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Debt advice shake-up in England could reduce face-to-face help

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Thousands of vulnerable people struggling with personal debts could lose access to free specialist face-to face help as a result of a government shake-up that seeks to move more services online, advisers have said.

Some areas could have more than half of their debt adviser workforce made redundant, with local debt advice charities forced to abandon in-person services or even risk closure as a result of the plans to put debt advice services out to tender.

Despite funding for debt advice increasing from £51m a year pre-pandemic to £77m, from April the bulk of the money will go to three national call centres, while cash for local services that provide face-to-face help will be halved.

Advisers say the shift away from in-person appointments will especially hit vulnerable clients at a time when personal debt is soaring as a result of rising energy and food bills and the end of furlough and debt payment holidays.

Nearly 4 million low-income households in the UK are behind on rent, bills or debt payments, up threefold since the pandemic hit, according to the Joseph Rowntree Foundation.

Clients with complex problems – including debt, housing issues and mental illness – who struggle to access or navigate online services will be particularly at risk. One local adviser said complex cases had soared in the pandemic and now made up roughly two-thirds of their casework.

Debt advice groups say that although the bidding process is ongoing, leaked estimates suggest West Yorkshire’s advisers could be cut from 32 to 11, South Yorkshire’s from 28 to seven, and Hull, East Riding and North Lincolnshire’s from 18 to four.

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Under current arrangements, the Money and Pensions Service (MaPS), an arms-length government agency, funds nine regional grants for face-to-face debt advice provided by a network of local providers and national charities such as Citizens Advice.

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Under the new tender, three national contracts for a mix of face-to-face and digital and phone services will be issued covering the north, Midlands and south of England, with separate arrangements for national call centre and online-based advice.

There are concerns that small, local advice providers that rely on the MaPS funding for the bulk of their income may have to drop face-to-face services or close entirely. Many know they are not included in any of the tender bids, and do not have the size or resources to compete for the tender individually.

“The impact will be catastrophic,” said Sylvia Simpson, the chair of Leeds Debt Advice Network. She anticipates that all three independent advice centres in Leeds will lose MaPS funding, and the number of specialist debt advisers in the city will be reduced from nine to three.

MaPS says its proposed new advice framework amounts to the “most significant investment in debt advice in England ever made”. It insists there is no evidence that face-to-face advice delivers better outcomes than digital or phone alternatives, and says under the new system face-to-face services will be maintained for people who need them.

Craig Simmons, the head of debt policy and strategy at MaPS, said: “With demand for debt advice expected to grow, a new approach is essential so that more people can access expert, free-of-charge debt advice more easily. We also want to make sure that there is good provision of MaPS-funded advice accessible throughout England, including in those areas which may currently be underserved.”

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The shadow work and pensions secretary, Jonathan Reynolds, said: “Families are facing an incredibly difficult winter because of a Conservative-made cost of living crisis, [and] tax hikes. Unbelievably, just as more people will need to turn for help, the government are overseeing devastating cuts to debt advice services.”

Although practically all advice appointments were conducted by phone or online during pandemic lockdowns, advisers say this made dealing with complex cases far more time-consuming and complicated.

Advisers have called for the tender process to be rerun with a fresh emphasis on the importance of in-person services. “It’s clear face-to-face advice needs more funding, rather than current funding being shifted into call centres,” said Ray Davies, a Unite union rep at Citizens Advice in Hull.