Kenny defends 'private option' to recover debt

Michael Brennan, Deputy Political Editor. Irish Independent - 27th March 2013

TAOISEACH Enda Kenny has insisted that the State has to recover all the monies owed to it following the revelation that the use of private debt collectors is being considered.

It came after the Irish Independent revealed that consultants are being hired to investigate the possibility of handing over the task of collecting unpaid state bills to private debt collection agencies.

Mr Kenny said there was a range of options being considered by Public Expenditure Minister Brendan Howlin – with recommendations due to be brought in due course.

"Obviously Minister Howlin has a remit here, as all government departments have to recover monies due to the State and the taxpayer in the best way possible," he said.

It has emerged that the use of private debt collectors by councils has soared during the recession – because they can no longer depend on the Government to provide extra funds to cover any unpaid debts.

The Stubbs Gazette Credit Bureau confirmed it had recently been hired by cash-strapped Sligo County Council to recover over €700,000 in unpaid fire charges.

Its managing director, James Treacy, said there was often a "psychological shift" among debtors when they were contacted by a debt management company.

"If a company owes rates and they haven't been paying the local authority and they get a Stubbs demand letter, it forces them to take their heads out of the sand," he said.

Mr Howlin confirmed there were several options open to the Government, including leaving public sector bodies to collect the debts, centralising the debt collection services in one agency or getting the "private option" of private debt collectors.

Social Protection Minister Joan Burton's department – which is owed €340m in social welfare overpayments and fraudulent claims – said it had already taken steps to recover more of the money.

A spokesman confirmed that the new social welfare law allowed for up to €28 per week to be deducted from the €188 jobseekers' payment to recover overpayments.

There are around 50 debt collection companies in the country ranging from established firms to "one-man" operations often run by ex-gardai or ex-Revenue staff.

The sector is currently unregulated but the Government has promised to bring in legislation to address this.