Government takes on €887 million debts from parents with child benefit

The government has taken over or canceled 887 million euros in debts and payment arrears from parents, most of which is related to the debts incurred by the victims of the national government’s childcare benefits scandal. Some 160 million euros were paid to private creditors via Sociale Banken Nederland, reported outgoing State Secretary Aukje de Vries (Toeslagen) in the latest progress report on the compensation campaign for the victims.

The situation was caused by the implementation of an algorithm at the Belastingdienst, the Dutch Tax Office, which was meant to ferret out parents who were cheating the benefits system. However, the algorithm led to thousands of parents being falsely accused of defrauding the system, with nearly no options to appeal. When parents were accused, their childcare benefits were immediately cut off, and they were forced to pay the government a lump sum for all benefits received in the past.

The situation put many parents in financial arrears for an extended time. The algorithm’s standards were also not subject to scrutiny, as it was able to consider someone at an increased risk based on aspects like nationality. Belastingdienst staff members were often shouted down or disregarded when they raised concerns about the system.

A large part of the canceled government debts come from the benefits program itself. Almost 326 million euros have been waived by the Tax Authorities, the Benefits Department, and Customs. Nearly 350 million euros of the canceled debts were outstanding at DUO, which mainly concerned student debts.

Part of the debt total was outstanding with the CAK, which collects contributions for home care, among other items. A relatively small amount (a total of 142,000 euros) was taken over from the National Office for the Collection of Maintenance Contributions. In addition to parents, ex-partners can also have debts taken over.

In his progress report, De Vries also reported on progress in terms of reparation: the measures taken earlier appear to be taking effect, as the full assessment of victims' files (comprehensive assessment) is being completed more quickly. Just under half of the 68,000 people who came forward as victims and passed an initial test were actually recognized as victims.

For almost three-quarters of them, a comprehensive assessment has been carried out, which shows how much compensation will be awarded. Almost 84,000 defrauded young people have also received financial support, the so-called child benefit.