Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020

Lord Kirkhope of Harrogate Excerpts

Tuesday 6th October 2020 Lords Chamber

[Lord Kirkhope of Harrogate (Con) [V]]

My Lords, I declare my interest as a founder member of the Mental Health Act commission back in the 1980s. It is because of that interest that I wish to concentrate my remarks today mostly on the aspects of the regulations that refer to mental health.

I am sure we all appreciate that debt and mental health are a bit of a vicious circle. Worrying about finances and having limited capacity, and possibly limited assistance, in dealing with money matters can exacerbate mental illness, often to the point of triggering a crisis. It follows that a person’s critical mental state means that managing finances becomes an impossible burden. I therefore welcome these proposals, which, despite applying only in limited circumstances, bring some relief to a number of those in receipt of critical treatment throughout the period in which that treatment is necessary. This breathing space is important. However, it should not be regarded as just a delay to the inevitable but as an opportunity for resolution of outstanding pressures.

I am a little disappointed that the second part of the proposals, for a statutory debt repayment plan, is not being introduced at the same time. Indeed, no date has yet been suggested by the Government. Can my noble friend the Minister give us any indication as to when those proposals might be introduced, and what, if any, problems are preventing a date being set? A moratorium of limited time and scope, without these additional provisions, may just kick the can down the road, especially if other assistance is not fully deployed in the meantime. As these first proposals are now to come into effect in May next year, speed in completing the other provisions is essential.

The Financial Guidance and Claims Act 2018, to which my noble friend the Minister has referred, provides us with the powers that we are examining and which are needed to obtain debt respite, but without a wider scheme in place we are taking risks in proceeding with this element alone. They surely rely on each other to have the best chance of success. For those who are not currently under mental health crisis treatment, the regulations set out the means whereby they can get advice, as well as the criteria and qualifications needed by those who give such advice and have the powers afterwards to trigger a moratorium, pending, I hope, some settlement of the issues. Is my noble friend happy with the qualification requirements for those entrusted with those responsibilities?

Even with great care, the process itself can be daunting to anyone with a mental illness. The specific exclusions of certain categories of debt under regulation 5(4) are difficult to understand, especially if they currently include universal credit allowances and third-party deductions or if a VAT-registered business is involved. While the regulations are otherwise reasonably clear, some people may regard any moratorium as cover for all their debts at the time, so it must be clearly explained to them—as my noble friend the Minister has said—that their general ongoing liabilities must still be met, if possible, during the break. Is my noble friend happy that the qualified advisers will be able to convey this message and deliver an appropriate outcome for clients?

These general provisions apply equally to those receiving mental health crisis treatment, but, pursuing a different course, they must get relief in reliance on the approved mental health professionals, who will then need to notify the debt adviser in order to trigger a moratorium. Bearing in mind the historic and long-standing communication problems between AMHPs and local authorities, for instance, over responsibility in mental health matters, can my noble friend offer some further explanation as to how this process might be expected to work?

Sadly, many mental health patients have episodes of crisis that can be repetitive, and, in such cases, there may be difficulties in implementing the breathing space for them. It could be for one crisis treatment followed by the 30 days set down in the regulations and then a further 60 days arranged by the debt adviser. However, if further crisis treatment is necessary, this could be a very long-term situation, which can lead to misunderstandings or, even, unfairness all round. I know that the regulations acknowledge this different approach, as they, of course, limit other cases to only one breathing space in any 12-month period.

The issue of published guidance is also important. It must not be just for debt advisers or AMHPs; it must also be available in simple language for those who might benefit most from it and, surely, also for creditors, who are directly affected by these proposals. I am pleased to see that the provisions will be reviewed after five years, but I hope that, as implementation takes place, there will be careful monitoring and, if necessary, adjustments will be made as and when required. Finally, I hope that my noble friend can reassure us on that point as well.