Money and Pensions Service (MaPS) has completed a two-year quantitative pilot longitudinal study (PLS), marking the first steps towards developing a longitudinal study to build an in-depth understanding of the medium and long-term impacts that debt advice can have.
A study of this kind has rarely, if ever, been attempted either nationally or internationally. This pilot has the largest longitudinal dataset so far gathered on debt advice in the UK. The key conclusion for the pilot is that a large-scale longitudinal study of debt advice is feasible, important and timely. The pilot demonstrates solid evidence that such a study is likely to produce valuable insight.
A large-scale study will allow MaPS to measure how effective debt advice is in achieving the best outcomes for clients, including building financial resilience to avoid returning to problem debt. It will also provide insights to inform MaPS’ future commissioning exercises and the design of effective solutions. This is particularly the case for those for whom debt advice has a lesser impact – for example households with deficit budgets – and people who are reluctant to engage with debt advice.
Feasibility and lessons learned for a large-scale study:
- Eligibility, participation and attrition rates demonstrate that understanding longer term debt advice outcomes is possible
- Retention rates do not challenge the feasibility of a large-scale longitudinal study keeping the treatment and control comparable
- A range of valuable outputs can be measured at different points in time
- Encouragement to seek help with debt increases the likelihood of people asking for help from friends and family
- Self-help is the main choice made by those encouraged to seek help with debt
The main challenge is still how best to encourage participants reluctant to seek formal debt advice to ask for this type of help.
On the effects of receiving encouragement to seek help, the pilot evidence suggests informal help, such as from friends and family, does not tackle the root causes of an individual’s debt. This is despite respondents reporting a greater feeling of wellbeing. There is clearly a sense of relief, even though effective strategies to tackle debt are not adopted.
This is of particular interest for policymakers and service designers to prevent people from taking a less optimal route to solve their debt problem when formal debt advice is available.
Descriptive evidence on the role of formal debt advice suggests people who seek it tend to be facing the greatest level of financial difficulty, with formal advice likely to mitigate and possibly counteract these difficulties.