Faceless and impersonal: what national government debt collection is getting wrong and how it can improve

Our latest report, Nothing Personal, shines a light on our Research Community’s experience of debt collection by the national government.

The title is a very deliberate choice. Perhaps more than any other sector, the national government can feel particularly faceless as a debt collector, and is the most prone to treating people who owe it money as just numbers on a spreadsheet.

Part of the reason for this is the scale. Our research shows that millions of people owe money to government departments, which are also under a lot of pressure to collect the debts they are owed. Against this background, it is almost understandable that the government struggles to take a personal approach, instead opting to maximise the speed and efficiency of collection.

However, given our research has made clear, time and again, that people in problem debt are disproportionately likely to experience serious mental illness, the drive for efficiency often comes at too high a human cost.

“…they treated me like I was doing it on purpose. They didn’t understand my mental health and said I didn’t have mental health problems but was making it all up.” Expert by experience

Nowhere is this starker than when the government collects benefits overpayments through deductions, whether from benefits themselves or from earnings once a person has moved into work. Within a month of the debt being identified the Department for Work and Pensions (DWP) can authorise a deduction of 15% from a Universal Credit Payment or on a sliding scale from PAYE earnings. 

This can be £60 a month, money that may have been critical for essential spending, but despite this, there is very little opportunity to explain personal circumstances, before the first deductions are made.

For those of us with mental health problems, managing our finances can be difficult, a problem made all the more intense on a low income. The triple impact of discovering we have been paid too much, that our benefits will now be reduced to make up for it, and that our avenues of appeal are both limited and hard to engage with is potentially devastating.

“It caused me severe anxiety for months. I had obviously spent the amount they over-paid me, I really struggled to manage on less money for months. How can they make a mistake, but I have to take the repercussions? … Life is a constant struggle, every day,”- Expert by experience

Compare this to a debt in the private sector, where most firms will spend weeks or months engaging with the customer before taking action, and even then cannot recover money directly without a court order that at least to some extent takes into account the person in debt’s ability to pay.

We would be the last to claim the private sector gets everything right when it comes to mental health and debt collection – you can read our Debts and despair report to find out more – and as In the public interest made clear, going through the courts system comes with its own intense problems. But surely it is incumbent upon the national government to lead the way, not to be found lagging behind. As it stands, the banking sector is presenting a friendlier face than the Department of Work and Pensions!

This is all the more concerning when the government’s new Public Authorities (Fraud, Error, Recovery) Bill (PAFER) will hand the DWP even more powers, authorising it in some circumstances to make direct deductions from bank accounts.

There is some hope though. The Government Debt Management Function (GDMF) is working to improve debt collection across the board and its recent Communications Toolkit is a real step in the right direction. Our research did also uncover some examples of good practice, where people had been able to speak to the DWP and had their personal circumstances treated seriously and sympathetically. Making that the rule rather than the exception would make a big difference.

Once I had made telephone contact with the correct government department, they were nearly always very helpful. Sometimes they were even kind and very willing to go at a pace that I could cope with.” Expert by experience

Guidance is a start but we are calling for an urgent overhaul. The government should take a consistent approach and implement a pre-action protocol that includes real affordability checks. The PAFER Bill may present an opportunity for reform, but if it is not taken, an already complicated and confounding system may become even more impersonal.