions was overdue by more than six months.

In its report, the committee warns he scale of debt outstanding is having a direct impact on Government borrowing.

“While the Treasury and the Cabinet Office say they are belatedly developing a cross-government strategy for debt, we are concerned that the centre has taken so long to drive improvements in debt collection, given that this should be a basic business activity, and given the huge volume of bad debts that are written off each year,” it says.

A Government spokesman said: “As part of our long-term economic plan, this Government’s relentless focus on tackling fraud, error and debt has already saved £6.5 billion.”

“Before 2010, Whitehall did not know how much overdue debt was owed to Government and departments weren’t working together to address it.

“We are turning debt management around but hardworking people expect us to do more and we will.”