The first tranche of the additional funding for debt advice has been distributed by the Money and Pensions Service to advice providers.
No one needs any reminder of how the pandemic has worsened the debt situation of large numbers of people from all walks of life across the UK. Latest predictions are that, by the end of 2021, the number of people requiring debt advice or guidance will have risen by three million, or by 60%, from pre-Covid levels. One million people will require formal debt advice and the other two million will require enhanced money guidance as an early intervention measure.
The Money and Pensions Service has now allocated the first tranche of an additional £37.8 million of debt advice funding to various organisations that deliver free debt advice in England in anticipation of a surge in demand for their services. The Service will oversee the delivery of the additional funds to the appropriate advice charities and other organisations. Initially, £7.5 million is being allocated to three debt advice providers: Christians Against Poverty, PayPlan and StepChange.
One of the other initiatives to be funded by the scheme is the recruitment of an additional 500 debt advisers; and organisations who wish to recruit new advisers can now submit bids to MAPS – they will need to demonstrate that they can offer a service throughout England via at least two separate delivery channels.
The funding consists of £20.6 million from the government, £14.2 million raised through a one-off increase to the Financial Services Levy and £3 million from the existing MAPS budget.
Caroline Siarkiewicz, Chief Executive at MaPS said:
“The toll of coronavirus on some people’s financial wellbeing will be severe and long lasting. Although many have been helped by the furlough scheme and special flexibility on products such as mortgages and loans, there are likely to be challenges ahead when these come to an end. We are taking steps now to ensure the support needed by people dealing with money problems will be available at the crucial time, whether that’s right now or in the months to come.”
Minister for Pensions and Financial Inclusion Guy Opperman MP said:
“This Government has stepped in to support people on low incomes during this pandemic, providing an extra £9.3 billion of welfare support.
“However, there are sadly still people who will be facing debt as a result of this pandemic – we want to ensure that help tackling debt is available to anyone who needs it and this funding will provide vital financial advice to people who need it most.”
Phil Andrew, CEO of StepChange Debt Charity said:
“While we know most people want to repay their debt, the sad truth is that in the wake of the pandemic fewer are currently able to. Hopefully, this will prove to be a temporary problem for many. As yet, though, huge numbers have little certainty about what their financial future will look like. For us, knowing that we will be able to afford to help as many people as possible, whatever kind of debt solution they need, is hugely reassuring. At a time when we are less able than usual to rely on predictable levels of our normal funding, this support will enable us to help many people through this difficult period. Now would not be the time for reputable debt advice services to have to contract – if anything, we need to demonstrate even more energy and creativity to help solve the nation’s household debt problems created by Covid-19.”