Reprieve granted to debt advisers

The government wants other institutions to step in with funding in future years

Hundreds of specialist debt advisers facing redundancy have won a reprieve after the government found £27m to continue the service for a year.

For the past five years, the £27m-a-year Financial Inclusion Fund has been paying for about 500 specialists in England and Wales to give free advice.

Last month, the government said it would axe the fund, and advisers stopped taking new cases.

But Business Secretary Vince Cable said temporary funding could now be found.

Funding for the advisers, who help 100,000 people with complex cases every year, was expected to run out in March.

The decision not to renew the fund led campaigners to express fears that there was a danger that a serious gap could appear in the provision of help to sick or vulnerable people who became trapped in serious debt.

Although there is still free advice available from several bodies, including Citizens Advice, these specialist advisers are trained to deal with complex cases and to represent clients to their lenders.

The debt advisers, who work out of Citizens Advice offices and community halls around England and Wales, had already been sent redundancy letters and been told to stop taking on any new clients, other than those with the simplest problems.

Now, the Department for Business has said it has found the money from a contingency fund to keep the advice going for another year.

“I am very happy to be able to confirm the continuation of this important service,” said Financial Secretary to the Treasury, Mark Hoban.

“Effective debt advice can be the first step towards regaining control of your finances. It can also help people to make the most of their money in the future and avoid unsustainable debts.

“The government intends to put the provision of debt advice onto a more sustainable footing. We want to see a flexible and cost effective response to debt problems, so that people can be helped in a way that works for them.”

Business Secretary Vince Cable said that, after the next year, the government would be looking elsewhere for help in funding advice services, such as the debt advisers.

Some of the most complex cases are dealt with by the advisers

“While the government has maintained funding for this programme, it provides only a small part of the revenue necessary to keep Citizens Advice afloat,” he said.

“I would like to take this opportunity to call on the other funding streams, such as from local authorities, to help provide whatever support they can to keep this excellent service going.”

Delroy Corinaldi, of the Consumer Credit Counselling Service (CCCS), welcomed the reprieve amid “current uncertainties over the availability of face-to-face debt advice”.

“We are concerned that any reduction in the amount should not impact on peoples’ ability to get free face-to-face debt advice,” he added.

“This should put free advice in a place where it can continue to take on the fee-charging sector which the recent Office of Fair Trading review found to be unfit for purpose.

“The challenge now is for debt charities to work together to provide free debt advice, face to face, over the phone and online, for those who need it.

“The next few years are likely to be very difficult for many people due to stagnating household budgets and rising costs but given CCCS’s capacity on its helpline and online debt counselling, there is no need for anyone to pay for debt advice.”

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