Emma Hardy (Kingston upon Hull West and Hessle) (Lab) I beg to
move, That this House has considered reductions in community debt
advice services. It is a pleasure to serve, even if very briefly,
under your chairship, Ms Fovargue. I thank my hon. Friend the
Member for Kingston upon Hull East (Karl Turner) and my right hon.
Friends the Members for Kingston upon Hull North (Dame Diana
Johnson) and for Wentworth and Dearne (John Healey), who have
supported me on this...Request free
trial
(Kingston upon Hull West and
Hessle) (Lab)
I beg to move,
That this House has considered reductions in community debt
advice services.
It is a pleasure to serve, even if very briefly, under your
chairship, Ms Fovargue. I thank my hon. Friend the Member for
Kingston upon Hull East () and my right hon. Friends the
Members for Kingston upon Hull North ( ) and for Wentworth and Dearne
(), who have supported me on this
issue from the very beginning and who are all here today.
I will start by giving a brief outline of the cost of living
crisis and then go into the importance of face-to-face debt
advice, before looking at the potential model that the Money and
Pensions Service will introduce and finishing with my specific
requests for the Minister. For brevity, I will refer to the Money
and Pensions Service as MaPS; otherwise, we will end up spending
an awfully long time just on the title.
A survey by the Joseph Rowntree Foundation in early October this
year showed that the number of UK households that are behind on
rent, bills or debt repayments has trebled since the pandemic
hit, and now stands at nearly 4 million. The pandemic has dragged
families who were previously just about managing into arrears on
essential bills, and we know that economic pressures are getting
worse. Those in receipt of universal credit are beginning to feel
the effects of the £20-a-week cut—a cut that Labour, of course,
opposed. The ban on evictions has ended, domestic fuel prices are
rising and the collapse of providers means that many people have
already been transferred to new companies on higher tariffs. As
fixed-term plans end, more people will face increased energy
bills, and that is before the energy cap is uplifted in April.
The Chancellor has it in his powers to reduce VAT on fuel but has
chosen not to do so. Workers also face an increase in national
insurance. Inflation is rising and is now around 4%, and many
expect it to remain at that level until mid-2022.
This is all creating a cost of living crisis, and an increasing
number of people will find themselves needing advice and support
with debt—many for the first time. Currently, debt advice is
provided by a network of local providers and national charities
such as Citizens Advice, and they are funded through nine
regional grants from MaPS.
(Rutherglen and Hamilton
West) (Ind)
Outside the usual services, a number of charities I have met
recently have reported that people are approaching them for debt
advice or asking to be signposted. The third sector is already
struggling to obtain funding in my constituency. Does the hon.
Lady agree that it is unfair to expect charities to shoulder most
of the burden?
I absolutely agree. As I have outlined, we expect more people to
seek debt advice, and the burden will fall on those who provide
it at the moment. I pay tribute to all those who currently
provide support and debt advice. Some are volunteers, but they
often deal with complex cases and they work with sensitivity and
compassion to help people at extreme times of personal crisis.
Over 100,000 people attempt suicide each year because of debt, so
the services that these organisations provide can literally be
life-saving.
Lots of people need face-to-face debt advice for a huge a variety
of reasons. There is the obvious reason—that they do not have the
technology or the internet—but it is not just that. Debt advice
clients are often vulnerable. For many, this is due to personal
factors such as disability, language barriers, alcohol or
substance abuse or mental health conditions. In fact, debt
advisers tell me that 82% of their clients have concerns around
mental health. But many others are vulnerable due to a change in
circumstances—to quote the famous phrase, “We are all just two
pay cheques away from being in the same situation.” People get
into debt because of bereavement, loss of employment, poor health
or domestic abuse. Face-to-face advice provides a safe,
supportive environment for a person to seek help.
(Leeds Central) (Lab)
I congratulate my hon. Friend on securing this debate, and she is
making a very powerful speech. Supported by Unite the union, a
number of debt agencies in my constituency, including the Ebor
Gardens Advice Centre, Money Buddies, St Vincent’s and Better
Leeds Communities, are seriously concerned that the renegotiation
of the MaPS contract will lead to a dramatic reduction in
face-to-face advice. Does she agree that it is precisely in the
most complex cases, which she is talking about, where people have
a carrier bag full of papers, that those agencies, which do a
fantastic job, need to be able to see a person face-to-face in
order to give them the best possible help to get out of the debt
that is weighing on their shoulders?
[Hannah Bardell in the Chair]
I absolutely agree with my right hon. Friend. As debt advisers
say, the first face-to-face appointment can be extremely
emotional for many people. Sometimes it is the first time they
have ever told anybody about their debt problems. For a number of
reasons, they might not be able to discuss them at home.
Sometimes people feel ashamed and unable to tell their partner
that they are suffering from debt. They do not want to be seen as
not being able to cope. They could also be a victim of financial
abuse—a form of domestic abuse—and they might not want to tell
someone of the situation they are in. Sometimes, as my right hon.
Friend said, they have accumulated so much correspondence that
they are afraid to open it. Bringing those letters to a
face-to-face appointment provides the emotional support they need
to address the problem.
Debt is often multifaceted. It is a mistake to think that it is
an easy financial problem that can be solved by someone at the
end of a telephone following a flow chart and using a script. It
is not, and nor is it as easy as someone clicking options on a
website. People might start with information from a website, then
use the phone and finally need a face-to-face appointment with a
case adviser. Those face-to-face advisers know their community.
They are not just experts in debt advice; they have links to
other charities, councils, jobcentres and even local bailiffs. As
debt advisers, they have a relationship with those organisations,
and they can speak to them and sometimes resolve the problem.
When someone enters Citizens Advice with debt advice problems,
there are experts there checking what benefits someone is
entitled to and that they are getting them. They might say, “Here
is where you can get mental health support in the community.”
They know the area because they are based there. Moving services
to national or regional call centres breaks that connection,
which is a disadvantage to everyone.
(Kingston upon Hull North)
(Lab)
I congratulate my hon. Friend on securing this important debate.
She knows well the high levels of indebtedness in Hull. The fact
that there is such an excellent service operating through our
local citizens advice bureau is of huge benefit to many people.
We know that demand is only going to get higher with the cost of
living crisis, which she has so ably outlined. Does she think
that having a hybrid system, where there is accessibility through
face-to-face appointments as well as telephone advice, is the way
to go, rather than moving to telephone advice only?
As I mentioned at the start, my right hon. Friend has been with
me from the beginning, looking at this issue and campaigning on
it. She is absolutely right. I accept that some people might want
to access more virtual appointments and information on a website,
but it cannot come at the expense of the face-to-face component.
We cannot lose that face-to-face part.
MaPS is changing the way funding is provided. Although, it is
increasing the money for debt advice—I want to acknowledge that,
and it is set to increase to £77 million in April 2022—the bulk
of that funding is moving to call centres and online services. At
a meeting on 17 November, the MaPS chief executive and
commissioning team told We Are Debt Advisers, which is a group
representing debt advisers, that 20% of the £77 million had been
allocated to face-to-face appointments. That amounts to £15.4
million. They also said that regional providers currently spend
56% of their existing £33 million on delivering this way, which
is £18.5 million. By their own admission, this is a cut of just
over £3 million to face-to-face services. That is made worse by
the replacement of the grant system with contracting, which in
its current form will exclude many smaller providers active in
the sector from being able to bid for contracts at all.
(Wentworth and Dearne)
(Lab)
I am grateful to my hon. Friend for all her work on this issue.
She makes a powerful point about the shift in priority, and
therefore funding, from face-to-face debt advice to online and
telephone advice. In South Yorkshire, there are currently 28
funded face-to-face debt advisers, but that will go down to
seven. Pre pandemic, in Rotherham alone, the number of new
face-to-face debt inquiries each year was 2,200. In the context
that she has set out of rising prices, bills and taxes, she might
question Ministers whether, if the Treasury or MaPS have evidence
to suggest that the demand for face-to-face debt advice will go
down, not up, and to justify these cuts, they will publish that,
and then we will all be better informed and more confident about
the future.
I thank my right hon. Friend, who has been campaigning on this
issue from the very beginning. He is absolutely right: all the
forecasts—all of them—show that demand for debt advice will only
increase. We know that. We also know that cases can be complex
and that it can sometimes be the first time that people have got
into debt. So the idea that we would cut face-to-face advice at
this time seems incomprehensible.
Under the new tender, MaPS will instead have three national
contracts. Its staff met me—I credit them for that—and said that
these will be a mix of face-to-face, digital and phone services,
with one each for the north, the midlands and the south of
England, and a separate arrangement for a national call centre.
However, three regional contracts, instead of nine smaller ones,
as it was before, means that small, local providers that
currently rely on MaPS funding for the bulk of their income face
having to drop face-to-face services or close entirely. Many
already know that they are not included in tender bids because
they do not have the size or resources to compete individually
for these tenders. Sylvia Simpson, chair of the Leeds Debt Advice
Network, described the impact as “catastrophic”, with three out
of four local MaPS-funded debt agencies no longer able to provide
debt advice after 31 March. There are serious doubts about the
rationale for the decision to restructure funding. Where is the
evidence to support it and its timing? Does MaPS have confidence
in the outcome itself?
Debt advisers tell me that there has been no proper consultation.
In the face of the national outcry from debt advice
organisations, charities and trade unions, MaPS issued a two-week
call for evidence concerning the impact of the covid-19 pandemic
on access to debt advice. That concluded on 29 October, but the
procurement exercise for the new contracts had already taken
place. The consultation will not influence a procurement process
that has already gone on, so what was its purpose? It is clear
that the procurement exercise expected bidders to focus on
digital and telephone-based services rather than face-to-face
services, despite MaPS’ own evidence showing that demand for
face-to-face services was almost double supply.
A 2019 MaPS assessment of the need for debt advice said:
“Face-to-face is the channel with the smallest gap between demand
and supply at the national level. Nevertheless, the levels of
unmet demand are high, with demand being over two times higher
than supply. It is also the channel with the biggest variation in
unmet demand between countries and regions. Face-to-face unmet
demand is particularly high in London, where existing supply of
face-to-face debt advice could meet only just over a fifth of
current demand.”
MaPS does not seem to have evidence that the need for
face-to-face services will fall. On 29 November, in reply to a
letter sent on 16 November from the Chair of the Treasury
Committee, the right hon. Member for Central Devon (), MaPS provided figures showing that, for the last
pre-pandemic year, 2019-20, face-to-face services accounted for
34% of its consultations. That fell by only 3 percentage points,
to 31%, in 2020-21, despite the fact, let us not forget, that
this was during a global pandemic that involved lockdowns,
compulsory mask wearing, the adoption of social distancing and
people being afraid to leave their homes. Despite all that, the
demand for face-to-face debt advice fell by only three percentage
points. In its letter to the Treasury Committee, MaPS notes that
its most recent modelling of future demand is from autumn 2020
which, as we will remember all too well, was just before another
national lockdown and before the pandemic’s third wave brutally
hit, killing thousands of people in our country. That is when the
modelling was done. MaPS does not say whether the modelling
includes the impact of the pandemic, but I think we can assume it
probably did not.
On the importance of face-to-face appointments, MaPS said that
the forecast
“did not make distinctions between case complexity or channel of
provision.”
If someone has a simple debt inquiry, they would probably google
it and look on a website, or they might phone someone up and
check. If their case is extremely complex—I refer to my earlier
points on domestic abuse, mental health and such
concerns—accessing a website is not going to be suitable. MaPS
needs to be looking at complex cases and how it provides
support.
In other words, the modelling does not tell MaPS how much demand
for face-to-face appointments to expect, and the contract does
not give it control over how much can be provided. MaPS claims
that changes will increase accessibility to advice in those
difficult-to-reach places, but those changes could mean the
opportunity for face-to-face advice would no longer exist in some
areas of the country. I accept—I was discussing this point with
the Minister earlier—that some areas could end up with more
access to advice, but that is at the expense of other areas.
In the letter, MaPS mentions an equalities and vulnerability
impact assessment. That has not been made available and I hope
the Minister is able to use his influence to say to MaPS that it
should be published. At the moment, MaPS is saying to me, “We do
not know, because we are still commissioning. We are not sure how
much will be face to face; we are not sure how much will be on
the phone or remote. We haven’t made any decisions.” If that is
true and it does not know where it is going to end up, how can it
have done an equalities and vulnerability impact assessment? When
MaPS has made up its mind about what it wants, I assume another
impact assessment will be needed. I hope that one is made
public.
I hope I have explained clearly why face-to-face advice is the
only way of supporting a significant proportion of people in
debt, and why a reduction in capacity and coverage will fail some
of the most vulnerable in our society. I hope that MaPS does more
to reach out more effectively to practitioners with a lifetime of
experience and knowledge in the field. Debt advice groups such as
AdviceUK believe that MaPS’ vision for debt advice is deeply
flawed, does not meet the needs of the diverse communities across
England and does not enable the provision of flexible, in-depth
and sustainable debt advice services.
MaPS cannot explain why it has made the funding allocations it
has done or what impact they will have on people with complex
needs. Of course, the pandemic has been a huge disrupter. Its
effects are still being played out and the future remains hard to
predict, but we do know that there will be an increase in the
number of families in debt. We know that we are only beginning to
see the devastating impact of the cost of living crisis. I hope
the Minister is able to use all the influence he has—accepting,
of course, that MaPS is a separate organisation and that this is
a commercial contract—to call on MaPS to place an immediate hold
on the procurement of new debt advice contracts, pending a
thorough and effective consultation into the likely demand for
face-to-face services in the near future; and to insist that
there should be no loss of debt adviser jobs and an increase in
funding for community-based face-to-face services. Consultation
with frontline advisers through their trade union should also be
essential for all future decisions affecting jobs and service
delivery.
I finish by reminding the Minister of my earlier comment: more
than 100,000 people attempt suicide each year because of debt.
The services these organisations provide can literally be
life-saving. Having the right debt advice is too important to get
wrong.
(in the Chair)
I now call the chair of the all-party parliamentary group on debt
and personal finance, .
09:49:00
(Makerfield) (Lab)
It is a pleasure to serve under your chairmanship, Ms Bardell. I
congratulate my hon. Friend the Member for Kingston upon Hull
West and Hessle () on her well-informed and
passionate speech.
We know demand for debt advice services is high and likely to
increase, because personal debt is soaring, because of rising
energy and food bills, and the end of furlough and debt payment
holidays. Those schemes did quite a lot to put off the problem,
but it never went away. About 4 million low-income households in
the UK are behind on their rent, essential bills and debt
payments. That figure has grown threefold since the pandemic, and
coupled with that, there have been big changes to the
commissioning of debt advice. That was on 16 July, when we had
hoped the pandemic was coming to an end, but it is probably still
carrying on, so is this the right time for a new and completely
different approach?
It is really welcome that MaPS is investing more money in debt
advice, and I also welcome the fact that it is looking at the
wellbeing of advisers. Debt advice puts a considerable strain on
those advising: quite often, the people who come in are at the
end of their tether. There was a black joke in the citizens
advice bureau I worked at that when somebody came in with a
bulging carrier bag, it was going to be a debt client, and the
bag would be full of bills that people could not open. They had
put them behind the clock until the clock fell off the
mantelpiece, and then they would seek debt advice. That was not
just those who could not cope, but people from all walks of life,
including professional people. Debt has a particular impact on
individuals. It often leaves people feeling shame that they are
in this position and cannot do what they want for their families.
That is wrong, but it is how people feel, and we cannot get away
from it.
(Kingston upon Hull East)
(Lab)
I know that my hon. Friend is an expert in this area, not least
because of all of the years that she worked with the CAB. Would
she say something about the importance of the holistic approach
to advice? This is very often not just about debt, but other
issues, including domestic violence. In my experience as a
criminal lawyer, people often get into all sorts of difficulties
as a result of other factors. Indeed, the problem is often that
people have not been pointed in the right direction on issues
such as the benefits that they are entitled to, but do not
actually claim.
I thank my hon. Friend for that intervention, and I will be
moving on to discuss the wraparound provision, which does not
just cover debt advice. We cannot just see debt as the problem:
the important thing is the person who has the problem, and we
have to deal with all their problems through that person-centred
approach. It is no good just dealing with a person’s debt if they
also have an employment problem or a housing problem that needs
to be solved. We have to look at everything in the round.
Understanding how to manage our money effectively can be really
hard, as well as support after debt has been accrued, so does the
hon. Member agree that real-life money management education
should be provided much earlier in life?
I do agree, but I do not think there is a silver bullet. Some of
the problem is that there just is not enough money to go around,
and it does not matter how well a person manages their money if
they do not have enough to go around. Money management education
is one of the tools of the trade, but it is not a silver
bullet.
As I was saying about the new MaPS contract, it is good to look
at the wellbeing of the advisers. I have heard that the debt
advice peer assessment scheme has caused advisers considerable
strain, with people having to do two web chats at once, which is
really not feasible: they have to concentrate on the individual.
This focus on wellbeing is acceptable, but I worry about the nine
regional branches for debt advice going. About half of the money
will go to the three national digital and phone-based services
centres in the north, the midlands and the south, which will
largely be at the expense of face-to-face provision, and
providers can bid for only two of those. That element of
competition worries me a bit. We all know that advice agencies
are competitive: we have had to be, because we are competing for
a limited pot of money. However, setting people up against each
other is not the way to do it. Collaboration is the key with
advice agencies, and we need to see more of that. I do not
disagree with contracts—I think they are a way forward—but I do
think we need to look at the way in which the contract is
tendered and, in particular, how it can promote
collaboration.
The 50% cut in the regional services is another worry. As my hon.
Friend the Member for Kingston upon Hull West and Hessle said, it
is vital that there is partnership between the local agencies,
and those partnerships are often built up on the ground with
local knowledge. As my right hon. Friend the Member for Kingston
upon Hull North ( ) mentioned, it is the
wraparound casework support; the writing and phoning creditors;
the knowledge of bailiffs in the area and how the local
authorities work; and having those personal contacts that are
vital. We know that people who have mental health issues often
need the comfort of a face-to-face service. They may well be able
to move on to a telephone service at some point in future, but an
experienced adviser will be able to say when that point is.
I am also concerned about the nature of the contract. A number of
smaller agencies are being put off from bidding because payment
in arrears is a real problem. Advice agencies cannot cope with
payment in arrears. They need to know that the money is there up
front. They are not paying their advisers and rent in arrears;
they are paying for everything and it is a month-on-month worry.
The full responsibility for the TUPE arrangements is a problem,
as is clawback, which needs to be specified as to the quality
targets and the amounts.
I am pleased that in my discussions with MaPS it said it would
not be a month-on-month target, because all of us in the advice
field know that December sees a drop in cases, whereas January
and February see a big rise. The demand for debt advice is not
stable month on month; it goes up and down. I would also like to
see time targets, not numbers. Number targets encourage short,
easily dealt with cases, whereas the people who need face-to-face
support need time to deal with complex debts and the emotional
and other associated issues.
Mr (East Londonderry)
(DUP)
On the important issue of face-to-face contact and the empathy
needed, particularly for very vulnerable families obviously in
need, will the hon. Lady join me in paying tribute to the likes
of Citizens Advice, of which she is well aware, and other groups,
such as Christians Against
Poverty that offer empathy and a counselling role to assist
people through those problems, and in calling for more support
for such groups?
I certainly would. A friendly face is important, somebody outside
the family who is not judging, but dealing with someone as an
individual with problems, and not just as a problem. Many local
providers of face-to-face debt advice have felt unable to bid
because of the risks involved in entering the contracts, and the
large size of the contract, as well as the lack of any allowance
for inflation at a time when inflation is expected to rise.
The specifications place undue risk on the contractors, requiring
them to forecast volumes of people over the first three years of
the contract. There has been a pandemic and a rise in inflation;
how are they going to predict what will happen in three years’
time? Three years ago, could we have predicted what was going to
happen now? I do not think so. There is a worry that the small,
local providers that rely on the MaPS funding may have to drop
face-to-face services or close entirely. Many are not included in
the tender bids and they do not have the size or resources to
compete for the tender individually.
What assessment has been made of the loss of local services,
those that are there now, and those that say they are likely to
close if they do not get any funding from the contract? I hope
that the shift from face-to-face is not motivated by
cost-cutting. That is worrying because the cases are more complex
and less capable of being dealt with through telephone and
digital service.
Telephone services work where the debt is quickly identified and
there is excess income that can be distributed to creditors in a
debt management plan. That is when it works. There are fewer and
fewer of those cases coming forward. Face-to-face services
typically support clients with a wider range of problems, such as
benefit claims, charitable applications, access to local welfare
assistance schemes, that national and regional contracts are not
aware of. Those services become more important because of the new
help to claim contract that is being put out to tender, which
takes out face-to-face entirely. That is a big mistake and will
lead to a lot more debt in the future.
Clients who have complex interwoven problems, including debt,
housing issues, mental illness and domestic violence, struggle to
access and navigate online services. In my borough, in Wigan,
people do not go online as much as in other boroughs. In fact,
only a couple of years ago, 30% of people in Wigan said they had
never been online. They would be particularly at risk.
It will hit vulnerable clients, less well-off people, young
people and people with dependent children. We assume all young
people go online to get help with their debt, but that is not the
case. Quite often, when they are hit by debt for the first time,
they do not know who to turn to. It is important that they can
turn to an individual, who can say, “Okay, do this,” and then
perhaps move them on.
The previous commissioning strategy seemed to better recognise
that people in debt need access to a wide range of wraparound
support, but that has now been superseded. How was that previous
contract looked at? Why was it seen to be unsuitable in the
future?
AdviceUK says that MaPS’ approach is wrong because it is rooted
in a mistaken belief that debt is solely a problem of poor
choices by individuals. That needs to be part of a wider
conversation about welfare support for the most vulnerable,
rising living costs, improving life chances, unstable and poorly
paid work, which we know is a big driver of debt, and improving
the credit industry, especially the way in which people on low
incomes are treated by that industry and the products that are
available to them, which often cost more and are less
suitable.
I agree with my hon. Friend the Member for Kingston upon Hull
West and Hessle that there needs to be a pause to this contract
and that we need to look at it in the round, and whether it will
improve the lives and the chances of people in debt. I would also
like us to look at debt solutions and debt enforcement. We need
to put more thought into how to prevent people from falling into
debt in the first place, how to get more money into people’s
pockets and how we deal with them when they get into debt.
Inevitably, people will get into debt. From the time that
citizens advice bureaux were founded during the second world war,
they have worked to put themselves out of business, but they are
now needed more than ever. There is not going to be a solution
that will ever bring an end to debt. We have to get solutions
that make the lives of people in debt easier and more manageable,
and certainly try to take the stigma away from debt.
10:02:00
(Strangford) (DUP)
It is a pleasure to speak in this debate, Ms Bardell. I
congratulate the hon. Member for Kingston upon Hull West and
Hessle () on setting the scene and thank
her for that. This is a massive issue, not just in the hon.
Lady’s constituency, but in my own. In our office, we deal with
those who have extreme financial difficulties every day and every
week. I will give a couple of examples, without mentioning any
names.
In Strangford, the CAB, Christians Against
Poverty church groups and other groups provide community
debt advice services; those are the groups that I work with on
most occasions. There has been an increase of at least 30% in
gas, electricity and oil prices in Northern Ireland, and cold
weather and an extreme winter are predicted. Food prices are up
by as much as 20% in some places and there is the additional
pressure of Christmas, with the expectation that many families
feel forced to live up to. We all know about that because we talk
to our constituents. When children see something at school that
their friends have, there is almost an onus on the parents to
make sure their children get the same thing. That is not a
criticism; it is the nature of how we live in our lives, but it
adds a huge burden to low-income families, with recent reports
citing that families will spend an average of £300 per child.
That does not include spending on other family members.
For me, Ms Bardell, Christmas is a time to enjoy being with
family. I have three boys who are 32, 30 and 28, three
daughters-in-law and five grandchildren, so for me Christmas is
time to spend with my grandchildren. The good thing about being a
grandparent is that at 7 o’clock at night I can give them back.
We have all had those joys as parents; when they have a tantrum,
or they get a bit tired but they do not want to go to bed—or they
do want to go to bed.
A lot of people are not aware that Christmas spending is
something that can be accounted for in income and expenditure
forms when dealing with debt. Does the hon. Gentleman agree that
the need for better awareness when dealing with debt does not
mean losing that quality of life as well?
We do not want to lose quality of life, but we do need to deal
with the reality of life. The hon. Member for Makerfield () outlined in great detail
the issues that most families feel—and address. It is easy for me
to talk about time with the family, because it is my wife Sandra
who chooses the Christmas gifts. She is better at it than me, and
knows what the children want. The money we spend is disbursed as
she sees fit. However, for other people, it will be a juggling
exercise between buying Christmas presents and being able to
afford the oil and electric bills. That is the issue and that is
why I am here to speak on behalf of those constituents who are
under great pressure.
The security is not there for many families. Rather than seeing
disappointed faces on Christmas morning, people make purchases
and live with the debt for months to come. Last week, in my local
press back home, there was an indication that this year in
particular, the issue for those who have maxed out their credit
cards is that they will turn to payday loans. I have forever
cautioned against that, because the reality will be extreme.
There will be a pain-free two weeks, but then there will be a
very painful month after Christmas. I have extreme concern for
those people.
Is the hon. Gentleman as concerned as I am about the rise in buy
now, pay later debts? These are increasing exponentially; one
advice agency said that 34% of people are now coming to them with
buy now, pay later debts.
I certainly am concerned. I am going to give two examples of
those who have had extreme difficulties. There are many groups in
my constituency that do great work; Citizens Advice is one of
them. I have dealt with Citizens Advice ever since I became an
elected representative, first, as a councillor in 1985, then as a
Member of the Legislative Assembly and now as a Westminster MP. I
have a good working relationship and regular contact
with Christians Against
Poverty they are inundated with people who have decided to
make this new year the one when they get on top of their
finances. Last year, CAP helped over 16,000 people with debt;
they shared in the success of 2,500 becoming debt free—wow, it is
a big day for people when they become debt free. It is so
important. They helped almost 1,500 people through a covid-19
emergency appeal. Christians Against
Poverty in my constituency are based at Thriving Life Church
in Newtownards. I think probably all the churches have a help and
advice service, similar to what Christians Against
Poverty do. However, Thriving Life Church does particularly
incredible work.
While I was sitting in this debate, I thought of one example—I am
conscious of time and I want to be fair to other Members. On
occasion I have had to contact Pastor Cotter of Elim Church,
Newtownards, to deal with some personal debt issues that he has
been able to help with. His ability to work through the mechanics
of the mathematics and make sure that people get out the other
side is incredible. The hon. Member for Kingston upon Hull West
and Hessle said in her introduction, and it cannot be emphasised
enough, that this drives people to the very edge of desperation.
I have seen that. Christians Against
Poverty facilitate, through some 1,200 churches across the
UK, help and advice to those families and individuals who have
got themselves into difficulties with their money. Many of these
are working people; they are the working poor. These are the
people we are here to represent. They are people who have
incredible financial difficulty, who are squeezed most by the
removal of the tax credit bonus, and who are suffering most with
the universal credit differences.
I am going to give another, desperate example. I know one young
women in my constituency whose disability living allowance was
turned down. Over the 7 months of her appeal process, she found
herself in over £4,000 debt, through maxed-out credit cards and
payday loans—she was absolutely in over her head. I know that
this is not the Minister’s responsibility, but there must be some
way of hurrying up the process. It eventually found in her favour
after seven months, but that was seven months of excruciating
worry where she was pushed to the point of suicide. This is no
exaggeration, but by the time she came into my office she was
sobbing her heart out, mortified and suicidal. I was so grateful
that my staff knew who and where to send her—where she would
receive help and compassion and where there would be no
judgment.
People who max out their cards are scared, fearful, apprehensive
and extremely worried. That is why Citizens Advice, Christians Against
Poverty and other groups are so important, and that is why
we as elected representatives make those points on behalf of our
constituents. My constituent needed CAP’s help, and that is why I
believe that CAP and other community debt organisations are
essential in today’s climate. Not only do they help to take the
stress of the phone calls and letters but they future-proof
finances. In other words, they sort out people’s issues today as
well as giving them advice for the future—it is important that
they do not later fall back into debt—and teaching finance coping
mechanisms. They go through day-to-day finances with savings
schemes and allocate money for small treats—people need the small
treats for their children and families that many of us take for
granted, such as a cinema trip or the Chinese at the weekend—as
they understand life and have the expertise and knowledge to
teach others a better way of handling the stress and pressure of
life.
Christians Against Poverty and other community debt advice
providers save lives and prevent the break-up of family units
with their support and help. I thank CAP in Newtownards, based at
Thriving Life church, for all that it does. Community debt
centres are lifelines, and we have a responsibility to ensure
that they have funding available to help to cover the costs of
their free services, which save lives and improve people’s
quality of life. As we come towards Christmas, I remind people
that there is a way to come to terms with crippling debt: take
that first step of acknowledging your problems and seeking the
help you need. People want to help you, and your MP will want to
help. Do not wait for the new year to come. Do it now, and have
your Christmas unburdened by the stress of debt that is weighing
you down. Help is available—just ask. People are there who could
help you.
(in the Chair)
Order. Four more Back Benchers wish to speak before I call the
wind-ups at 10.40 am, so I ask Members to be kind to one another
and speak for no more than six or seven minutes.
10:12:00
(Nottingham East) (Lab)
It is a pleasure to serve under your chairship, Ms Bardell. I
thank my hon. Friend the Member for Kingston upon Hull West and
Hessle () for securing the debate and
speaking so passionately about the impact on her constituents,
and indeed all our constituents.
In the last 13 years, families in Nottingham East have faced blow
after blow to their finances. People lost jobs and savings in the
2008 financial crash, more than a decade of austerity has seen
benefit payments brutally cut and, in the pandemic, incomes have
plummeted. Throughout all of that, our community has been able to
rely on St Ann’s Advice Centre, which has been a lifeline to so
many people in Nottingham. Its debt advisers help to set up
manageable payment plans, help people to complete financial
statements and apply for certain grants, carry out benefits
checks, and provide advice on budgeting decisions. More than
that, from employment advice to food, furniture and clothing, the
advice centre takes a holistic approach to supporting
individuals. It is a one-stop shop for people facing poverty.
St Ann’s has three debt advisers funded through a MaPS contract.
However, under the new proposals, it will lose all of them and,
because MaPS has the monopoly on debt advice, it is unlikely to
get support from anywhere else. MaPS argues that, while
community-based face-to-face services are being cut, more money
is being put into a centralised digital and telephone-based
system. There are a number of major problems with that change,
but I will outline just two. First, removing the local
face-to-face element will take away an entire support system from
people. When people come through the door at St Ann’s for debt
advice, they can also get support with a whole range of other
issues tailored for them locally—they can leave with a food
parcel or a clothing parcel—which cannot be replaced on the
internet or over the phone. Secondly, digital and phone advice is
simply not appropriate for some of my constituents.
According to frontline debt advisers working on webchat, about
50% of all clients either disengage or need to be directed to
face-to-face services to ultimately have their problems resolved.
Can the Minister say what will happen to people whose problems
cannot be solved by digital and phone-based services? Who will
support them if community debt advice is cut? Disabled people,
elderly people, those who require translation or who lack regular
access to a phone or the internet due to homelessness or
poverty—those people will suffer. Many of them are among the most
marginalised and vulnerable in society.
Recently, St Ann’s debt helpline inbox received 455 emails in one
week. That is the worst they have ever seen. These changes and
cuts would be wrong at any time, but to implement them now—after
a pandemic has wreaked havoc on people’s lives, as families have
£20 a week cut from their universal credit payments, as national
insurance contributions rise, and as bills and food prices
soar—is simply inhumane.
The debt crisis will only grow. MaPS is removing some of the last
genuine support my constituents have access to—the people they
turn to when bailiffs are at the door; the people who will hold
their hands in times of extreme personal difficulty and crisis.
The Government must remember that savings made through cuts to
community debt advice will have knock-on impacts on other public
services, such as the benefits system, mental health provision
and homelessness services.
I urge the Minister to pause this contract. He has heard today
about the catastrophic impact these changes will have on people’s
lives—on my constituents and on his. Go back to the drawing board
and work with MPs across the House to implement the kind of debt
advice system that would best serve our communities.
10:16:00
(Sheffield, Hallam) (Lab)
It is a pleasure to serve under your chairship, Ms Bardell. I
congratulate my hon. Friend the Member for Kingston upon Hull
West and Hessle () on securing the debate.
As we have heard, debt has many forms and can affect anyone.
However, it is particularly difficult for those on lower incomes,
who are unfortunately kept in what could be seen as a debt trap,
with higher levels of credit being offered. Whether it is payday
loans—as we have discussed in the House many times—or online
credit when people buy online, or someone simply taking on a car
and a mortgage and their circumstances changing, many things can
put someone in debt. While there are many reasons behind it, the
impact is the same. People feel extreme stress; as my hon. Friend
the Member for Kingston upon Hull West and Hessle outlined,
100,000 people a year try to take their lives as a result of
debt. That is a staggering figure and we should be deeply ashamed
of it.
Considering where we are now, after the pandemic, provides
important context. Since 2012, household debt has risen every
year. Although we have seen a sharp decline in so-called
unsecured debt through the pandemic, as savings have risen and
outgoings have fallen, it is clear that those aggregated figures
mask deep inequalities in our society.
While people on higher incomes were four times more likely to see
their family savings increase under lockdown, roughly a third of
low-income households saw their savings all but depleted. Part of
that inequality is explained by the hit to incomes that many
people experienced through the pandemic, by either having their
salaries reduced through being on furlough or losing their jobs
altogether. One of the most shocking economic facts of the
lockdown and the covid crisis is that the increase in the average
wage was due not to actual wages increasing, but to the number of
people on low wages being forced out of work.
The Government are hitting lower-income families even harder with
the cut to universal credit and the increase in national
insurance, all while inflation continues to soar and we see large
increases in energy bills—I expect we will continue to see a
sharp rise in demand for support with unmanageable debts. That is
why, after engineering all this inequality, the proposal to
reduce the amount of face-to-face debt advice makes absolutely no
sense.
I do not need to tell Members about the huge increase in complex
constituency casework that we have all seen throughout the
pandemic. I do not need to even mention the importance of our
constituency caseworkers or surgeries in helping our
constituents. It is that detailed, face-to-face meticulous
support that the new MaPS proposals will axe. As a former
councillor, I know that every local authority deals with debt
support differently. Some areas do not offer local assistance
grants, for example. With 330 different types of local
authorities, a national and regional system would struggle to
understand what the full offer is in individual areas.
Some might argue that the overall spending envelope on debt
advice has increased. I hope the Minister will not reach for that
today, because those resources are going to national services
that cannot provide the quality of support and follow-through
from one-off conversations with someone in a national call
centre.
I worry about access. Will the Minister confirm that calls will
be free and web pages free to visit? I am concerned about access
in terms of disability. As we know, some people who suffer from
certain disabilities are more likely to have issues with debt. It
is really important that people can access services no matter
their circumstances, so I want to hear more about how the
Minister will support people with disabilities and debt issues. I
am also concerned about the move away from grant agreements to
commercial contracts with debt advice providers. We have seen
that fail repeatedly in other DWP contexts. Large outsourcing
companies are very good at gaming key performance indicators, as
we all know, but when it comes to providing services, the service
users and staff often suffer.
MaPS needs to pause the process and rethink. Instead of handing
out redundancy notices just before Christmas to some of the most
highly trained staff and reducing regional wraparound
face-to-face services, which all our constituents rely on, it
should enter into proper consultation with debt advisers and
agencies, and make sure that any future contracts are accessible
at a local level. Only by including those voices and listening to
organisations such as We Are Debt Advisers and trade union groups
such as the Unite Debt Advice Network will we find a way forward
for these services and ultimately help people in a desperate
situation.
10:22:00
(Kingston upon Hull East)
(Lab)
It is always a pleasure to serve under your chairship, Ms
Bardell. I begin by congratulating my hon. Friend the Member for
Kingston upon Hull West and Hessle (). Persistence pays off, because
my hon. Friend has been incredibly persistent in securing this
very important debate. I thank her very much indeed for that.
I want to begin by paying tribute to Unite the union. It is my
trade union and I am very proud of its constructive campaign on
this issue. I also want to thank Citizens Advice, a crucial
organisation that is important to me and my constituents. For
many years I hosted a citizens advice bureau clinic from my
constituency office. It was incredibly busy. It was probably then
that I recognised how crucial the service was. An array of people
came to that clinic, but they were not what one might
expect—somebody on the bones of their backside. The people
varied. Some were in good, well-paid employment, often coming up
against it and getting into real difficulty. As my hon. Friend
said, it is true what people say that we are only two pay cheques
away from such incredible difficulty ourselves.
I am incredibly proud to represent the constituency of Kingston
upon Hull East, not least because I was born and bred there, but
we have real difficulties in Hull. I think I am right in saying
that insolvency in Hull is double the national average. In
2019-20, before the pandemic, I understand that the CAB saw 6,000
people for debt, 89% of them face to face. I did not intend to
detain the House for very long, but I just want to make this one
plea to the Minister. I pray in aid for his support in this: we
need to pause, because we do not know—we cannot possibly
know—what the result of the pandemic is in reality.
I think the Minister has the power to say to MaPS, “Let’s pause
now. Let’s not do something that we will potentially regret later
on.” I ask the Minister to pause the change, because it is
obvious from the hon. Members who have spoken today that it is
essential to stop it. I am not suggesting it is finished forever;
it might be, but after a period of time and proper, decent
consultation, we can revisit this idea. For now, I say to the
Minister, “You have the power. Use it rightly and pause this
now.”
10:26:00
(Leeds North West)
(Lab/Co-op)
It is a pleasure to serve under your chairship, Ms Bardell. I
start by thanking my hon. Friend the Member for Kingston upon
Hull West and Hessle () not only for securing this
debate, but for becoming a formidable champion for debt and
welfare advice services up and down the country.
We are in the middle of a perfect financial storm. Increasing
taxes, soaring inflation, the gas price crisis, the end of
furlough, the removal of the universal credit uplift—the list
goes on. As a nation, our finances are being squeezed more
tightly than ever before, and what we have to show for it is an
increase in personal debt. At least 7 million adults are
currently behind on at least one household bill. The Bank of
England has told us to expect a sharp increase in defaults on
household and business loans, as well as a coming sharp rise in
the cost of energy over the winter.
Perhaps it is unsurprising, then, that the newly-crowned most
popular show ever on Netflix revolves around the central theme of
crushing personal debt. We should make no mistake: whether
through malnourishment, fuel poverty or, most commonly, poor
mental health, debt does kill. It killed Jerome Rogers, who died
by suicide aged just 20, having accrued debts of only just over
£1,000 stemming from two unpaid £65 traffic fines. It
disproportionately kills renters, the young, those on zero-hour
contracts and people of colour.
But there is help at hand. Some of it comes from our own offices
and the hundreds of dedicated caseworkers who work so hard for
MPs, dealing with the broadest range of issues imaginable in what
can often be a fairly thankless task. We all thank our staff for
the work they do. Pre-pandemic research from the CAB found that
more than three quarters of MP caseworkers had dealt with issues
pertaining to bailiffs, and still more are dealing with a case
load characterised more and more by personal debt and the issues
it causes.
MPs’ offices, however, are not debt advice centres. Our staff do
not have the time and, although I am lucky that my senior
caseworker is also an experienced debt adviser, most of us are
unlikely to have specifically trained staff in our offices. When
I heard that MaPS was proposing a rise in funding for debt advice
services, initially I thought I would be pleased, especially
given that the predicted amount would rise by 60% by the end of
the year; but my concern, like that of everybody else here, is
that most of the funding is set to go to a handful of national
services offering advice over the phone or online.
That change in funding strategy will have the impact of cutting
face-to-face debt advice by possibly as much as 50% to 60%. I
thank Unite the union for its campaign to support the retention
of and possibly an increase in funding—it is defending not only
its workers, but people in the most awful circumstances, and
going above and beyond the remit of a trade union into broader
social campaigning.
In Leeds, the decision will mean that at least three out of the
four MaPS-funded services will lose advisers. For the benefit of
those familiar with Leeds, that means that the Ebor Gardens
Advice Centre is set to lose all its debt advisers, as will St
Vincent’s Centre, and Better Leeds Communities will also lose
half its advisers. To add insult to injury, Leeds City Council
was not consulted prior to the recommissioning, and I am sure
none of our other local authorities were either.
All those services are based in the constituency of my right hon.
Friend the Member for Leeds Central (), but they cover the whole
city—a city with eight constituencies and 800,000 people. The
important thing to remember is that those centres are not just
there for debt and welfare advice; they are multi-purpose
community centres. If someone goes in to see a debt adviser and
does not have any food to feed their children, the centre will
give them a food parcel. If someone is suffering from crushing
mental health problems, they will be taken down the corridor to
the counselling service. If someone has had nothing to eat that
day, they will be taken downstairs to the café. Sorry—I am
getting slightly emotional because I have a lot of experience
with these organisations. I am thinking about people I know who
have been to them. If someone needs to go to court, a person from
the centre will physically go to court with them, hold their hand
and support them through the process—an absolutely awful
experience for anybody who has to go through it.
Those multi-service community centres cannot be replaced by a
screen or a phone. The Minister really needs to think about that.
We are not just talking about the fact that people will not have
a service that can deal with their debt; they will not get
support at all. Many, many people who face debt crises already
have suicidal thoughts. We will see a big increase in suicide
rates, pressure on A&E and the inundation of hospitals and
mental health institutions, just for the sake of saving a fairly
small amount of MaPS funding.
Those organisations, and so many like them up and down the
country, do vital and essential work. Experienced debt advisers
can be the difference between shelter and homelessness, between
happiness and despair, for many people. They change and save
lives. Once they are gone—once they have left the profession—it
is very hard for them to come back. These are not well paid
jobs.
It is a vocation.
Absolutely, it is a vocation—a passion. Debt advisers want to
help people. They want to save lives. When they leave the
profession, they are very well qualified to work in many other
areas, including financial services, where they will be paid much
more. Once they’re gone, they’re gone.
Every community needs specialist debt advisers who are available
to those who need them. I am sure that, as MPs, everyone in the
Chamber can appreciate that people need face-to-face support for
many different reasons. That is one reason why we hold surgeries
for our constituents, but we cannot be the last emergency
service; we need these specialist services. I therefore ask the
Minister today to stop the procurement exercise and retender it
with a priority on face-to-face debt advice, as well as online
and phone advice, so that we get the services people need and
avoid a potential crisis in this country with severe loss of
life.
10:32:00
Mr (Wolverhampton South East) (Lab)
Thank you for chairing our proceedings this morning, Ms Bardell.
I congratulate and thank my hon. Friend the Member for Kingston
upon Hull West and Hessle () for securing the debate, and
thank all hon. Members representing different parts of the
country for their contributions.
When people fall into serious debt that they cannot manage, it is
one of the most stressful experiences in life. Multiple debts can
lead to people feeling overwhelmed, being pursued by creditors,
having mental health problems, in some cases losing their home,
and, in even worse cases, trying to take their own life. I begin
by paying tribute to the advisers who are trying to help people
in those circumstances: to the citizens advice bureau and other
agencies in my city of Wolverhampton, and to all those around the
country that we have heard about this morning.
We come to this issue after a year and a half of the pandemic.
The pandemic had contrasting effects around the country for
people, financially. It was, in many ways, a tale of two
Britains. In one Britain, people were able to work from home,
were paid at or near their full salary, and yet saw their
expenditure reduce—they were no longer spending on holidays,
restaurants or other forms of entertainment—and were able to save
money. That is the key factor behind the rise in bank deposits
that we saw during the pandemic—something that happened not just
in this country, but in most comparable countries. That is the
story of one Britain.
However, the other Britain that we have been hearing about this
morning is a very different story. Here, families on low incomes
saw their expenses increase. They were at home with the heating
on all day. They had children who were off school, who needed to
be fed more at home than was usually the case. Those families
could not afford holidays or eating out in the first place, so
they were not saving anything through the absence of those
options, yet they had extra expenditure pressures and, of course,
some people fell through the gaps in the various Government
support schemes, be that furlough, self-employed grants or other
support. For those families, the pandemic was really tough
financially, and it added hugely to the pressures they were
already under.
That took place over the past 18 months, but right now, looking
forward, we have rising inflation, rising energy bills and a
series of tax rises that will come into force in April next year.
The charity StepChange estimates that 14 million people faced a
fall in their incomes at the start of the pandemic, and most of
those did not experience a quick recovery. It estimates that 4.3
million people are behind on bills such as council tax, rent or
utilities. One in three of those who are in difficulty have had
to resort to measures such as skipping meals or rationing the use
of utilities, and one in four of those who accessed payment
holidays during the pandemic have subsequently missed a payment.
It is against that background that the Money and Pensions Service
is changing how debt advice will be delivered.
As we have heard, debt advice is crucially important, because it
can make the difference between someone being overwhelmed by
their debts and their finding a way to control them and,
hopefully, pay them off over time. Good advice on that front can
make the difference between a person being evicted and their
keeping their home, and in some cases, as we have heard, it can
actually save lives. I acknowledge the work that the Government
have done to institute a breathing space that gives people
protection from enforcement action for a specific period during
which a manageable repayment plan is organised; but access to
that breathing space is itself dependent on accessing proper debt
advice. The Government have put more money into debt advice since
the start of the pandemic, acknowledging the rise in need that is
reflected in the figures that have been quoted over and over
again in this debate. However, the balance of how that money is
spent is changing markedly, from face-to-face advice to online
and telephone advice. That is the crux of what we have been
talking about this morning.
Of course, it might be that online and telephone advice is
suitable for some people, and can help them with their problems.
We all understand that the world is changing, and that we should
make use of technology in delivering public services—nobody is
arguing for the world to stand still. However, online advice will
not be suitable for everyone, particularly those with the most
complex debt needs, and the fear being expressed this morning is
that if the right balance is not struck, people could lose out on
the face-to-face advice that they need, with some very damaging
consequences for them. Right now, it is feared that the number of
face-to-face advisers could be cut by around two thirds under the
plans that have been put forward.
Let me quickly give the Minister some examples of where that
face-to-face advice is particularly valuable. I am grateful to
the debt advisers who took part in a call with me yesterday in
preparation for this debate. The first point is literacy: a
significant proportion of the people with the most complex debt
needs may also have literacy problems. They do not always find it
easy to navigate online forums or to realise immediately the key
parts of a letter that they might have received, and as we have
heard this morning, some people cannot even face opening
correspondence because they know the direction in which their
situation is heading. It is not always easy for people to admit
that they have a literacy problem, but this is an area in which a
face-to-face adviser can provide invaluable help.
The second point is privacy. In some cases, domestic violence or
fear of a partner can be an important factor. We have heard about
financial intimidation within households: people in those
circumstances do not want a phone call to be overheard, or their
partner seeing which website they are on or who they might be
talking to online. Again, face-to-face contact can provide that
level of privacy. Thirdly, representation to courts can be
crucial, such as in threatened eviction cases. That is often
based on local knowledge of key local authority or court
officials. It is very unlikely that a call to a call centre or
the use of an online service will replicate that kind of targeted
local intervention, and those interventions can make a big
difference. As such, my plea to the Minister is this: if debt
advice is to be reformed, let us ensure that those who need
face-to-face advice can still get it.
One feature of debt advice is that people sometimes do not seek
it until very late in the day—maybe just a day or two before they
face drastic action from a creditor. A face-to-face adviser can
know the urgency and make a lot of calls very quickly. We should
ask ourselves whether an online service will really deal with
urgent situations like that. There is also a problem with which
we MPs are all familiar—the need to read between the lines. A
person might come to see us with one problem, but as they talk,
more and more comes out. We have all had cases like that, and
often the initial thing that they raise is not really the biggest
thing that has gone wrong in their life. That is something that
we all recognise from our advice surgeries, and it is far easier
to spot in a face-to-face meeting than through another
channel.
The other factor here is that it is hard for the organisations
involved to speak up, because they are bidding for money from the
contracts and are worried that if they speak up too loudly, they
might get on the wrong side of the Money and Pensions Service,
the Department for Work and Pensions, the Treasury or somebody
who is involved in making the decision. However, these issues
have been raised with us, and they deserve serious consideration
by Ministers.
Nobody wants the world to stand still. We all understand that the
way that services are delivered is changing. As I say, that might
suit many people, but my plea to the Minister is not to design a
service that cuts off the possibility of face-to-face advice for
people who need it. If that happens, the problem is that we will
not know about the evictions that could have been prevented. We
will not know about the problems that might have been headed off,
if only advisers had been able to see people and talk to them. We
will not know about the mental health problems that go
undiagnosed or untreated. We will not know about the person with
literacy problems who did not get the help that might have made a
difference to them, because many of the people with the most
complex needs might not access the advice at all.
I acknowledge that, overall, the Government have put extra money
into this field during the pandemic and the last couple of years,
but the money going into face-to-face advice specifically is
being reduced. I appeal to the Minister, his colleagues and MaPS
to structure the contracts in a way that ensures that
face-to-face advice is there for those who need it and that the
local knowledge in these services, which is so important, is not
lost.
10:43:00
The Economic Secretary to the Treasury ()
Thank you for the opportunity to respond, Ms Bardell. It is a
pleasure to serve under your chairmanship and to speak in the
debate on behalf of the Government.
I have listened intently and carefully to all seven Back-Bench
speeches, which have revealed considerable understanding of the
complexity of the service delivery in constituencies across this
country. There has also been significant commentary around the
context in which our constituents find themselves at this
incredibly difficult time. I will endeavour to answer the
specific concerns raised about the recommissioning exercise by
the Money and Pensions Service in a few moments. I congratulate
the hon. Member for Kingston upon Hull West and Hessle () on the constructive tone and
content of her speech, and on securing the debate.
I will begin with a deliberately unambiguous statement: the
Government are committed to supporting the financial wellbeing of
the most vulnerable in society, and to tackling problem debt. As
reflected in the contributions to the debate, hon. Members will
be well aware of the scale and breadth of the package that we put
in place to protect jobs and livelihoods during the pandemic. It
was one of the most comprehensive support packages in the world,
but I recognise that it was never going to be comprehensive for
every single need.
We recognise that individuals in problem debt require extra
support to get their finances back on track, especially during
this challenging and, to a degree, uncertain time. For that
reason, we agreed to provide additional funding to the Money and
Pensions Service for debt advice provision in England in 2020-21
and this financial year, on top of our wider coronavirus support
package.
Several speeches referred to the difficulties in predicting
demand and its distribution; indeed, MaPS acknowledged that, in
terms of what it ended up needing for the 2020-21 financial year.
That will always be a judgment call that it has to make very
carefully, but the additional funding enabled the recruitment of
more than 500 new debt advisers to provide additional debt advice
capacity to meet the anticipated demand arising from the
pandemic. Part of that additional funding was also allocated to
providers to cover lost income from a key voluntary funding
stream known as “fair share”.
I will say a little more about debt advice in a moment, but first
I will highlight some of the things that the Government have done
to help people in financial difficulty, because some speeches
referred to that wider context. In May 2021, as I think the right
hon. Member for Wolverhampton South East (Mr McFadden)
acknowledged, we launched the breathing space scheme, with
cross-party support, where lenders agree to hold off with their
fees and payment requests for 60 days. We have championed that
scheme for many years and I am proud to see it up and
running.
We will use similar principles of providing respite from bills
and demands in the introduction of a statutory debt repayment
plan, which is currently under development. Under that new plan,
which will essentially give another mechanism for people to use
when they are struggling with debt, people will enter formal
agreements with creditors to repay their debts over a more
manageable timeframe. We are obviously working very carefully
with the sector to get that absolutely right.
As well as helping individuals to tackle problem debt, we are
ensuring that they have access to fair and affordable credit. In
the Budget, we introduced plans to provide £3.8 million for a
pilot no-interest loans scheme, which Fair4All Finance is working
with partners to design and deliver. It is my ambition, and that
of the Government, that those loans will support people who are
unable to access or afford existing forms of credit, and prevent
them from falling into problem debt. During the debate, the
uptick in buy now, pay later was mentioned. As I think we
discussed in this Chamber last Tuesday afternoon, that is a
priority for us as well, and I was grateful for the contributions
from Members who were present.
The Treasury is working closely with the regulators and other
Government Departments to help and protect people in financial
difficulty. The Financial Conduct Authority regulates debt
advisers, and recently published its consultation on debt
packager firms. We believe that the FCA’s proposals will put a
stop to bad practices in the sector and help to prevent consumer
harm. We are also engaging closely with the Insolvency Service,
which this summer raised the monetary eligibility limits for debt
relief orders. Those changes will enable more people in financial
difficulties to access a DRO and get a fresh start.
Let me turn to the specifics of MaPS’ debt advice commissioning
exercise, which has occupied the lion’s share of time this
morning. That exercise is an important step towards creating a
better and more resilient debt advice sector. At the core of the
contributions was a concern around the redistribution of
face-to-face and online and other modes of delivery, and the
outcome of the commissioning process. MaPS’ current commissioning
model dates back many years, and some of its current grant
agreements even predate its predecessor body, the Money Advice
Service.
I listened carefully to the contributions on the complexity of
the needs of individual constituents, and I respect the
experience of the hon. Members for Kingston upon Hull East
() and for Makerfield (), who have personal
professional expertise in this area. It is important that we aim
to achieve an outcome from the commissioning exercise that gives
MaPS a better opportunity to manage performance and drive
improvement, innovation and efficiency—improving the service that
customers are offered and offering greater value for money, but
not failing to recognise the complexity of the needs of those
populations. That is in line with the Government’s wider approach
on the funding that they give to charities, 80% of which is now
on a contract basis.
The hon. Member for Kingston upon Hull West and Hessle spoke of a
number of concerns raised by the debt adviser community,
individually, in representations to constituents and collectively
through this process. A transition, such as the one proposed by
MaPS, will require some changes and for the sector to adapt to
them. The question is about to the pace and scale of those
changes, which is the discussion that MaPS needs to resolve in
the coming weeks. I am unable to comment on the specifics of the
commissioning exercise. I do not run that, nor do my officials.
There is a degree of commercial sensitivity around it.
This morning’s debate has put some detail on the nature of the
concerns. I commit to ensuring that those concerns are
represented fully to the leadership of MaPS as it undertakes this
evaluation and moderation of the bids received. Once that is
completed, MaPS will have a greater understanding of what the
changes will mean to debt advice provision in England, including
the proportion that will be delivered face to face. I can say
that the Government have given MaPS a statutory duty to consider
the needs of the most vulnerable.
Colleagues have raised issues of the unmet, or even undiagnosed,
needs that come out of conversations, as well as case complexity
and the concerns raised by the right hon. Member for
Wolverhampton South East about literacy and privacy. All funded
services must be able to handle those complex cases, and MaPS
needs to demonstrate that the commissioning exercise will achieve
that, irrespective of the channel the cases come through.
Although we are discussing the MaPS contract, we have also heard
a lot about clients’ mental health problems. Has the Minister had
any discussions with other agencies—for example, clinical
commissioning groups in the area of health—about commissioning
services, such as Financial Shield, which help those in debt and
with other problems? That will save the health service money as
well.
I have not personally, but I am happy to look into that. We have
to look holistically at the range of new providers and what
insights we can gain to improve the services offered. MaPS has
factored the concern about sensitivity to the mode of delivery
and the complexity of customers’ needs into its commissioning
process by requiring bidders to engage in effective promotion and
outreach to customers who will most benefit from the service.
One thing I am keen for MaPS to look at is the move towards three
regional models. I made the point in my speech that smaller
providers simply cannot bid for those large contracts. It appears
it is by choice, although it is not—they cannot continue to
access the contracts because they are too small. The move is from
nine to three.
I am grateful to the hon. Lady for that point. The significant
concern that the outcome of the commissioning exercise will leave
a smaller number of providers that are somewhat detached from
local communities and specific needs must be addressed through
the process. It would be undesirable for that detachment to lead
to a lack of confidence in the new configuration, and MaPS will
need to address that directly in how it responds.
When the outcome is secure, it is important that customers’ needs
are diagnosed, that they have tailored support, and that
providers collaborate to ensure that customers can be referred in
a seamless manner when they can be better served by another
service within the provision available. I recognise the point
that that is not always possible if there is a level of comfort
in a specific physical location. How that will be transferred
efficiently needs to be looked at. MaPS has not dictated the
channel through which advice needs to be provided, although it
has required local provision in its regional lots. That is to
allow bidders to innovate and compose a service that is aligned
to MaPS’ requirements but is also informed by that intimate local
knowledge, skills and experience.
A few people mentioned potential adviser redundancies. I will not
be able to say anything more until bids are evaluated, and I
think colleagues will understand that. However, we strongly
encourage MaPS to take all reasonable steps to support the
process and use its role as a market steward. That means
supporting, where possible, any transfer of undertaking
activities that the organisations involved may need to carry out
to ensure continuity of employment for debt advisers.
I thank the Minister for his incredibly constructive approach to
the debate—we have all seen that. I do not expect an answer, but
would he please, at least, consider asking MaPS to pause the
process? We are all worried that we do not know the effects of
the pandemic.
I will come on to that in my final remarks. I want to give the
hon. Member for Kingston upon Hull West and Hessle a few minutes
to speak, but I have a few more paragraphs, if I may.
Where transfer of undertakings regulation does not apply, MaPS
must ensure that successful bidders are aware of, and connected
with, any skilled advisers and project staff who might be made
redundant so they can be considered for new roles. The Government
acknowledge that wherever services are subject to commissioning,
there may be elements of uncertainty and change for the sector,
as is the case with any new policy. The Treasury and the
Department for Work and Pensions will ensure that the outcome of
the MaPS evaluation and moderation exercise achieves value for
money and meets the needs of vulnerable customers, in line with
statutory requirements.
On the point made by the hon. Member for Kingston upon Hull East
about a pause, I will reflect carefully on that and talk to my
officials. There has been a delay in the decision about what
would come forward, last Friday. Clearly, this is an incredibly
complex and delicate matter. We want to ensure that the new
provision meets changes in consumer demand from a commissioning
exercise that had not taken place yet under these conditions, but
it must also take account of the fact that our experience of the
last 18 months is distinct from anything experienced before. That
does not mean that we will say that there will be no change, but
it means that the change has to be carefully calibrated and
justified on the basis of the very real concerns that have been
raised. I thank hon. Members from across the Chamber for their
insights, which will inform the way I take the matter
forward.
10:57:00
I am incredibly grateful for those final comments from the
Minister. We all accept that we could not have expected a
pandemic and we do not know what will happen in the next year. As
my good friend, my hon. Friend the Member for Kingston upon Hull
East (), said, let us have a pause in
the process, look again and see what happens to the economy in
the next 12 months. Let us see what happens if there is another
variant and, my goodness, let us hope that there will not be
another lockdown. We do not know what will happen, so I would
like to push for a pause in the re-evaluation.
I thank everybody who has spoken today for their expertise,
passion, emotion and understanding. The biggest message that has
come through is that nothing can compensate for having a real
person there. A screen cannot give someone a hug or make them a
cup of tea. A person on the end of the phone cannot pass them a
tissue when they are crying or offer to entertain their children
while going through their debt payments. That compassion from one
human to another cannot be replaced in a virtual way, and that is
what we are talking about. The majority of people in the country
are two pay cheques away from poverty. We cannot typecast the
people who need this support. We can only say, “Let’s hope it
will never be any of us”, but if it were one of us, I would want
somebody there to hold my hand, make me a brew and tell me that
they will help me get through it, and that is why face-to-face
matters so matter.
Question put and agreed to.
Resolved,
That this House has considered reductions in community debt
advice services.
|
