The Money Advice Trust, the charity that runs National Debtline, has today welcomed the National Audit Office’s (NAO) report into tackling problem debt. The report found that while personal debt problems have a significant impact on individuals, the government has a limited understanding of how this affects the public purse and there are “weaknesses in its strategy” for dealing with the issue.
The NAO’s findings comes in the same week as new Money Advice Trust research showed that people are increasingly struggling with “smaller but trickier” debts, often in the form of household arrears and debts to local and central government – with demand for debt advice expected to hit its highest level for five years.
Joanna Elson OBE, chief executive of the Money Advice Trust, the charity that runs National Debtline, said: “The National Audit Office has hit the nail on the head. We need to see a new cross-government strategy to tackle problem debt – which brings together the work of government departments, agencies and regulators into a single, coherent approach.
“The government needs to put its own house in order when it comes to how it collects the growing debts owed to government departments and local authorities, in particular.
“With demand for debt advice at a five-year high, there is also a need to significantly increase funding for frontline debt advice services, to close the growing gap between supply and demand.
“The good news is the government has already taken some positive steps, with the creation of a new Single Financial Guidance Body and plans for a statutory ‘Breathing Space’ scheme. This provides a strong platform to build on and we look forward to working with the government as it responds to the NAO’s recommendations.”
The Money Advice Trust’s new research, published this week, examined how debt problems have changed over the last decade and found:
· Smaller but trickier debts – half of callers to National Debtline (50 percent) are now struggling to repay debt of £5,000 or less – up from just 22 percent in 2008
· More household arrears and public sector debts – 30 percent of National Debtline callers in 2018 have council tax arrears, up from just 15 percent in 2008, with callers also increasingly facing energy arrears (rising from nine to 17 percent), rent arrears (rising from six to 17 percent) and benefit and tax credit overpayments (rising from three to 16 percent) over the same period.
· Increasing demand – National Debtline is expecting more than 189,000 calls by the end of this year, the highest level of demand since 2013, with demand for webchat and online advice also rising.
In its report, the Money Advice Trust recommended a “new formal cross-government strategy to reduce problem debt, with HM Treasury bringing together the work of the Single Financial Guidance Body, regulators, Department for Work and Pensions and all relevant departments and agencies into a single coherent approach.”