Community Debt Advice Services

Debate between Yvonne Fovargue and Gregory Campbell

Wednesday 1st December 2021 Westminster Hall

[Yvonne Fovargue]

I do agree, but I do not think there is a silver bullet. Some of the problem is that there just is not enough money to go around, and it does not matter how well a person manages their money if they do not have enough to go around. Money management education is one of the tools of the trade, but it is not a silver bullet.

As I was saying about the new MaPS contract, it is good to look at the wellbeing of the advisers. I have heard that the debt advice peer assessment scheme has caused advisers considerable strain, with people having to do two web chats at once, which is really not feasible: they have to concentrate on the individual. This focus on wellbeing is acceptable, but I worry about the nine regional branches for debt advice going. About half of the money will go to the three national digital and phone-based services centres in the north, the midlands and the south, which will largely be at the expense of face-to-face provision, and providers can bid for only two of those. That element of competition worries me a bit. We all know that advice agencies are competitive: we have had to be, because we are competing for a limited pot of money. However, setting people up against each other is not the way to do it. Collaboration is the key with advice agencies, and we need to see more of that. I do not disagree with contracts—I think they are a way forward—but I do think we need to look at the way in which the contract is tendered and, in particular, how it can promote collaboration.

The 50% cut in the regional services is another worry. As my hon. Friend the Member for Kingston upon Hull West and Hessle said, it is vital that there is partnership between the local agencies, and those partnerships are often built up on the ground with local knowledge. As my right hon. Friend the Member for Kingston upon Hull North (Dame Diana Johnson) mentioned, it is the wraparound casework support; the writing and phoning creditors; the knowledge of bailiffs in the area and how the local authorities work; and having those personal contacts that are vital. We know that people who have mental health issues often need the comfort of a face-to-face service. They may well be able to move on to a telephone service at some point in future, but an experienced adviser will be able to say when that point is.

I am also concerned about the nature of the contract. A number of smaller agencies are being put off from bidding because payment in arrears is a real problem. Advice agencies cannot cope with payment in arrears. They need to know that the money is there up front. They are not paying their advisers and rent in arrears; they are paying for everything and it is a month-on-month worry. The full responsibility for the TUPE arrangements is a problem, as is clawback, which needs to be specified as to the quality targets and the amounts.

I am pleased that in my discussions with MaPS it said it would not be a month-on-month target, because all of us in the advice field know that December sees a drop in cases, whereas January and February see a big rise. The demand for debt advice is not stable month on month; it goes up and down. I would also like to see time targets, not numbers. Number targets encourage short, easily dealt with cases, whereas the people who need face-to-face support need time to deal with complex debts and the emotional and other associated issues.

[Mr Gregory Campbell (East Londonderry) (DUP)]

On the important issue of face-to-face contact and the empathy needed, particularly for very vulnerable families obviously in need, will the hon. Lady join me in paying tribute to the likes of Citizens Advice, of which she is well aware, and other groups, such as Christians Against Poverty, that offer empathy and a counselling role to assist people through those problems, and in calling for more support for such groups?

[Yvonne Fovargue]

I certainly would. A friendly face is important, somebody outside the family who is not judging, but dealing with someone as an individual with problems, and not just as a problem. Many local providers of face-to-face debt advice have felt unable to bid because of the risks involved in entering the contracts, and the large size of the contract, as well as the lack of any allowance for inflation at a time when inflation is expected to rise.

The specifications place undue risk on the contractors, requiring them to forecast volumes of people over the first three years of the contract. There has been a pandemic and a rise in inflation; how are they going to predict what will happen in three years’ time? Three years ago, could we have predicted what was going to happen now? I do not think so. There is a worry that the small, local providers that rely on the MaPS funding may have to drop face-to-face services or close entirely. Many are not included in the tender bids and they do not have the size or resources to compete for the tender individually.

What assessment has been made of the loss of local services, those that are there now, and those that say they are likely to close if they do not get any funding from the contract? I hope that the shift from face-to-face is not motivated by cost-cutting. That is worrying because the cases are more complex and less capable of being dealt with through telephone and digital service.

Telephone services work where the debt is quickly identified and there is excess income that can be distributed to creditors in a debt management plan. That is when it works. There are fewer and fewer of those cases coming forward. Face-to-face services typically support clients with a wider range of problems, such as benefit claims, charitable applications, access to local welfare assistance schemes, that national and regional contracts are not aware of. Those services become more important because of the new help to claim contract that is being put out to tender, which takes out face-to-face entirely. That is a big mistake and will lead to a lot more debt in the future.

Clients who have complex interwoven problems, including debt, housing issues, mental illness and domestic violence, struggle to access and navigate online services. In my borough, in Wigan, people do not go online as much as in other boroughs. In fact, only a couple of years ago, 30% of people in Wigan said they had never been online. They would be particularly at risk.

It will hit vulnerable clients, less well-off people, young people and people with dependent children. We assume all young people go online to get help with their debt, but that is not the case. Quite often, when they are hit by debt for the first time, they do not know who to turn to. It is important that they can turn to an individual, who can say, “Okay, do this,” and then perhaps move them on.

The previous commissioning strategy seemed to better recognise that people in debt need access to a wide range of wraparound support, but that has now been superseded. How was that previous contract looked at? Why was it seen to be unsuitable in the future?

AdviceUK says that MaPS’ approach is wrong because it is rooted in a mistaken belief that debt is solely a problem of poor choices by individuals. That needs to be part of a wider conversation about welfare support for the most vulnerable, rising living costs, improving life chances, unstable and poorly paid work, which we know is a big driver of debt, and improving the credit industry, especially the way in which people on low incomes are treated by that industry and the products that are available to them, which often cost more and are less suitable.

I agree with my hon. Friend the Member for Kingston upon Hull West and Hessle that there needs to be a pause to this contract and that we need to look at it in the round, and whether it will improve the lives and the chances of people in debt. I would also like us to look at debt solutions and debt enforcement. We need to put more thought into how to prevent people from falling into debt in the first place, how to get more money into people’s pockets and how we deal with them when they get into debt.

Inevitably, people will get into debt. From the time that citizens advice bureaux were founded during the second world war, they have worked to put themselves out of business, but they are now needed more than ever. There is not going to be a solution that will ever bring an end to debt. We have to get solutions that make the lives of people in debt easier and more manageable, and certainly try to take the stigma away from debt.