😔 Debt Advice Services

• The discussion centered around the critical issue of debt advice services in the UK, particularly in light of the ongoing cost of living crisis.

• Ms Stella Creasy highlighted the severity of the debt crisis, noting that 55,000 people in her Walthamstow constituency are financially vulnerable, and 7 million low-income families across the UK are going without essentials.

• High inflation and increasing costs in food, energy, and rent are pushing many into debt, with 4 million households borrowing to cover basic needs like food and housing.

• The reliance on high-cost credit and “buy now, pay later” services like Klarna and Clearpay was noted as a major concern, contributing significantly to the debt problem. These companies currently do not fund debt advice services.

• There’s a significant gap between the demand for debt advice and the available services, with only 2 million people receiving help last year against a target of 3.7 million by 2030.

• Local governments, struggling with cuts, are reducing support for debt advice, further exacerbating the crisis. Examples include budget cuts to Citizens Advice Bureaux in various regions.

• Proposed solutions included increasing funding for debt advice services, possibly through a windfall tax on “buy now, pay later” companies, and enforcing regulation on these firms.

• The Government has been consulting on a regulatory regime for “buy now, pay later” products and is looking into ways to enhance debt advice, including digital transformation.

• The importance of face-to-face debt advice was emphasized, especially for vulnerable groups who struggle with online systems.

• The Treasury’s commitment to supporting national and community-based debt advice services through the Money and Pensions Service (MAPS) was acknowledged, highlighting the positive impact of such services on individuals.

• The Government’s financial inclusion strategy and the formation of a committee to address debt issues were mentioned, showing intent to tackle barriers to accessing necessary financial services.

• The discussion concluded with an emphasis on the need for continued advocacy and support for those struggling with debt to build a more secure financial future.

The session on Debt Advice Services showed a very low level of disagreement. All speakers, including Ms Stella Creasy, Mrs Sarah Russell, and James Murray, focused on highlighting the issues related to debt and the importance of debt advice services, rather than engaging in any form of disagreement. Ms Creasy started by outlining the severity of the debt situation and emphasized the need for increased funding for debt advice services. Mrs Russell supported this view by discussing the lack of services in seemingly affluent areas and the need for face-to-face services. James Murray, representing the Treasury, acknowledged the contributions of the previous speakers and affirmed the government’s commitment to improving debt advice services, even mentioning ongoing consultations and new initiatives like the debt advice modernisation fund.

Throughout the debate, there was a consensus on the necessity to enhance debt advice services and address financial inclusion. The sole question raised by Warinder Juss was about funding for local organizations, which was met with a supportive, albeit non-committal, response from Murray. Overall, the session was characterized by agreement on the problem and shared views on the direction for solutions, resulting in minimal to no disagreement.