The Dutch government will decide on Friday whether to step down over an escalating scandal in which tax officials wrongly accused thousands of parents of fraud and left many families in debt by ordering them to repay childcare allowances.

Labor opposition leader Lodewijk Asscher, who was minister for social affairs in the previous administration, resigned on Thursday on the matter, denying he knew the tax authorities “falsely hunt thousands of families” but admitted that a failing system “that has made government an enemy of its people”.

Prime Minister Mark Rutte has said he opposes the dissolution of the current coalition, arguing that the Netherlands needs stability in the face of the coronavirus pandemic, but has not ruled it out. The cabinet will review its position at a regular Friday meeting.

The four ruling parties in Rutte’s coalition are deeply divided over their response to a damn report on the scandal, but it is believed that they would prefer to end their alliance rather than receiving a vote of no confidence after a planned parliamentary debate on the report next Tuesday to lose.

MEPs’ report, entitled “Unprecedented Injustice,” was released last month after an investigation into the childcare scandal that included publicly interviewing officials up to and including Rutte.

It found that the Dutch tax authorities had “violated the fundamental principles of the rule of law”, with fraud investigations against families being sparked by “something as simple as an administrative error without malicious intent”.

The chairman of the committee of inquiry, Chris van Dam, called the system “a mass process in which there was no room for nuance”. Around 20,000 working families were prosecuted in court for fraud, sentenced to repay child benefits and denied the right to appeal for several years from 2012.

Some were forced to move on the verge of bankruptcy or unjustified claims for tens of thousands of euros when the alleged fraud was an incorrectly completed form or a missing signature. Several couples separated under the strain.

Government ministers, MPs, civil servants and judges all had their share of responsibility, the report concluded, recommending that “everyone in the state apparatus should ask how something like this can be prevented”.

The government apologized for the tax office’s methods and provided more than EUR 500 million (£ 450 million) in compensation last March, around EUR 30,000 for each family.

Following allegations of racial profiling, the tax authority has also admitted that 11,000 families with dual nationalities were selected for special scrutiny. Dutch prosecutors have refused to open an investigation into discrimination because they found no evidence of criminal misconduct.

“Responsibility for culpable acts that are imputable to the state must be sought in the political sphere and not in criminal law,” the prosecutor said last week.

Twenty of the families involved this week have taken legal action against ministers from three parties in Rutte’s current coalition over their role in the scandal. They alleged criminal negligence because of failure of good governance, discrimination and violation of children’s rights.

Health Minister Tamara van Ark, Finance Minister Wopke Hoekstra, Economy Minister Eric Wiebes, former Tax Minister Menno Snel and Asscher are listed in the documents submitted to the Dutch Supreme Court.

The fate of the government rests largely in the hands of Rutte’s coalition partners. At least one leader – Sigrid Kaag of the social-liberal D66 party – said this week that the political ramifications of the parliamentary report are inevitable.

Should it collapse, the government would act as caretaker until a new coalition was formed. The general election is due in March, and Rutte and his center-right People’s Party for Freedom and Democracy come out strong in polls.