Bailiffs hired by councils to recover unpaid debts have seen their profits rise to record levels during the cost of living crisis, company filings show. Newlyn Group, which is hired by councils to recover unpaid traffic fines and council tax, saw its turnover from debt collection increase by 43.8% to £25.8m in the year to December 2022, while its gross profit rose to £15.5m. Company documents describe the figures as Newlyn’s “best ever results”. Another company, Marston Holdings, made £23.1m operating profit in the year to May 2022, after the number of the cases it was dealing with rose by 50% to 1.72m, according to company documents filed last week. The profit compares with the £12.5m figure reported in 2021 by the business, which is primarily involved in “debt recovery and enforcement services” including working with 145 councils and chasing unpaid vehicle tax for the Driver and Vehicle Licensing Agency. The companies say their results are in part because enforcement activity was temporarily paused during the pandemic and has now recovered. Marston Holdings said it had seen a reduction in council tax volumes and that the growth was from other parts of its business. But the figures have led to criticism from activists and debt charities, which called for an end to the outsourcing of public sector debt collection to private firms. Joe Cox, senior policy officer at the charity Debt Justice, said: “It is sickening to see bailiffs making windfall profits out of households weighed down by the cost of living crisis. The UK government needs to properly fund council tax reduction schemes and local authorities need to find more ethical approaches to preventing and collecting arrears.” He added that many people were “scarred” by experiences with bailiffs and that the fees they charged pushed people in financial difficulty “further into debt”. Louisa Olympios, an organiser at Acorn, a union representing people on community issues, issues, said companies were “profiting from other people’s misery”. She added: “It doesn’t make sense with councils that are trying to help during cost of living and trying to show a friendly face that in the background there’s always a threat of a bailiff if you don’t pay.” Some local authorities, including Bristol and Hammersmith and Fulham, have brought debt collection in-house. The financial results from two of Britain’s biggest bailiff agencies come amid continuing cost of living pressures, with household debt recently reported to have swelled past £2tn for the first time ever and high inflation continuing to affect the cost of goods and services. Council tax arrears have also increased and are now at a historic high of £5.5bn, according to official figures. In the 18 months to March, bailiffs added £250m in fees to people’s debts in England and Wales, according to Citizens Advice. Research by the charity says the majority of those who are in contact with a debt collector reported feeling harassed or intimidated. It has heard reports of bailiffs forcing their way into people’s homes and failing to take into account vulnerabilities such as disability or illness. The Ministry of Justice recently announced it would raise the cap on fees the companies can charge “to ensure that enforcement firms are appropriately remunerated for the work they do in order to ensure the sustainability of the sector”. Russell Hamblin-Boone, chief executive of the Civil Enforcement Association, which represents certified bailiff companies, said the firms provided support to vulnerable people and were “rightly held to high standards” by their clients and the Enforcement Conduct Board, an industry oversight body. He said the fees firms could charge to debtors were fixed, adding that civil enforcement “prevents losses to government of an estimated £12bn, which would otherwise be subsidised by tax payers”. Marston Holdings said in a statement that “revenues from enforcement activities” represented 24% of turnover”, down from 36% pre-Covid. It said other parts of its business had driven the growth in its profits, which were up £2m compared with 2019, and that the group’s earnings were “in line” with pre-pandemic levels. The company’s accounts say there has been an “increase in revenue across all business lines as a result of a rebound from Covid-19” and that Marston is “primarily involved in an integrated range of transportation services and other debt recovery and enforcement services”. A spokesperson said Marston had taken a “leading role in enforcement conduct, standards and the assessment of vulnerability”, adding that “many enforcement cases were returned to creditors unpaid due to debtors being assessed as “vulnerable and unable to pay”. Newlyn did not respond to requests for comment. But the group, whose principal activity is “bailiff services”, said in its accounts that a post-pandemic return to “near normal operating conditions” for its clients had contributed to a “record performance” that put the group in an “excellent position to … establish a very strong trading position for years to come”. The Local Government Association said councils strived to recover unpaid tax “as sympathetically as possible” and bailiffs should “only ever be used as a last resort”. Adam Butler, public policy manager at the StepChange debt help charity, said: “Bailiff profits come at the direct expense of the most financially vulnerable. The Ministry of Justice should reverse its planned fee hike, introduce a mandatory levy on bailiff profits to strengthen regulation of the sector and develop long overdue safeguards as quickly as possible.”