The Money and Pensions Service (MaPS) has announced an increase in its budget for debt support in England in 2020/21 by £38million. And an additional £5.9 million is being allocated to Northern Ireland, Scotland and Wales.
This new money is in addition to the existing MaPS budget for debt advice of £64 million.
It will come from a combination of government funds, reallocated MaPS budget and an industry levy. The details of the industry levy have not been given. MaPS says it is is also working with the FCA to:
establish a fairer and more sustainable debt advice funding approach for the future.
MaPS will set out the process for how it will allocate the funds in the coming weeks.
Why 60% more?
This is a 60% increase in the budget for debt advice.
Before the pandemic hit, MaPS had estimated that over 5 million people in the UK had regularly missed payments to debts and so were in need of debt advice.
Its early modelling now suggests that this will increase by 60% to 8 million people over the next 18 months, peaking around the end of 2021.
Caroline Siarkiewicz, MaPS Chief Executive, said:
When the greatest demand for debt advice hits, potentially in 18 months’ time, we need to be ready and that means acting now.
It’s a good start!
We need more than just money, we also need to look how we can best use it.
I set out an approach in Coronavirus – how the debt advice sector should be planning. One of the 5 measures I proposed there was better debt advice funding. That isn’t just more money, as I said:
MaPS knows the huge problems its current debt advice contracts are causing. Just sort them. Get out your red pen and scrap the targets, bureaucracy and DAPA. Also extend the contracts by three years and give everyone a pay rise.
And I looked in more detail at the crucial area of insolvency in Coronavirus & the reform of Personal Insolvency in England. By making the process of giving debt advice and helping clients through insolvency faster, we can help more people with the same number of debt advisers. And at the moment experienced debt advisers are in short supply.
So if we get these changes to debt advice and debt solutions right, this new £38million will be able to help even more people.
But right now, new money and fast is very welcome.