Independent Debt Advice

Lord Watts Excerpts

Tuesday 8th February 2011 Westminster Hall

[Yvonne Fovargue]

I completely agree. The idea that there were clusters of problems was identified at least 10 years ago. The legal aid cluster of social welfare law was developed so that the person could be addressed as a whole and not just seen as a set of individual problems.

A national telephone advice system could not help with our current problem of debt. Local knowledge, particularly about bailiffs, is vital. That was evidenced on Saturday in an article in The Times, which highlighted the different practices of bailiffs employed by neighbouring local authorities. The cuts cannot, however, be taken in isolation, as my hon. Friend pointed out. The consultation paper on legal aid proposes to remove debt from scope for all cases except those with an

“immediate risk of losing their home”.

That flies in the face of all the research demonstrating that early and timely intervention is crucial and actually saves the public purse money. For every £1 of expenditure on debt advice, the state potentially saves £2.98. Indeed the figure could be higher, particularly for the NHS.

Last Thursday in the Chamber, I mentioned a project that had been funded by my local primary care trust, which I managed until last May. It measured stress levels on a recognised NHS scale before and after the debt advice process. In the first nine months of the project, the PCT estimated that three suicides had been prevented. The project was a finalist for a national NHS innovation award due to its low cost and good outcomes for clients and the NHS.

Local authorities are also cutting the amount of money available for advice. The CAB in England and Wales faces an expected cut of 10% in 2011-12. If that is factored in with cuts to the financial inclusion fund and the proposed changes in legal aid from 2012, local bureaux can expect, on average, a 45% cut in funding.

[Mr Dave Watts (St Helens North) (Lab)]

With the cuts that we are seeing right across the spectrum, whether in local government or, in my case, the PCT, which part funds some of the posts in CABs in my area, does my hon. Friend agree that the only way to resolve the matter is for the Government to make a direct grant to citizens advice bureaux so that they can handle the massive increase in demand caused by the cuts imposed by the Tories and the Liberal Democrats?

[Yvonne Fovargue]

I have long been a supporter of a statutory duty to fund advice services, and I still believe that it is the only way in which the absolute importance of advice can be highlighted to local government and other funders. The cut to debt advice funding and the proposed cuts to local authorities and legal aid will be felt most significantly in urban areas, which have the greatest numbers of clients. To whom are those people expected to turn for advice on their debts?

The Government have announced their intention to establish a national money advice service to deliver free financial advice and an annual financial health check to provide people with a holistic overview of their finances.

--- Later in debate ---

[Andrew Percy]

No, let me finish. If the hon. Gentleman is going to make a point, he should at least have the courtesy to listen to the response. He was part of a Government that ran up massive debts that the coalition Government must repay. Tough decisions have been made, but even when we are not necessarily happy with some of those decisions, our job as coalition Members is to come here and make it clear what we think our constituents deserve. In saying what I have, that is exactly what I have tried to do. I am trying to support exactly the point that Opposition Members have been making, which is that we need face-to-face debt advice.

[Mr Watts]

The hon. Gentleman must have come across the same sort of cases that I have as an MP, in which people have been given bad advice. My worry about training someone for one day, or even one week, is that it will not provide the level of skills required to advise people in the best possible way. Bad advice is worse than no advice at all.

--- Later in debate ---

[Nic Dakin]

I thank my hon. Friend. I think all hon. Members agree that these are specialist advice services with specialist staff. One of the points my hon. Friend the Member for Newcastle upon Tyne North (Catherine McKinnell) made was about the danger of losing specialist expertise. That is another consequence I am sure nobody wants to see. In Scunthorpe, the part-time debt adviser at Crosby community association was withdrawn in December. The area is now losing the FIF debt advice, and the debt advice provided through legal aid is not in place. North Lincolnshire credit union does not provide debt advice, so the local situation is bleak.

As my hon. Friends have pointed out, there is a direct correlation between debt advice and ill health. My hon. Friend the Member for Makerfield mentioned the case study of John. Grant Thornton’s recent study, “Psychology of Debt,” demonstrated that one in two adults with debts have a mental health problem and one in four people with a mental health problem is also in debt. It is therefore clear that the time spent helping people to address their debt problems can help their overall health and well-being. Money spent by the Government on debt advice is likely to save money being spent on the health service. Research by Friends Provident found that the provision of free debt advice allowed creditors to recover in one year £1 billion more than they would otherwise have done.

[Mr Watts]

Will my hon. Friend give way?

[Nic Dakin]

I am about to finish.

Independent free debt advice is good for the individual, good for the public and private sectors and good for UK plc as a whole. I hope that the Minister will take this opportunity to spell out the Government’s plans to ensure that independent debt advice remains available and accessible to all those who need it. It is crucial that the Government do not abandon people with debt problems at this time.