The Government needs to set out support for people in financial trouble - Vikki Brownridge
Recent events, reflected in global and domestic political fragmentation, have left a sense of upheaval, concern and dissatisfaction lingering in the air. Against a backdrop of uncertainty, many people are looking for financial reassurance and support.
For people experiencing problem debt already, these feelings may be even more intense. With two in five StepChange clients in arrears on household bills at the time they first contact us, the risk is that even more will find themselves unable to keep up, and that the situation could worsen for those already struggling.
We think there are things that policymakers could do that would help, at least a bit, to alleviate people’s fears and improve their financial situation.
The ‘big picture’ of a stable and thriving economy (in which support for those who need it is prioritised and is affordable) must be the long term goal. We have a number of policy asks that reflect this. However, many of these would take time, require primary legislation, and quite possibly not show their true worth within a single Parliament – which doesn’t make them not worth doing, it just means that their results will only be felt well into the future.
In the short term, boosting people’s confidence that policymakers see and recognise their situation, and are working to improve it, is vital.
Support for energy costs is absolutely key. While the energy price cap is one way of attempting to give everyone some degree of planning certainty about their forthcoming costs, it doesn’t of itself help to address affordability. Targeted support for households whose incomes are not sufficient to be able to withstand above-inflation energy price rises will be important, especially before next winter.
The Government can also work with Ofgem to take forward the planned energy Debt Relief Scheme at pace, which supports those who have built up debt during the period of historically high prices to repay debt affordably.
Wider Government debt collection practice also needs to remain high on the agenda for reform and improvement. We have been pleased to see the Government recognising this need, but we were disappointed not to see the regulation of bailiff firms included as a commitment for this Parliament in the King’s Speech.
We also think there is an urgent imperative to increase the take-up of council tax support – one of the most under-claimed benefits, relating to one of the most common types of arrears that we see among our clients.
Aside from energy and council tax, there are other measures that we think could be achieved quickly, and without new primary legislation. These include some that would help to build financial resilience among households who might otherwise struggle most.
For example, the Government could speed up the extension of the Help to Save scheme to parents and carers claiming Universal Credit from 2028 to 2027, alongside a full rollout of a targeted No Interest Loan Scheme (NILS) based on the Government-supported pilot scheme.
Meanwhile, DWP changes to third party deductions from Universal Credit could significantly reduce the stress facing some of the most hard-pressed households.
This is by no means a full list of our suggestions to Government. But it does serve to show that, even within current fiscal and political constraints, there are incremental measures that can be taken to support people in the short term, at the same time as planning more fundamental improvement for the long term.
Vikki Brownridge is chief executive of StepChange Debt Charity, based in Leeds.