An additional £37.8 million to fund the provision of debt advice and other support for people suffering money difficulties in the wake of the coronavirus outbreak has been secured by the Money and Pensions Service (MaPS).
Early analysis by MaPS predicts the number of people needing help with debt will climb for at least the next 18 months – increasing by over 60% and peaking around the end of 2021.
The funding will be managed by MaPS which has committed to the following:
- Ensuring 1 million additional people in England get debt advice over the next 12-18 months
- Delivering enhanced money guidance for a further 2 million across the UK, to offer an earlier intervention for people affected by the coronavirus outbreak and to reduce the number who go on to need full debt advice
- Advancing projects to maximise the capacity of existing debt advice and help as many people as possible, such as the Pilot of Adviser Capacity and Efficiency.
MaPS will set out the process for allocating funds in the coming weeks.
The extra money is in addition to the existing MaPS budget for debt advice in 2020/21 of £64.6 million and will come from a combination of government funds, reallocated MaPS budget and an industry levy. MaPS is also working with the FCA to establish a fairer and more sustainable debt advice funding approach for the future.
In addition to the £37.8 million being announced by HM Treasury today, £5.9 million is also being allocated to Northern Ireland, Scotland and Wales because debt advice is a devolved matter.
Caroline Siarkiewicz, Chief Executive at the Money and Pensions Service, said:
“This pandemic is first and foremost a health emergency, but for many the longest lasting impact will be a financial one. Experience and evidence tell us that the number of people needing formal debt advice in the wake of a major event like this increases slowly at first but is then likely to grow for many months. When the greatest demand for debt advice hits, potentially in 18 months’ time, we need to be ready and that means acting now.
“Debt services are already over-subscribed so we’ll be working hard to help people early, before their financial situation gets too bad. We already have projects under way to help deliver debt advice differently, making better use of data and helping people find the advice that is available more efficiently. For people facing money struggles it’s important they know we are by their side to help them through – not just now, but for the many months to come.”
Coronavirus and debt: what should people do?
There is already help available for people facing financial difficulty in the wake of coronavirus. Here are some initial steps to take:
- Do an emergency budget. It’s important to have a full picture of what you’re spending and what income you’ve got coming in. We have a budget planner tool to take you through this.
- Talk to your creditors if you might miss payments. Many firms are making allowances or adapting repayment schedules to help people manage their cash flows but it’s important to warn them in advance that you need this help. Get more detail on managing loans and credit card repayments from our website.
- Be careful about borrowing. If you have emergency savings, this is the time to use them. If you do need to borrow, try friends and family first. Be wary of high-cost credit and make sure you understand how much you could end up repaying in total. We can take you through some of the other options for borrowing money.
Caroline Siarkiewicz added:
“At a time of great stress for many, the additional impact on people’s financial wellbeing will be a difficult blow to take. The most important thing is that people avoid the temptation to ignore money problems. Whatever your circumstances, this is the time to check up on your household budget, use our money guidance tools to keep yourself on track, and seek help as soon as possible if you think you aren’t going to be able to meet your commitments.”
If you are struggling with debt, there are free services available to help you with options such as debt restructuring and repayment plans. You can find help using our debt advice locator tool.
The Money Advice Service website has detailed guidance on all aspects of coronavirus and your money online.