Private debt collectors to go after welfare fraudsters

Michael Brennan, Deputy Political Editor, Irish Independent 26 March 2013

Desperate to recover the unpaid millions, it is hiring consultants to examine how much it costs the public service to try to recover unpaid debts in terms of staff, buildings and technology.

And for the first time, it is going to investigate the benefit of handing over the task completely to private debt-collection agencies.

Outsourcing of private debt collectors would represent a major departure in Government policy -- and would mean that the public-sector staff currently carrying out this work would be given new tasks instead.

The Department of Social Protection is currently owed over ¿340m by welfare recipients who were overpaid by mistake or made fraudulent claims.

The Revenue, which has a reputation for aggressively pursuing tax, is still owed ¿1.3bn in outstanding bills, according to the 2011 figures -- its most recent annual report.

Although some bodies, such as the University of Limerick, have begun to employ debt collectors to recover unpaid student fees, there is no uniform approach across the public service.

The Irish Independent has learned that Public Expenditure Minister Brendan Howlin's department has now set up a "debt management project" examining the potential for using debt collectors.

It is going to hire consultants to investigate whether private debt collectors would be more efficient than the public servants currently tasked with recovering the money.

The bodies being examined include the Department of Social Protection, the Department of the Environment, the Revenue, the Courts Service and the HSE. The consultants will also be asked to find out if it would be cheaper and more efficient to centralise all debt-collection staff in the public sector into one unit.

The study is due to begin next month and is expected to be completed by the autumn.

It will be up to Mr Howlin and his Cabinet colleagues to decide on whether to employ private debt collectors once the consultants' report has been completed.

But even though the State desperately needs to recover unpaid debts, he will have to reassure Labour TDs that any use of debt collectors will not involve heavy-handed tactics.

The Government recently outsourced the operation of the new local property tax helpline to a Cork-based private company.

It is also moving hundreds of human resources staff from 40 different departments and agencies into one single office in south Dublin to save money.

More than half of the €340m debt owed to the Department of Social Protection is almost five years old.

Councils are owed up to €750m in unpaid contributions from developers – many of whom have gone bust or have not proceeded with their building projects.

Many public-sector bodies are going to court to secure judgments against people who owe them money.

Information provided by 'StubbsGazette' Credit Bureau shows that the Revenue was the most active of all, securing over 1,800 court judgments last year worth €92m.

Local authorities got 408 judgments against individuals to secure the repayment of €5.2m in debt.

Bord Gais was the most frequent user among the semi-states last year, with 51 court judgments worth €233,000.

The study on using debt collectors is not related to the introduction of the property tax – which the Revenue will be able to collect directly from people's wages, social welfare payments or bank accounts if they refuse to pay.

But if the Government opts to outsource debt collection work to private firms, it will have to insist that they abide by the law by not harassing or intimidating people.

There has been criticism for years that the debt-collection sector is completely unregulated.

One of the most controversial companies is Viper Debt Recovery and Repossession Services Ltd, which is owned by convicted criminal Martin 'The Viper' Foley, an associate of the late gang leader Martin Cahill.

However, Finance Minister Michael Noonan is due to include regulations to cover debt collectors in the Central Bank (Supervision and Enforcement) Bill, which is currently before the Dail.

The department could not be contacted for comment last night.