Community Debt Advice Services

Wednesday 1st December 2021 Westminster Hall

09:30

[Yvonne Fovargue (in the Chair)]

Before we begin, I remind Members that they are expected to wear face coverings when they are not speaking in the debate, in line with current Government guidance and that of the House of Commons Commission. I also remind Members that they are asked by the House to have a covid lateral flow test twice a week if they are coming on to the parliamentary estate. That can be done either at the testing centre in the House or at home. Please give each other and members of staff space when seated and when entering and leaving the room.

[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 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.

[Margaret Ferrier (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?

[Emma Hardy]

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.

[Hilary Benn (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]

[Emma Hardy]

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.

[Dame Diana Johnson (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?

[Emma Hardy]

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.

[John Healey (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.

[Emma Hardy]

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 (Mel Stride), 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.

[Hannah Bardell (in the Chair)]

I now call the chair of the all-party parliamentary group on debt and personal finance, Yvonne Fovargue.

09:49

[Yvonne Fovargue (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 (Emma Hardy) 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.

[Karl Turner (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.

[Yvonne Fovargue]

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.

[Margaret Ferrier]

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?

[Yvonne Fovargue]

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 (Dame Diana Johnson) 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 Gregory Campbell (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?

[Yvonne Fovargue]

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.

09:59

[Jim Shannon (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 (Emma Hardy) 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.

[Margaret Ferrier]

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?

[Jim Shannon]

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 (Yvonne Fovargue) 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.

[Yvonne Fovargue]

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.

[Jim Shannon]

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.

[Several hon. Members rose—]

[Hannah Bardell (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

[Nadia Whittome (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 (Emma Hardy) 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

[Olivia Blake (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 (Emma Hardy) 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.

10:21

[Karl Turner (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 (Emma Hardy). 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

[Alex Sobel (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 (Emma Hardy) 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 (Hilary Benn), 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.

[Jim Shannon]

It is a vocation.

[Alex Sobel]

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

[Mr Pat McFadden (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 (Emma Hardy) 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

[The Economic Secretary to the Treasury (John Glen)]

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 (Emma Hardy) 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 (Karl Turner) and for Makerfield (Yvonne Fovargue), 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.

[Yvonne Fovargue]

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.

[John Glen]

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.

[Emma Hardy]

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.

[John Glen]

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.

[Karl Turner]

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.

[John Glen]

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

[Emma Hardy]

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 (Karl Turner), 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.