Community Debt Advice Services

Pat McFadden Excerpts

Wednesday 1st December 2021 Westminster Hall

[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.