Independent Debt Advice

Debate between Catherine McKinnell and Paul Blomfield

Tuesday 8th February 2011 Westminster Hall

[Catherine McKinnell (Newcastle upon Tyne North) (Lab)]

I congratulate my hon. Friend the Member for Makerfield (Yvonne Fovargue) on securing this very important debate. I am extremely concerned about the ending of the financial inclusion funding, as is my local CAB, which has asked me to put forward some of its sincere concerns about the proposals.

There was a record number of insolvencies in England and Wales in 2010, which was an increase of 0.7% on the previous year. The 2010 figures have not yet been broken down by constituency, but in 2009 my constituency of Newcastle upon Tyne North had the highest rate of personal insolvencies in England and Wales, closely followed by North Tyneside, Newcastle upon Tyne Central and Newcastle upon Tyne East, in that order. Furthermore, the top 11 constituencies for personal insolvencies all fall within the north-east of England. I want to convey to the Minister that those are not just figures; they are real people with real lives. We all know that debt can expose vulnerable people to the threat of homelessness, to bailiffs seizing their possessions, and to the loss of essential services and even their liberty. Therefore, having access to free, confidential and trustworthy debt advice is absolutely fundamental.

As my hon. Friend set out in detail, the financial inclusion fund was established in 2004 by the previous Labour Government to support fact-to-face debt advice services, in areas of deprivation where there had been difficulty in accessing debt advice. At Newcastle citizens advice bureau there are eight full and part-time debt advice workers whose work has been supported by the financial inclusion fund, and in 2010 they supported more than 1,000 local people in relation to £14.3 million of personal debt. I was shocked by those figures. In the last quarter of that year alone, the service saw more than 300 clients, which was the highest number in the history of the project in Newcastle; the appalling weather at that time did not prevent people from getting to their CAB for help. However, as a result of the coalition’s decision to end the financial inclusion fund, there is huge uncertainty about what will replace it. On 4 February, the CAB stopped offering advice supported by the financial inclusion fund.

[Paul Blomfield (Sheffield Central) (Lab)]

There are many similarities between the city of Newcastle and the city of Sheffield, which I represent. We have 12 specialist face-to-face debt advisers supported through the financial inclusion fund, and they process similarly staggering amounts of debt casework. During 2009-10, which is the last full year for which information is available, they dealt with £25.6 million of debt. Crucially, they prevented the loss of homes for 110 clients, through negotiation with lenders and landlords, or through interventions in county courts, and successfully negotiated 655 payment plans. Does my hon. Friend agree that the withdrawal of the financial inclusion fund, which will mean that all those posts in Sheffield will disappear and all that help will go, is a particularly callous decision at a time when debt is rising as a result of this Government’s policies?

[Catherine McKinnell]

I strongly agree; that is precisely the point that I want to make today. With no news of any funding beyond March, the service in Newcastle is winding down, and so are bureaux right across Tyne and Wear. The situation is deeply worrying because of the personal insolvency figures and also because people, particularly in places such as the north-east where more than 50% of the population is employed in the public sector, will find themselves in even more worrying financial circumstances.