Call For Government Debt Advice Strategy Overhaul

A damning report into the failings of the Government’s multi-million pound debt advice strategy has highlighted the need for a new approach in tackling the UK’s consumer debt crisis.

As a national debt charity that has demonstrated the benefits of sustainable, self-funded debt advice, which does not rely on public funding, Debt Advice Foundation is calling on the Government to rethink its initiative.

Back in 2004, the Government launched a strategy to improve support and reduce the number of people with unmanageable debt. However, six years on and with more than £130 million invested, the initiative is struggling to meet the growing demand for debt advice.

Coordinated by the Department for Business, Innovation and Skills (BIS), the project has incorporated the services of a number of not-for-profit organisations, including Citizens Advice and the National Debtline, but has been criticised for its lack of management and thorough evaluation of the UK’s debt advice landscape.

The report, published by parliament's Public Accounts Committee, has highlighted waiting lists of up to five weeks, with some debt advice organisations involved in the initiative said to have no capacity for new cases.

According to the report, it is claimed that the BIS needs to gain a better understanding of consumer needs and the effectiveness of different methods of debt advice delivery, in order to identify the most cost effective ways of providing support.

David Rodger, Managing Director of Debt Advice Foundation said: “With 11 per cent of the country’s population finding it difficult to manage their debts and personal insolvency at record levels, demand for debt advice is at an all time high.

“Consumer debt now stands at around £1500 billion and the Government is faced with tough questions as to why household debt has continued to spiral, despite millions being invested in its debt advice strategy.”

Funds for the Government strategy are confirmed until 2011, but future funding is subject to the outcome of its next spending review.

However, Debt Advice Foundation believes there is a sustainable way for the non-for-profit sector to deliver debt advice, based on a self-funding model.

David continues: “We believe a sustainable debt advice service can be achieved without relying on public funding, and the relationship between debtor, creditor and debt advice organisation is the key to this.

“By providing debt solutions, our charity receives funds from creditors, which in turn allow us to continue to provide support for consumers – a method that is being used within the not-for-profit sector, but could be utilised to better effect.”

Debt Advice Foundation is currently campaigning for better debt advice legislation in the UK and the creation of an Ethical Debt Advice Framework to underpin the country’s debt advice industry.