The government’s eye-watering outstanding debts have been making headlines since the publication of a National Audit Office report on the issue in February; however, over that same period, the Debt Market Integrator has gone largely under the radar.
A five-year, £1 billion project, the DMI is a private-sector company in which the government takes a minority share, as well as providing possibly the sweetest initial customer base any debt recovery company has ever had.
The list of ‘initial customers’ includes HMRC, DWP, the Student Loans Company, the Legal Aid Agency, DVLA and the Home Office, along with other customers of the Cabinet Office – and comes with a promise that none of these will seek to use the services of any other debt recovery company.
However, the Debt Market Integrator will be allowed to sub-contract recovery work out to other DRCs, if the governance structure of such arrangements is kept simple and straightforward.
It is perhaps no surprise that the government are taking debt recovery forward as a more rigidly structured process, given the substantial failings found in the NAO report in February.
At the time, a Valentine’s Day statement from the NAO reported “no integrated approach for managing debt across government”.
The total outstanding debt in March 2013 was £22 billion or more, the NAO found, with £6 billion written off as unrecoverable in the preceding 12 months.
“In total, government accounts show losses of more than £32 billion over the last five years,” the NAO said.
Clearly there is a challenge in terms of public perception – the government would not want to be seen to pursue hard-up families for settlement of debts, for instance – but equally there is a reputational problem associated with failing to recover those funds, too.
The Debt Market Integrator is likely to be appearing in more politics and finance columns over the coming months – and it will be interesting to see both how well it can improve government debt recovery, and also how its status as a government-backed non-public entity affects its perception by the population at large.