Public and Commercial Services Union
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Private companies to profit from public debt

Plans announced yesterday about collecting the money owed to government will mean more private companies profiting from public debt, PCS warns.

A Cabinet Office report (pdf) makes it clear that an ongoing review by ministers will almost certainly lead to an increased use of private debt collectors.

The union says this will do nothing to solve the scandal of more than £120 billion being lost to our public finances every year, mostly through tax evasion and avoidance by the very wealthy, and that this should be the government's central focus.

There is a growing use of debt collection agencies in the civil service, with 10 companies now holding contracts with HM Revenue and Customs to chase £1 billion worth of debt ranging from PAYE and self-assessed tax to national insurance and tax credit overpayments.

The proposals come as tens of thousands of civil service jobs are being cut, including experienced staff who work in debt management in HMRC, the Department for Work and Pensions and the courts service.

Private agencies are being paid hundreds of thousands of pounds from the money collected from taxpayers, but the union says they often lack the knowledge and expertise required to understand the complex tax and benefits systems.

The £6.5 billion written off through debt last year across all central government departments is dwarfed by the £16 billion in benefits and tax credits that are unclaimed, the union adds. Yet ministers are making no concerted effort to address this problem.

PCS general secretary Mark Serwotka said: "It is important that the money owed to the government is paid, but ministers are cutting public sector jobs at the same time as inviting more private companies in to profit from debt.

"It is also telling that ministers are not making a similar effort to address the much larger problem of people not claiming the benefits and tax credits to which they are entitled.

"Instead of insisting that the only way to collect debt - including the tens of billions in tax avoided and evaded - is through more private agencies, ministers should be creating jobs and investing in their own staff."

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