We need to talk about debt advice (again)

fatbelly

Debt advice is in crisis  - and facing more cuts

https://wearedebtadvisers.uk/news/we-need-to-talk-about-debt-advice

sourcrates

It was inevitable though, many thousands of people who ordinarily would not need advice on how to tackle debt, now find themselves in that boat due to the ever-increasing cost of living, and it`s going to get a whole lot worse before it gets better.

It`s bound to filter down to grass roots advice level, everyone and everything is under pressure, yet the Government continue to !!!!!! around with internal party squabbling instead of dealing directly with the issues that matter to everyday folk.

Three Prime Ministers, and as many chancellors in only three months, it`s ludicrous, we are facing an economic downturn of biblical proportions and yet the Torries say it`s just business as usual and continue to fiddle while Rome burns.

I saw a sign on a hedge in the middle of rural Staffordshire yesterday afternoon, set out in big black letters, it read -

"BRING BACK BORIS"

stymied

@fatbelly is there anything you propose we can do to help? Is there a template letter to send someone / MP? Thanks

kimwp

I don't know if it's quite in line, but I put a suggestion to Google that they put the debt charities at the top of the search results. Maybe if others suggest it too, that might help.

I also think fee paying debt companies should have to declare the existence of the debt charities on the websites.

EssexHebridean

I’d like to see the ones that charge a fee for even things like DMP’s having to declare that in big letters, along with the fact that there are free alternatives on the top of each page of their websites. The fact that we get people arriving here on occasion who literally weren’t aware of the amount they were paying for the service, and that they could have avoided those fees is shocking, and worrying, 

fatbelly

The funding cuts are now being announced. My team has been cut by 10% but we are trying to absorb that cut.

We are in a deprived area and have met every stupid target that MaPS has set.

It's really unacceptable and I assume WADA will post something soon

https://wearedebtadvisers.uk/home

Floss

On top of those unfair & damaging cuts, some of the advice from Stepchange & PayPlan seems to be of varying quality, just based on what I see posted on here. 

fatbelly

Yes, fair comment.

I'm afraid CA is not exempt from this either

When you have an unstable funding basis with advisers leaving/being laid off and being replaced by new/inexperienced advisers and supervisors, this is inevitable.

I'm old enough to remember when we had National Debtline advisers on this board who had decades of experience and were brilliant. Not seen them for years

sourcrates

fatbelly said:

Yes, fair comment.

I'm afraid CA is not exempt from this either

When you have an unstable funding basis with advisers leaving/being laid off and being replaced by new/inexperienced advisers and supervisors, this is inevitable.

I'm old enough to remember when we had National Debtline advisers on this board who had decades of experience and were brilliant. Not seen them for years

Too busy to post on MSE, was the response I got when I asked them.

This was just after the first wave of the pandemic.

sourcrates

fatbelly said:

Yes, fair comment.

I'm afraid CA is not exempt from this either

When you have an unstable funding basis with advisers leaving/being laid off and being replaced by new/inexperienced advisers and supervisors, this is inevitable.

I'm old enough to remember when we had National Debtline advisers on this board who had decades of experience and were brilliant. Not seen them for years

Slightly off topic, but just been looking at the most recent insolvency figures for this year on Gov.UK.

quote -

"For individuals, in January 2023, 612 bankruptcies were registered, which was 5% higher than in January 2022, but 60% lower than January 2020.

There were, on average, 6,328 Individual Voluntary Arrangements (IVAs) registered per month in the three-month period ending January 2023.

There were 1,741 Debt Relief Orders (DROs) in January 2023, which was 7% lower than January 2022 and 21% lower than the pre-pandemic comparison month (January 2020)".

So IVA`s are far outstripping the rest of the market, I`d love to know how many of those who opted for an IVA would have been better suited to a DRO, or even bankruptcy, but those figures aren't available.......incidentally, the bankruptcies were made up of 518 debtor applications and 94 creditor petitions.

fatbelly

Latest from We are Debt Advisers:

In April, the Money and Pensions Service (‘MaPS’) announced that it was reducing the targets for community-based debt advice services by 29%.  Over the course of the year, the four grant funded providers of these services will now be expected to deliver advice to just under 100,000 people.

This reduction in target has been justified by MaPS as a response to the increased complexity of cases that debt advisers have been seeing through the cost-of-living crisis, and it has been made following concerns that high volume targets were placing advisers under considerable pressure.  As MaPS put it in their press release:

“The new total reflects the fact that clients need more time and support from advisers. It also makes it feasible to provide both the best standard of service for clients and the right level of protection for debt advisers’ welfare by ensuring their workloads are more manageable.”

Whilst the acknowledgement that the cost-of-living crisis has led to more complex cases is welcome, we are concerned that MaPS fails to acknowledge that there has also been an increase in demand for services.  The fundamental problem of a lack of capacity in front-line services to deal with that demand is not being addressed.

How much capacity is there overall? 

MaPS has announced that its “expectation is that at least 560,000 people will receive debt advice via our community-based services grants and contracts” this year.  

This is the same number of people that were expected to be advised by MaPS funded agencies in 2019/20 – some four years ago, and prior to the pandemic and cost-living crisis which have shattered the finances of many households since.

By MaPS’ own estimates the need for debt advice has increased by 2 million in the past two years alone, and in May this year, the Financial Conduct Authority reported that:

"The number of adults who missed payments on any domestic bills or meeting any of their credit commitments in 3 or more of the previous 6 months went up by 1.4 million: from 4.2 million (8%) in May 2022 to 5.6 million (11%) in January 2023."

There simply isn’t the required level of capacity in debt advice services to meet the demands that they are facing, with many community-based agencies reporting lengthy waiting lists for an appointment.

Why isn’t there sufficient capacity?

MaPS has failed to deliver any significant increase in capacity over the past four years, despite having received considerably more funding from government to do so, particularly during the pandemic.

Whilst the fall in the number of people receiving advice during the pandemic can be explained by a combination of the closure of face-to-face agencies during the lockdowns and government’s temporary assistance for households, including suspensions of debt enforcement, the lack of any significant increase in capacity since is scandalous.

In the MaPS Annual Report of October 2022, their Chief Executive, Caroline Siarkiewicz, noted that they expected demand for services to rise and that:

“In order to meet this increase, for 2022/23 we have secured significantly more funding for debt advice provision in England…and have launched a procurement exercise to ensure that we are able to meet the challenge of serving more people than ever before.”

But that procurement exercise proposed cuts of 50% to community-based services, resulting in an outcry from advisers, and politicians, which ultimately forced a backdown and the promise that grant funding would remain at its current level until a consultation concerning the future of community-based services had been conducted.

That promise now rings hollow, with MaPS having included a 10% cut to grant funded agencies within its agreements for 2023/204.

But the procurement exercise of 2022 was a disaster in other ways too.  The threat of redundancies caused many advisers to leave, and vacant posts were not filled in the light of ongoing funding uncertainties.  

This also meant that many new debt advice trainees, recruited through an Increasing Capacity Project supported by the additional funding for MaPS during the pandemic, found that there were no qualified jobs to move into.

As we understand it, Citizens Advice – the largest of the four grant funded agencies – has narrowly managed to avoid making compulsory redundancies in response to the recent cuts, by deleting vacant posts.  But it has left capacity to deliver shattered.

As for the procurement of the national contracts – which were intended to boost capacity through the delivery of digital and telephone advice – we find that these are expected to deliver 460,000 “sessions” in 2023/24 at a cost of £46 million.  That equates to just £100 of funding per client.  It is not clear how these services will cope with the increased complexity of cases without referring to community-based organisations and how double-counting of cases will be avoided within MaPs’ monitoring framework.

Even within community-based settings, expected to deal with the most complex of cases, funding levels are at just £300 per client.

These levels of funding are woeful given the demands that the sector faces and the pressures that advisers are under. 

A long-term strategy for debt advice – backed by a considerable increase in funding is required.  

WADA is calling for:

• An immediate reversal of the 10% funding cut made to community-based debt advice services earlier this year; and 
• A Parliamentary inquiry to assess the demand for debt advice and the level of funding needed to meet this, and to inform the setting of the levy paid by financial services firms for debt advice services.

Next month, when Parliament returns from Summer recess, we will be stepping up our calls for an inquiry.  

P.S Can you help spread the word? 

Our friends at Debt Justice are creating a Together Against Debt Manifesto to make sure that politicians cannot ignore the household debt crisis hitting our communities. 

Everyone who has experienced the stress of debt is invited to have their say and they don't need any specific knowledge to join in. 

Together, participants will be creating and taking their shared demands to politicians to influence what they are promising at the upcoming general election. Please spread the word, so that people with experience of debt can be part of this exciting and empowering project.  They can register an interest at https://act.debtjustice.org.uk/together-against-debt-peoples-manifesto.