Asked by: Steve Reed (Labour (Co-op) - Croydon North)
Question to the Department for Levelling Up, Housing & Communities:
To ask the Secretary of State for Housing, Communities and Local Government, what information his Department holds on the level of debt counselling and advice provided by local authorities in England in the most recent period for which that information is available.
Answered by Kemi Badenoch - President of the Board of Trade
The Department does not hold information on the level of debt counselling and advice provided by councils in England. In this year's settlement, the Government made available an increase in Core Spending Power in England from £49 billion in 2020-21 to up to £51.3 billion in 2021-22, a 4.6% increase in cash terms. This funding is largely unringfenced in recognition that local authorities are best placed to decide how to meet the needs of their local area, including the provision of debt counselling and advice.
Asked by: Lord Bishop of St Albans (Bishops - Bishops)
Question to the HM Treasury:
To ask Her Majesty's Government, further to the findings in the Christian’s Against Poverty’s Our Story, Client Report 2021, published in April, that 45 per cent of clients did not initially know where to access help to manage their debts, what plans they have to better (1) signpost, and (2) raise awareness of, debt advice services as part of the recovery from COVID-19.
Answered by Lord Agnew of Oulton
The Government recognises that some people are struggling with their personal finances as the impact of the COVID-19 pandemic continues to unfold. The Government is committed to helping people access the support they need to get their finances back on track. This is why it has agreed to maintain record levels of debt advice funding for the Money and Pension Service (MaPS) in 2021/22, bringing the budget for free debt advice in England to £94.6 million, an increase of over 70% compared to 2019/20 levels.
Support from MaPS is available to all online, and the website includes a debt advice locator tool to help people find local free advice services. MaPS also launched a Money Navigator Tool last year, promoted via various channels, which helps people navigate their finances during the pandemic and avoid financial issues worsening in future.
To ensure that people are signposted to the help they need, MaPS services are referenced in the Financial Conduct Authority’s (FCA) guidance, which is issued to all financial services lenders regulated by the FCA. Further, MaPS-funded free-to-client debt advice service providers have been pro-actively reaching out to customers during the pandemic, including by using video-calls and webchat to offer broader ways for clients to engage.
In addition, the MaPS-led Pilot of Adviser Capacity and Efficiency (PACE) was launched in March 2019, offering a new route into debt advice. This pro-actively engages people by working closely with creditors, who introduce those who are missing payments to the service and promote the benefits of seeking help. In addition to creditor referrals, MaPS launched a self-referral route into PACE in November 2019 to engage with customers directly. The pilot’s evaluation is ongoing, and MaPS will move successful elements of the work to full-scale from this Autumn.
Asked by: Alex Cunningham (Labour - Stockton North)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what additional resources the Government will provide to the debt advice sector to ensure it can respond effectively to the 60 per cent increase in demand for debt advice forecast by The Money and Pensions Service.
Answered by John Glen - Paymaster General and Minister for the Cabinet Office
The Government recognises the importance of providing a strong financial footing for the debt advice sector and is committed to helping people access the support they need to get their finances back on track.
This is why the Government has agreed to maintain record levels of debt advice funding for the Money and Pension Service in 2021-22, bringing the budget for free debt advice in England to £94.6 million. This is more than a 70% increase since 2019-20 and reflects the Government’s commitment to ensure that appropriate support is available for people in problem debt.
Asked by: Andrew Selous (Conservative - South West Bedfordshire)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what estimate he has made of the number of households who (a) will need debt advice in 2021-22 and (b) needed debt advice in (i) 2019-20 and (ii) 2020-21.
Answered by John Glen - Paymaster General and Minister for the Cabinet Office
The Government works closely with the Money and Pensions Service to understand the need for debt advice and monitor financial difficulty through an annual survey and notes the Financial Conduct Authority’s biennial Financial Lives Survey.
The Government recognises that some people are struggling with their finances at this challenging time. To help people in problem debt get their finances back on track, an extra £37.8 million support package has been made available to debt advice providers this financial year, bringing this year's budget for free debt advice in England to over £100 million.
In May 2020, the Government announced the immediate release of £65 million of dormant assets funding to Fair4All Finance, an independent organisation that has been founded to support the financial wellbeing of people in vulnerable circumstances. The funding is used to increase access to fair, affordable and appropriate financial products and services for those in financial difficulties.
From May 2021, the Breathing Space scheme will offer people in problem debt a pause of up to 60 days on most enforcement action, interest, fees and charges, and will encourage them to seek professional debt advice.
The Government has delivered unprecedented support for living standards during this challenging time, protecting livelihoods with the Self-Employment Income Support Scheme (SEISS), the Coronavirus Job Retention Scheme (CJRS), and temporary welfare measures.
The Government has extended the CJRS until 31 March 2021. Eligible employees will continue to receive 80% of their usual salary for hours not worked, up to a maximum of £2,500 per month.
The Government has increased the overall level of the third grant under the SEISS to 80% of average trading profits, meaning that the maximum grant available has now increased to £7,500.
The Government has provided local authorities with £500 million to support people who may struggle to meet their council tax payments this year. The Government expects that this will provide all recipients of working age local council tax support with a further reduction in their annual council tax bill of £150 this financial year.
These measures are in addition to the changes this Government has made to make the welfare system more generous, worth over £7 billion according to recent estimates by the Office for Budget Responsibility.
The Government has worked with mortgage lenders, credit providers and the Financial Conduct Authority to ensure the financial sector provides support for people across the UK to manage their finances by providing payment holidays on mortgages and consumer credit products.
The Government has also delivered protections for renters, including an extension to the ban on bailiff evictions for all but the most egregious cases until at least 21 February 2021, with measures kept under review.
Asked by: Luciana Berger (Liberal Democrat - Liverpool, Wavertree)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what assessment he has made of the adequacy of the funding allocated by his Department for local authority-commissioned specialist debt advice services.
Answered by John Glen - Paymaster General and Minister for the Cabinet Office
The Government does not directly fund the provision of specialist debt advice by local authorities.
Instead, the Government funds the Money Advice Service (MAS) to deliver publicly-funded debt advice, using a levy on the financial services industry.
Following Peter Wyman’s independent review of the funding of debt advice published in January 2018, the Government agreed to increase debt advice funding to MAS to over £56 million this year, enough to provide help to over 530,000 people.
Asked by: David Crausby (Labour - Bolton North East)
Question to the HM Treasury:
To ask Mr Chancellor of the Exchequer, what recent steps his Department has taken to (a) publicise and (b) support debt advice services.
Answered by John Glen - Paymaster General and Minister for the Cabinet Office
The government-commissioned Money Advice Service (MAS) funds centrally-coordinated, publicly-funded debt advice. MAS spent just under £49m to provide over 440,000 debt advice sessions in 2016-17. This year, MAS’ budget will rise to over £56m – enough to provide support to 530,000 people.
To support this work, the government is also setting up a new single financial guidance body, which will bring together public-funded money and pensions guidance, and debt advice services. The new body will enable the public to get support with all aspects of their financial lives quickly and easily.
Asked by: Catherine McKinnell (Labour - Newcastle upon Tyne North)
Question to the HM Treasury:
To ask Mr Chancellor of the Exchequer, whether he plans to increase funding for organisations that deliver free impartial debt advice.
Answered by Steve Barclay - Secretary of State for Environment, Food and Rural Affairs
The government set up the Money Advice Service (MAS) in 2010. It spent just under £49 million on its debt advice work last year. This led to more than 440,000 free-to-client debt advice sessions being delivered across the UK. This funding comes from the Financial Services Levy. The level of funding is determined by the Financial Conduct Authority (FCA) after consultation with MAS and the broader financial services industry.
The government is also fundamentally reforming the publicly-funded debt advice landscape. The Financial Guidance and Claims Bill, currently in the Lords, will bring together the Money Advice Service, PensionWise and The Pensions Advisory Service to form a single financial guidance body. Efficiencies created from the merger mean that the new body will be able to direct further resource to the front line.
Asked by: Lord Tunnicliffe (Labour - Life peer)
Question to the HM Treasury:
To ask Her Majesty’s Government what assessment they have made of the use of (1) monthly fee debt management plans; (2) percentage fee debt management plans; and (3) a combination of set fee and percentage debt management plans.
Answered by Lord O'Neill of Gatley
The Government has fundamentally reformed the regulation of the debt management market, transferring responsibility to the Financial Conduct Authority’s (FCA) more robust regime to better protect consumers.
Any consideration of the state of the debt management market should properly await the outcome of the FCA’s authorisation assessment of commercial debt management firms, which is expected in the coming months.
FCA rules make it clear that fees charged for debt management plans should not undermine the customer’s ability to make significant repayments to the customer’s lenders throughout the duration of the debt management plan.
Asked by: Lord Tunnicliffe (Labour - Life peer)
Question to the HM Treasury:
To ask Her Majesty’s Government what assessment they have made of the case for a mandatory fee model whereby Financial Conduct Authority authorised debt management firms charge a set fee for debt management plans; and what assessment they have made of how to prevent debt management companies from making additional charges.
Answered by Lord O'Neill of Gatley
The Government has fundamentally reformed the regulation of the debt management market, transferring responsibility to the Financial Conduct Authority’s (FCA) more robust regime to better protect consumers.
Any consideration of the state of the debt management market should properly await the outcome of the FCA’s authorisation assessment of commercial debt management firms, which is expected in the coming months.
FCA rules make it clear that fees charged for debt management plans should not undermine the customer’s ability to make significant repayments to the customer’s lenders throughout the duration of the debt management plan.
Asked by: Lord Tunnicliffe (Labour - Life peer)
Question to the HM Treasury:
To ask Her Majesty’s Government what criteria they use to analyse the effectiveness of debt management advice.
Answered by Lord O'Neill of Gatley
These questions have been passed on to the Money Advice Service (MAS). MAS will reply to directly to the Noble Lord by letter. A copy of the letter will be placed in the Library of the House.