Budget Resolutions

Yvonne Fovargue Excerpts

Tuesday 12th March 2024 Commons Chamber

[Yvonne Fovargue (Makerfield) (Lab)]

There are things to welcome in the Budget when it comes to helping people struggling with hardship and debt, but they are more about tinkering than about providing solutions to the underlying problems. I welcome the extension to the household support fund, which is distributed by local councils and is a crucial lifeline for desperate families, but it is only for six months. That is wholly inadequate given the scale of the problem.

Increasing the repayment period for households on universal credit that take out budgeting advances from 12 months to 24 months is clearly helpful, especially for those struggling to make ends meet or coping with an emergency, but that still leaves millions of people on universal credit subject to unaffordable deductions from their benefits to repay other Government debts. Those deductions from an amount of money that is frankly too little to live on in the first place cause real hardship.

We have to put those small changes in the context of a cost of living crisis that is affecting millions of people. StepChange says that two in five people are currently struggling to keep up with household bills and credit commitments, and its advisers regularly speak to clients struggling to meet even the most basic needs, such as getting a healthy meal and keeping the heating on. They are also increasingly seeing people on negative budgets, which means that they do not have enough income to meet their necessary outgoings, let alone put towards paying off their debt. A new report published today by Christians Against Poverty highlights that and the fact that many people lack credit, but I am not sure the Government recognise the problem as well as those charities do. That is why people need more help with the fundamentals, such as council tax and energy bills. Where is the much-needed council tax support scheme and a social tariff for energy? Those changes would make a real difference.

We also need major changes to the kinds of debt solutions that advice agencies can offer. The announcement of the scrapping of the up-front £90 application fee and the uplift to the vehicle value to qualify for debt relief orders is a start, because debt relief orders were a real barrier to those in financial hardship who had to find £90 before they could even deal with their debts. The statement on financial vulnerability is welcome, but it is estimated that an extra 556,000 debt relief orders will be applied for—a 75% increase on 2023. The statement asserts that individuals will be put in contact with free debt advice where appropriate, so my question to the Chancellor is: where will the extra money come from to pay for the additional debt advice? The free advice sector is already overloaded. Debt advisers are working beyond their capacity and suffering burnout, and many are leaving the sector, despite their commitment to it. More and sustained funding is urgently needed.

Enough with tinkering around the edges. We need a system of simple and straightforward debt solutions, and we must ensure that people, including those on negative incomes, are always able to access the solution that best suits their needs. One part of the solution has to be to reduce creditors’ reliance on bailiffs, whose fees, which rose substantially last year in the middle of a cost of living crisis, are simply added to people’s debts, making them less and less affordable. Bailiffs are often part of the problem, not the solution. We have to encourage creditors—including public sector organisations, the Government and local authorities—to embrace a fairer and more effective system that prioritises affordable payment plans over the seizure of goods.

Of course, we need to prevent people from falling into debt in the first place, so we must look at the issues more holistically. The causes and solutions are complex. Many people affected by debt have multiple categories of debt, spanning lots of regulatory regimes. That complexity is replicated across Government and Whitehall, and laws and regulations span several Departments. For example, the regulation of “buy now, pay later” firms, which is far too delayed—I was really sorry to see that it appears to have been kicked into the long grass—is the preserve of the Treasury. Bailiff fees are an issue for the Ministry of Justice, and prepayment meters are the responsibility of the Department for Energy Security and Net Zero. The Department for Work and Pensions looks after deductions from universal credit, and rent arrears are dealt with the Department for Levelling Up, Housing and Communities—and that is not a complete list. Actually, all those Departments need to work together, and any policies need to have a financial inclusion impact assessment. That would stop many of the policies that are pushing people into more hardship and debt.

This may sound a little strange, but I am looking to introduce a ten-minute rule Bill to regulate e-scooters that use lithium-ion batteries, which will come under the Department for Transport. This is a financial inclusion matter, because it is often the cost of living that causes people to search for cheap bargains online that turn out to be anything but and are actually dangerous.

I will not pretend to have all the answers to the complex issues, but I do know that we have to have a joined-up approach to solving them. Far too many people in our country are struggling with what seems like hopeless debt, and they gain little from the tinkering and short termism of this Budget.

[Mr Deputy Speaker (Mr Nigel Evans)]

I call Angus Brendan MacNeil.