Figures from the Public Accounts Committee show that private debt collectors were enlisted to help pursue £1.2 billion owed to the UK government in 2012-13.
This was at a time when £22 billion in total was owed to the government, including unpaid fines, outstanding tax owed to HMRC, and overpaid tax credits.
Poor internal credit control and the failure of a joined-up approach to pursuing debt have been blamed for the sheer size of the balance, with some of the most difficult debts owed to ‘arms-length bodies’ such as the Student Loans Company.
And despite a lack of clear evidence on the effectiveness of passing debts to private collectors to pursue, the figures seem to suggest the practice has its merits.
For instance, in the past four years, debt owed to the government has dropped by £5.5 billion in total – including £3.5 billion of tax credits and other debts deemed ‘uncollectable’ by HMRC, which were subsequently written off.
Margaret Hodge, chair of the Public Accounts Committee, said: “Government must get better at preventing, managing and recovering debt.
“The Treasury and key Government departments have a job to do to get on top of this and get money owed flowing into the coffers.
“When it comes to using debt collection agencies, they must be vigilant in monitoring companies’ performance and behaviour.”
But with tens of billions of taxpayers’ pounds at stake, and plenty of professional organisations capable of pursuing that debt in the appropriate way, we would hope to see more use of debt collectors in the years ahead, helping to ensure unpaid debts are not allowed to endanger the UK’s economic recovery.