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Over the past few years we’ve seen a massive increase in the number of unsustainable budgets. That’s not just people going without a few luxuries, but people struggling to pay for the basics.
Mat, CAP Debt Advisor
Key findings
The debt advice landscape is becoming increasingly challenging, with high levels of deficit budgets and people seeking help with complex social issues.
Face-to-face support is vital to help vulnerable people out of their financial difficulty, and also to start participating in society again.
Debt advice funding, however, is drying up. CAP’s Chief Executive Officer says: ‘Help for the most vulnerable people in crisis levels of debt has little creditor funding and no direct Government funding accessible to organisations like CAP and our peers.’
Policy recommendations
1. Expand and fund free debt advice and wraparound support
Increase and expand funding for free FCA-authorised, in-person, community-based advice for those digitally excluded or in crisis.
Government to provide sustainable funding to organisations that offer wraparound support, which includes emotional and practical care to provide holistic and long-lasting impacts.
Increase the financial contribution and the long-term commitment of support from financial services and creditors whose clients are supported by the provision of free debt advice.
2. Increase the sectors that contribute to debt advice funding
Energy and water sectors to begin making meaningful contributions to enable sustainable and sufficient income generation to continue the provision of free debt advice available to all.
Government to commit to ring-fenced funding for local authorities to deliver/commission local debt advice services.
3. Ensure access to a liveable income
Reform welfare systems so benefits are accessible, streamlined to ensure people can automatically access the support they are entitled to, and are adequate enough for people to afford the essentials.
Address the prevalence of deficit budgets – where even careful budgeting leaves households short on essentials. This should be done through ensuring that wages and social security are sufficient to cover the costs of essentials.
4. Develop understanding and create services that meet the current need
Commit to provide long-term and sufficient investment in money coaching and life skills training through funding streams that are available for locally-based, not-for-profit providers.
Creditors and Government to ensure their policies and practices are co-designed with customers in vulnerable circumstances, and those with first-hand experience of debt and poverty.
