On Monday 28 March, the APPG Debt & Personal Finance held an in-person event on ‘Debt advice needs in the wake of the pandemic’. The guest speakers at the event included Caroline Siarkiewicz, Chief Executive of the Money and Pensions Service; she was joined by subject experts from a mental health charity, creditor, trade body and academic perspective.
Caroline Siarkiewicz, Chief Executive of the Money and Pensions Service described the steps MAPS had taken with partners to alleviate debt pressures during the pandemic. Debt advice partner organisations had responded with admirable speed to adapt, going the extra mile to meet people’s needs.
MAPS had secured an extra £38m in funding for debt services in June 2020, and while demand for debt advice dipped during the pandemic due to government interventions, the cost-of-living crisis meant 8.5 million people were now struggling with debt problems.
Turning to the ongoing commissioning process for debt advice, Ms Siarkiewicz stated that it was right that the process has received scrutiny and acknowledged the need to find a new way forward. Ms Siarkiewicz stated that while the majority of its debt contracts will be commissioned in September, grant funding for community-based debt advice is being renewed temporarily while MAPS consults on the best way to deliver these services in the future.
Sharon Collard, Chair in Personal Finance at The University of Bristol presented research from the abrdn Financial Fairness Trust on financial difficulties and advice seeking during the pandemic between March 2020 and October 2021. The research describes the gap between the financially secure and those in financial difficulties; it explains how only one in eight people (13%) struggling with debt problems during the pandemic received spoken and online debt advice.
Contrasting previous satisfaction surveys, Professor Collard said that almost half of people who sought debt help during the pandemic felt they only received ‘some’ of the support they needed. This raised important questions for MAPS and debt advice providers more widely about people’s expectations of advice, what happened to clients who exited support, and particularly in cases when people were struggling with a negative budget, whether wider interventions were needed.
Helen Undy, Chief Executive of the Money and Mental Health Policy Institute described how the pandemic had a disproportionate impact on people with mental health problems. Around half of people in debt have a mental health problem, and of those 2.5 million people who fell behind on bills last year considered or attempted to take their own lives. Ms Undy emphasised that this is why advice matters, and why creditors and debt advice providers need to design their interventions around the presumption that customers are likely to need additional support.
Ms Undy welcomed the Government’s Breathing Space and Mental Health ‘Recovery Space’ schemes but said the latter was being underused. Ms Undy also welcomed MAPS’s u-turn on funding of face-to-face debt advice, recommending a minimum quota for face-to-face provision in the future. New contracts from MAPS also needed to provide specific investment to support specialist mental health training for advisers.
Sue Lindsay, Director of Customer Policy and Engagement at Wessex Water provided information on the raft of support and low tariffs the company had made available to people on benefits and low incomes during the pandemic. Ms Lindsay described how the company’s social tariff offered discounts of up to 90% on a typical bill for those in the greatest hardship. Similar provision was fast-tracked to those who lost income during the pandemic due to social distancing restrictions.
Ms Lindsay explained that getting support to the right people would not be possible without the company’s partnership with community groups and debt advice agencies. Wessex has been working with the Consumer Council for Water on how to increase accessibility to water affordability schemes; and with MIND to broaden its understanding of how to give customers with mental ill health the right support.
Ian Fiddeman, Principal, Credit and Personal Credit Policy with UK Finance described how a well-funded, high quality debt advice sector was ‘essential’ in view of the current financial headwinds, such as rising interest rates, and pressure on budgets through inflation. Mr Fiddeman said lenders had put in £20million additional funding for debt advice during the pandemic, stressing the importance that services should be ‘efficient’.
UK Finance believes a greater range of creditors should face a levy to pay for debt advice, including councils and utility companies. In addition, Mr Fiddeman suggested that Breathing Space for people with mental health problems should cover a period longer than 60 days. Finally, the Treasury’s move to develop statutory debt repayment plans (SDRPs) should be accompanied by topping up fair share contributions with a new payment to recognise the growing number of clients with negative budgets.
During the Q&A, Chilli Reid of Advice UK and Damon Gibbons from the ‘We are debt advisers’ campaign asked questions about MAPS’s original tenders, including the significant cuts implied to face-to-face debt advice, when referrals from national services were expected to increase.
Ms Siarkiewicz described how MAPS has now adjusted budgets to grant-fund face-to-face services temporarily, while the body looks again at how to best deliver in-person services. She admitted that ‘no-one wants to be in a position where people are leaving the sector’, adding that finding a new way forward for locally-based services ‘may take a significant amount of time’.
Finally, turning to questions over the need for a more joined-up approach to debt advice, Ms Lindsay pointed to the Welsh national advice strategy which takes a more holistic view when working with people in financial difficulty. Ms Siarkiewicz added that while MAPS’s funding is meant to support debt advice and only debt advice, a co-commissioning approach with other services was ‘attractive’ and would certainly be looked at.