'Incomprehensible' £3m cut to face-to-face debt advice services will put lives at risk, Yorkshire MPs warn

An “incomprehensible” £3m budget cut for face-to-face debt advice services will put lives at risk unless it is reconsidered, Yorkshire MPs have warned.

The debate was led by Hull MP Emma Hardy
The debate was led by Hull MP Emma Hardy

Emma Hardy, Labour MP for Hull West and Hessle, led a Westminster Hall debate in Parliament on potential changes to the delivery of debt services through the Government’s Money and Pensions Service (MaPs).

She said with four millions households in the UK now estimated to be behind on rent, bills or debt repayments thanks to a growing “cost of living crisis”, an increasing number of people will need support and advice on how to deal with debt issues.

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“Over 100,000 people attempt suicide each year because of debt, so the services that these organisations provide can literally be life-saving,” she said.

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.

Ms Hardy said MaPS is changing the way funding is provided and although the overall amount of funding is due to increase to £77m a year from April, most of the funding will be for call centre and online services. Funding for face-to-face services will drop from the current £18.5m to £15.4m.

“By their own admission, this is a cut of just over £3 million to face-to-face services,” she said. “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.”

She said face-to-face appointments provide a “safe, supportive environment for a person to seek help” and that internet or phone services are inappropriate in many cases.

John Healey, Labour MP for Wentworth and Dearne, said the funding change will result in the number of funded face-to-face debt advisers in South Yorkshire being reduced from 28 to seven. He said in Rotherham alone, before the pandemic there were 2,200 new face-to-face debt inquiries each year.

Ms Hardy said: “All the forecasts 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.”

She added that she was also concerned MaPS’ plan to move to three larger regional contracts instead of the current nine “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”.

She added: “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 March 31.”

She added: “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.”

Treasury minister John Glen said MaPs’ current debt advice commissioning exercise “is an important step towards creating a better and more resilient debt advice sector”.

But he added that he would feedback the concerns of MPs to MaPs’ officials.

He said: “The question is about the pace and scale of those changes, which is the discussion that MaPS needs to resolve in the coming weeks. I am unable to comment on the specifics of the commissioning exercise. I do not run that, nor do my officials. There is a degree of commercial sensitivity around it.

“This morning’s debate has put some detail on the nature of the concerns. I commit to ensuring that those concerns are represented fully to the leadership of MaPS as it undertakes this evaluation and moderation of the bids received.

"Once that is completed, MaPS will have a greater understanding of what the changes will mean to debt advice provision in England, including the proportion that will be delivered face to face. I can say that the Government have given MaPS a statutory duty to consider the needs of the most vulnerable.”

He added: “The significant concern that the outcome of the commissioning exercise will leave a smaller number of providers that are somewhat detached from local communities and specific needs must be addressed through the process. It would be undesirable for that detachment to lead to a lack of confidence in the new configuration, and MaPS will need to address that directly in how it responds.”

When asked by Hull East MP Karl Turner whether Mr Glen would ask MaPs to put the process on hold, the Minister said: “I will reflect carefully on that and talk to my officials. There has been a delay in the decision about what would come forward, last Friday. Clearly, this is an incredibly complex and delicate matter.”

He said any changes will have to be “carefully calibrated and justified on the basis of the very real concerns that have been raised”.

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