Independent Debt Advice

Debate between Yvonne Fovargue and Helen Goodman

Tuesday 8th February 2011 Westminster Hall

[Helen Goodman (Bishop Auckland) (Lab)]

It is a pleasure to see you in the Chair this morning, Mrs Riordan. I congratulate my hon. Friend the Member for Makerfield (Yvonne Fovargue) on securing this important and timely debate.

A few months ago, I spent a morning in the court—which, incidentally, is also to be closed by the Government—in Bishop Auckland with a CAB adviser who was helping people who were in court because their rents or mortgages were not paid, and they were under threat of losing their homes. That morning I saw how vital the service provided by the CAB is to people at the critical moment when their homes are at risk. I was, therefore, absolutely appalled to discover that the Government are proposing to end the financial inclusion fund in March.

Last year, 1.5 million people were given advice on debt by citizens advice bureaux. Those services were concentrated on people who are most in need in deprived and low-income areas. In my constituency, there are three CABs. The Wear Valley CAB lost a grant of £95,000 in the FIF cuts, together with the legal aid cuts and the cuts that have been forced on the county council by the Secretary of State for Communities and Local Government. It will lose half its workers, which means that there will be no debt advice whatever in the whole of the Wear Valley district. The branch manager, Carol Shreeves, wrote to me in an e-mail:

“We have this week begun to tell clients coming to the bureau that we cannot take them on. Many have been very upset, as it has taken a lot of courage for them to come and seek help. The cut means that the bureau will have to reduce the number of hours it opens and will need to make approximately half its staff redundant. The difficulty is that since Christmas we have seen rise in demand for our services as various statutory agencies trying to save money at this difficult time have been referring clients to us…It seems to be generally accepted that debt advice is needed but the support for it is being withdrawn from all sides.”

[Yvonne Fovargue]

Does my hon. Friend agree that when there is an expansion of debt relief orders, requiring skilled advisers who have to take a complex examination to qualify to be an intermediary in the scheme, it is completely the wrong time to take funding away from skilled debt advisers? The CAB deals with 70% of debt relief orders, so there is no point in expanding the scheme and then leaving people with nowhere to go. There is no point in the expansion of the scheme.

[Helen Goodman]

My hon. Friend has made an extremely well-informed point and demonstrates to us all the complexity of this area and the significance of losing that kind of advice. Of course, the one group of people providing more advice are the loan sharks and the independent debt advisers, who are going round my constituency putting cards through letter boxes, saying, “Come to us”. If people go to them, they will be directed to precisely the people who will put them into a worse situation.

At the same time that that is happening, the Government are cutting the growth fund, which is the money that the Labour Government put into support for credit unions—another place where people can get low-cost finance and have a chat with somebody about how to manage their money.