02 Oct 2014

DISTINGUISHING ‘CAN’T PAYS’ FROM ‘WON’T PAYS’ CAN HELP RECOVER UNPAID PUBLIC SECTOR DEBT

Equifax research* reveals that 81% of MPs believe greater understanding of individuals’ circumstances is needed to reduce the impact of uncollected debts on local services

Key research findings:

  • 49% of politicians believe personal debts owed to local authorities are expected because people’s finances are under more pressure
  • Perhaps as a consequence, 81% of MPs think there need to be better ways to distinguish between those who cannot pay their debts (‘can’t pays’) and those who will not (‘won’t pays’)
  • 85% of MPs believe there needs to be better data sharing between Government departments
  • Only half think the current process of collecting outstanding debt in their constituency works well with the majority of debts collected
  • 63% of politicians think people find it easier to delay payment of Public Sector debts than other debts
  • 37% believe there need to be tougher penalties and prosecutions to deter non-payment of taxes and rents, and 21% advocate more on-the-spot fines
  • 10% expect there to be an increase in local taxes to address public sector debt

London, September 2014 – According to new research* commissioned by leading consumer insight expert, Equifax, nearly two thirds of MPs have been asked for help from constituents with concerns about debts they owe to their local authority. With 63% of MPs who responded to the research thinking that it’s easier for individuals to delay payments for public services than other debts, Equifax believes there is an opportunity for local authorities to improve public sector debt recovery through better understanding their debtors’ circumstances. By utilising the insight available and engaging early with individuals who are struggling to meet their financial commitments, local authorities can work with those individuals to agree a repayment plan which is fair for both parties.

“More than a third (35%) of MPs we researched said that unpaid public sector debt would result in a reduction in local services,” said Melanie Hosker, Head of Public Sector Services at Equifax. “One in ten said they would expect there to be an increase in local taxes to address the deficit of unpaid debts. According to the Department for Communities and Local Government this amounted to £2,528 million for council taxes alone, as at 31st March 2014. However, nearly half (49%) of politicians felt that pressure on personal finances makes public sector debt inevitable.

“Recognising the economic conditions affecting the ability of individuals to pay their public sector debts, local authorities need to have a better understanding of individuals’ financial circumstances. Focused and appropriate strategies can then be devised and implemented based on that understanding, ensuring essential funds are made available for frontline services and help can be offered to those who genuinely ‘can’t pay’”.

Equifax believes accurate, up–to-date and insightful information is the key to tackling the difficult challenge local authorities’ face in collecting public sector debt. The newly launched online investigation solution, Equifax Public Sector Gateway, provides access to detailed information so that they can more accurately separate the ‘won’t pays’ from the ‘can’t pays’ for the most effective debt recovery strategies.

Having this insight is fundamental because, for 88% of MPs who responded to the Equifax commissioned research, an important component in addressing local Government debt is being able to put more focus on agreeing with the debtor a suitable repayment arrangement. There was also consensus for better data sharing between Government departments with 85% of MPs advocating this approach. Taking firm action was acknowledged by over a third of politicians as having a role to play in recovering unpaid debt in their constituency.

“Equifax Public Sector Gateway is already helping local authorities seek to recover money owed to them” continued Melanie Hosker. “Online access is provided to an unrivalled range of focused reports that can trace individuals and assess their financial status and overall indebtedness. As a result, local authorities are better able to prioritise and cost-effectively manage their debt collections strategies so that the funding gap caused by budget cuts can be bridged.”

*Populus MP Omnibus – conducted between 22nd June and 22nd July 2014 – 119 MPs responded by self-completion postal questionnaire and online. Sample weighted to ensure representative of the party political make-up of the House of Commons.