Government urged to prevent New Year debt advice crisis

Front-line debt advisers are urging Government to intervene to prevent a crisis in debt advice provision in the New Year.

We are Debt Advisers, are calling on the Economic Secretary to the Treasury, John Glen MP, to stop the Money and Pensions Service (‘MaPS’) from making swathing cuts to community-based debt advice services as part of its recommissioning of debt advice.   The call has been backed by other agencies, including Advice UK.

The MaPS procurement exercise proposes a 50% funding reduction in community-based services in favour of placing more resources into national call centres and digital advice services.  Decisions on tenders made to MaPS are due in ‘mid-January’, but it is already evident that services are reducing in anticipation of the outcome of this exercise, and the transition to any new arrangements will plunge debt advice into crisis.

According to a recent survey 57% of debt advisers and administrative support staff told us that they expect to be made redundant. An additional 33% simply did not know what the future holds. Although existing staff have TUPE rights to any new providers, the overall number of qualified debt adviser positions is set to reduce dramatically. 

Any new contractors will be required to undertake redundancy selections in January, just when the demand for debt advice will be at its highest.  It is also not clear how the costs of any redundancies will be met.

Although the proposed new arrangements will increase the number of jobs available for call centre operators and webchat advisers, these are not conducted by specialist advisers, and will need to be recruited for.  The roles involve people following basic scripts to provide advice.  National phone and digital services do not contact creditors on debtors’ behalf to stop evictions or bailiff actions.  This will leave critical gaps in provision in the New Year.

The future of debt advice hangs in the balance

Following concerns from debt advisers and MPs that the procurement exercise will leave vulnerable debtors, including people with mental health problems, excluded from advice, and will lead to a lower quality of service, the Economic Secretary promised, on 1st December, to consider the case for suspending the procurement exercise. 

On 7th December, the Chair of the Treasury Committee requested that the Economic Secretary make a decision as soon as possible and provide his reasons for this.  Debt advisers have also requested a meeting, but this has not been forthcoming.

Speaking on behalf of the campaign, Damon Gibbons, Director of the Centre for Responsible Credit said:

“The future of debt advice hangs in the balance.  The proposed restructuring will slash community based, casework services, and replace these with basic telephone and webchat advice.  That will not only exclude many vulnerable people from debt advice altogether, but will mean that there will be more evictions, and more problems with Council Tax and other debt collection practices.   In January 2022, in the midst of a cost-of-living crisis, the Money and Pensions Service seems hell bent on reducing the supply of highly trained advisers, just when we need them most.  Government must now intervene to stop this madness.”