Community Debt Advice Services

John Glen Excerpts

Wednesday 1st December 2021 Westminster Hall

[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.

--- Later in debate ---

[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.