Before we begin, I remind Members that they are expected to wear face coverings when they are not speaking in the debate, in line with current Government guidance and that of the House of Commons Commission. I also remind Members that they are asked by the House to have a covid lateral flow test twice a week if they are coming on to the parliamentary estate. That can be done either at the testing centre in the House or at home. Please give each other and members of staff space when seated and when entering and leaving the room.
That this House has considered reductions in community debt advice services.
It is a pleasure to serve, even if very briefly, under your chairship, Ms Fovargue. I thank my hon. Friend the Member for Kingston upon Hull East (Karl Turner) and my right hon. Friends the Members for Kingston upon Hull North (Dame Diana Johnson) and for Wentworth and Dearne (John Healey), who have supported me on this issue from the very beginning and who are all here today.
I will start by giving a brief outline of the cost of living crisis and then go into the importance of face-to-face debt advice, before looking at the potential model that the Money and Pensions Service will introduce and finishing with my specific requests for the Minister. For brevity, I will refer to the Money and Pensions Service as MaPS; otherwise, we will end up spending an awfully long time just on the title.
A survey by the Joseph Rowntree Foundation in early October this year showed that the number of UK households that are behind on rent, bills or debt repayments has trebled since the pandemic hit, and now stands at nearly 4 million. The pandemic has dragged families who were previously just about managing into arrears on essential bills, and we know that economic pressures are getting worse. Those in receipt of universal credit are beginning to feel the effects of the £20-a-week cut—a cut that Labour, of course, opposed. The ban on evictions has ended, domestic fuel prices are rising and the collapse of providers means that many people have already been transferred to new companies on higher tariffs. As fixed-term plans end, more people will face increased energy bills, and that is before the energy cap is uplifted in April. The Chancellor has it in his powers to reduce VAT on fuel but has chosen not to do so. Workers also face an increase in national insurance. Inflation is rising and is now around 4%, and many expect it to remain at that level until mid-2022.
Outside the usual services, a number of charities I have met recently have reported that people are approaching them for debt advice or asking to be signposted. The third sector is already struggling to obtain funding in my constituency. Does the hon. Lady agree that it is unfair to expect charities to shoulder most of the burden?
I absolutely agree. As I have outlined, we expect more people to seek debt advice, and the burden will fall on those who provide it at the moment. I pay tribute to all those who currently provide support and debt advice. Some are volunteers, but they often deal with complex cases and they work with sensitivity and compassion to help people at extreme times of personal crisis. Over 100,000 people attempt suicide each year because of debt, so the services that these organisations provide can literally be life-saving.
Lots of people need face-to-face debt advice for a huge variety of reasons. There is the obvious reason—that they do not have the technology or the internet—but it is not just that. Debt advice clients are often vulnerable. For many, this is due to personal factors such as disability, language barriers, alcohol or substance abuse or mental health conditions. In fact, debt advisers tell me that 82% of their clients have concerns around mental health. But many others are vulnerable due to a change in circumstances—to quote the famous phrase, “We are all just two pay cheques away from being in the same situation.” People get into debt because of bereavement, loss of employment, poor health or domestic abuse. Face-to-face advice provides a safe, supportive environment for a person to seek help.
I congratulate my hon. Friend on securing this debate, and she is making a very powerful speech. Supported by Unite the union, a number of debt agencies in my constituency, including the Ebor Gardens Advice Centre, Money Buddies, St Vincent’s and Better Leeds Communities, are seriously concerned that the renegotiation of the MaPS contract will lead to a dramatic reduction in face-to-face advice. Does she agree that it is precisely in the most complex cases, which she is talking about, where people have a carrier bag full of papers, that those agencies, which do a fantastic job, need to be able to see a person face-to-face in order to give them the best possible help to get out of the debt that is weighing on their shoulders?
I absolutely agree with my right hon. Friend. As debt advisers say, the first face-to-face appointment can be extremely emotional for many people. Sometimes it is the first time they have ever told anybody about their debt problems. For a number of reasons, they might not be able to discuss them at home. Sometimes people feel ashamed and unable to tell their partner that they are suffering from debt. They do not want to be seen as not being able to cope. They could also be a victim of financial abuse—a form of domestic abuse—and they might not want to tell someone of the situation they are in. Sometimes, as my right hon. Friend said, they have accumulated so much correspondence that they are afraid to open it. Bringing those letters to a face-to-face appointment provides the emotional support they need to address the problem.
Debt is often multifaceted. It is a mistake to think that it is an easy financial problem that can be solved by someone at the end of a telephone following a flow chart and using a script. It is not, and nor is it as easy as someone clicking options on a website. People might start with information from a website, then use the phone and finally need a face-to-face appointment with a case adviser. Those face-to-face advisers know their community. They are not just experts in debt advice; they have links to other charities, councils, jobcentres and even local bailiffs. As debt advisers, they have a relationship with those organisations, and they can speak to them and sometimes resolve the problem. When someone enters Citizens Advice with debt advice problems, there are experts there checking what benefits someone is entitled to and that they are getting them. They might say, “Here is where you can get mental health support in the community.” They know the area because they are based there. Moving services to national or regional call centres breaks that connection, which is a disadvantage to everyone.
I congratulate my hon. Friend on securing this important debate. She knows well the high levels of indebtedness in Hull. The fact that there is such an excellent service operating through our local citizens advice bureau is of huge benefit to many people. We know that demand is only going to get higher with the cost of living crisis, which she has so ably outlined. Does she think that having a hybrid system, where there is accessibility through face-to-face appointments as well as telephone advice, is the way to go, rather than moving to telephone advice only?
As I mentioned at the start, my right hon. Friend has been with me from the beginning, looking at this issue and campaigning on it. She is absolutely right. I accept that some people might want to access more virtual appointments and information on a website, but it cannot come at the expense of the face-to-face component. We cannot lose that face-to-face part.
MaPS is changing the way funding is provided. Although it is increasing the money for debt advice—I want to acknowledge that, and it is set to increase to £77 million in April 2022—the bulk of that funding is moving to call centres and online services. At a meeting on 17 November, the MaPS chief executive and commissioning team told We Are Debt Advisers, which is a group representing debt advisers, that 20% of the £77 million had been allocated to face-to-face appointments. That amounts to £15.4 million. They also said that regional providers currently spend 56% of their existing £33 million on delivering this way, which is £18.5 million. By their own admission, this is a cut of just over £3 million to face-to-face services. That is made worse by the replacement of the grant system with contracting, which in its current form will exclude many smaller providers active in the sector from being able to bid for contracts at all.
I am grateful to my hon. Friend for all her work on this issue. She makes a powerful point about the shift in priority, and therefore funding, from face-to-face debt advice to online and telephone advice. In South Yorkshire, there are currently 28 funded face-to-face debt advisers, but that will go down to seven. Pre pandemic, in Rotherham alone, the number of new face-to-face debt inquiries each year was 2,200. In the context that she has set out of rising prices, bills and taxes, she might question Ministers whether, if the Treasury or MaPS have evidence to suggest that the demand for face-to-face debt advice will go down, not up, and to justify these cuts, they will publish that, and then we will all be better informed and more confident about the future.
I thank my right hon. Friend, who has been campaigning on this issue from the very beginning. He is absolutely right: all the forecasts—all of them—show that demand for debt advice will only increase. We know that. We also know that cases can be complex and that it can sometimes be the first time that people have got into debt. So the idea that we would cut face-to-face advice at this time seems incomprehensible.
Under the new tender, MaPS will instead have three national contracts. Its staff met me—I credit them for that—and said that these will be a mix of face-to-face, digital and phone services, with one each for the north, the midlands and the south of England, and a separate arrangement for a national call centre. However, three regional contracts, instead of nine smaller ones, as it was before, means that small, local providers that currently rely on MaPS funding for the bulk of their income face having to drop face-to-face services or close entirely. Many already know that they are not included in tender bids because they do not have the size or resources to compete individually for these tenders. Sylvia Simpson, chair of the Leeds Debt Advice Network, described the impact as “catastrophic”, with three out of four local MaPS-funded debt agencies no longer able to provide debt advice after 31 March. There are serious doubts about the rationale for the decision to restructure funding. Where is the evidence to support it and its timing? Does MaPS have confidence in the outcome itself?
Debt advisers tell me that there has been no proper consultation. In the face of the national outcry from debt advice organisations, charities and trade unions, MaPS issued a two-week call for evidence concerning the impact of the covid-19 pandemic on access to debt advice. That concluded on 29 October, but the procurement exercise for the new contracts had already taken place. The consultation will not influence a procurement process that has already gone on, so what was its purpose? It is clear that the procurement exercise expected bidders to focus on digital and telephone-based services rather than face-to-face services, despite MaPS’ own evidence showing that demand for face-to-face services was almost double supply.
Hannah Bardell (in the Chair)
I now call the chair of the all-party parliamentary group on debt and personal finance, Yvonne Fovargue.
It is a pleasure to serve under your chairmanship, Ms Bardell. I congratulate my hon. Friend the Member for Kingston upon Hull West and Hessle (Emma Hardy) on her well-informed and passionate speech.
We know demand for debt advice services is high and likely to increase, because personal debt is soaring, because of rising energy and food bills, and the end of furlough and debt payment holidays. Those schemes did quite a lot to put off the problem, but it never went away. About 4 million low-income households in the UK are behind on their rent, essential bills and debt payments. That figure has grown threefold since the pandemic, and coupled with that, there have been big changes to the commissioning of debt advice. That was on 16 July, when we had hoped the pandemic was coming to an end, but it is probably still carrying on, so is this the right time for a new and completely different approach?
It is really welcome that MaPS is investing more money in debt advice, and I also welcome the fact that it is looking at the wellbeing of advisers. Debt advice puts a considerable strain on those advising: quite often, the people who come in are at the end of their tether. There was a black joke in the citizens advice bureau I worked at that when somebody came in with a bulging carrier bag, it was going to be a debt client, and the bag would be full of bills that people could not open. They had put them behind the clock until the clock fell off the mantelpiece, and then they would seek debt advice. That was not just those who could not cope, but people from all walks of life, including professional people. Debt has a particular impact on individuals. It often leaves people feeling shame that they are in this position and cannot do what they want for their families. That is wrong, but it is how people feel, and we cannot get away from it.
I know that my hon. Friend is an expert in this area, not least because of all of the years that she worked with the CAB. Would she say something about the importance of the holistic approach to advice? This is very often not just about debt, but other issues, including domestic violence. In my experience as a criminal lawyer, people often get into all sorts of difficulties as a result of other factors. Indeed, the problem is often that people have not been pointed in the right direction on issues such as the benefits that they are entitled to, but do not actually claim.
I thank my hon. Friend for that intervention, and I will be moving on to discuss the wraparound provision, which does not just cover debt advice. We cannot just see debt as the problem: the important thing is the person who has the problem, and we have to deal with all their problems through that person-centred approach. It is no good just dealing with a person’s debt if they also have an employment problem or a housing problem that needs to be solved. We have to look at everything in the round.
Understanding how to manage our money effectively can be really hard, as well as support after debt has been accrued, so does the hon. Member agree that real-life money management education should be provided much earlier in life?
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.
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?
I certainly will. 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.
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This is all creating a cost of living crisis, and an increasing number of people will find themselves needing advice and support with debt—many for the first time. Currently, debt advice is provided by a network of local providers and national charities such as Citizens Advice, and they are funded through nine regional grants from MaPS.
A 2019 MaPS assessment of the need for debt advice said:
“Face-to-face is the channel with the smallest gap between demand and supply at the national level. Nevertheless, the levels of unmet demand are high, with demand being over two times higher than supply. It is also the channel with the biggest variation in unmet demand between countries and regions. Face-to-face unmet demand is particularly high in London, where existing supply of face-to-face debt advice could meet only just over a fifth of current demand.”
MaPS does not seem to have evidence that the need for face-to-face services will fall. On 29 November, in reply to a letter sent on 16 November from the Chair of the Treasury Committee, the right hon. Member for Central Devon (Mel Stride), MaPS provided figures showing that, for the last pre-pandemic year, 2019-20, face-to-face services accounted for 34% of its consultations. That fell by only 3 percentage points, to 31%, in 2020-21, despite the fact, let us not forget, that this was during a global pandemic that involved lockdowns, compulsory mask wearing, the adoption of social distancing and people being afraid to leave their homes. Despite all that, the demand for face-to-face debt advice fell by only three percentage points. In its letter to the Treasury Committee, MaPS notes that its most recent modelling of future demand is from autumn 2020 which, as we will remember all too well, was just before another national lockdown and before the pandemic’s third wave brutally hit, killing thousands of people in our country. That is when the modelling was done. MaPS does not say whether the modelling includes the impact of the pandemic, but I think we can assume it probably did not.
On the importance of face-to-face appointments, MaPS said that the forecast
“did not make distinctions between case complexity or channel of provision.”
If someone has a simple debt inquiry, they would probably google it and look on a website, or they might phone someone up and check. If their case is extremely complex—I refer to my earlier points on domestic abuse, mental health and such concerns—accessing a website is not going to be suitable. MaPS needs to be looking at complex cases and how it provides support.
In other words, the modelling does not tell MaPS how much demand for face-to-face appointments to expect, and the contract does not give it control over how much can be provided. MaPS claims that changes will increase accessibility to advice in those difficult-to-reach places, but those changes could mean the opportunity for face-to-face advice would no longer exist in some areas of the country. I accept—I was discussing this point with the Minister earlier—that some areas could end up with more access to advice, but that is at the expense of other areas.
In the letter, MaPS mentions an equalities and vulnerability impact assessment. That has not been made available and I hope the Minister is able to use his influence to say to MaPS that it should be published. At the moment, MaPS is saying to me, “We do not know, because we are still commissioning. We are not sure how much will be face to face; we are not sure how much will be on the phone or remote. We haven’t made any decisions.” If that is true and it does not know where it is going to end up, how can it have done an equalities and vulnerability impact assessment? When MaPS has made up its mind about what it wants, I assume another impact assessment will be needed. I hope that one is made public.
I hope I have explained clearly why face-to-face advice is the only way of supporting a significant proportion of people in debt, and why a reduction in capacity and coverage will fail some of the most vulnerable in our society. I hope that MaPS does more to reach out more effectively to practitioners with a lifetime of experience and knowledge in the field. Debt advice groups such as AdviceUK believe that MaPS’ vision for debt advice is deeply flawed, does not meet the needs of the diverse communities across England and does not enable the provision of flexible, in-depth and sustainable debt advice services.
MaPS cannot explain why it has made the funding allocations it has done or what impact they will have on people with complex needs. Of course, the pandemic has been a huge disrupter. Its effects are still being played out and the future remains hard to predict, but we do know that there will be an increase in the number of families in debt. We know that we are only beginning to see the devastating impact of the cost of living crisis. I hope the Minister is able to use all the influence he has—accepting, of course, that MaPS is a separate organisation and that this is a commercial contract—to call on MaPS to place an immediate hold on the procurement of new debt advice contracts, pending a thorough and effective consultation into the likely demand for face-to-face services in the near future; and to insist that there should be no loss of debt adviser jobs and an increase in funding for community-based face-to-face services. Consultation with frontline advisers through their trade union should also be essential for all future decisions affecting jobs and service delivery.
I finish by reminding the Minister of my earlier comment: more than 100,000 people attempt suicide each year because of debt. The services these organisations provide can literally be life-saving. Having the right debt advice is too important to get wrong.
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.
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.