#personal-debt

By Grace Brownfield, Senior Public Policy Advocate, StepChangeIt’s official — the UK is in now in The Thick Of It (the General Election campaign, that is).As a charity, we’re of course bound to be scrupulously apolitical and neutral. However, that doesn’t mean we don’t have strong views about what the next Government — of any persuasion — needs to do to fix the problems caused by debt.Today we’re publishing our own ‘manifesto’, in which we ask the political parties to commit publicly to our key asks. In England and Wales, these are:Introducing an independent regulator for bailiffs (enforcement agents)Committing to continue the implementation of a breathing space scheme and statutory debt repayment plans to help people recover from problem debtCreating binding good practice standards for public sector debt collection and enforcementCommitting to pilot a no-interest loan scheme in the UK to support those who might otherwise have to turn to high-cost credit or go without essentialsStrengthening the hand of the Financial Conduct Authority with a clear mandate and responsibility to deliver a safe and fair credit market for consumersSetting out a strategy to reduce the number of people using credit for essential household bills, emergency expenses and essential household goodsStrengthening the safety net, by improving the benefits system and making it more responsive to crisis needs — including ending the five-week wait for Universal Credit.In Scotland, the legislation governing how debt advice operates means that there are significant differences. So we’ve also published a Scotland-specific version which you can read here.One of the points that we want to make most strongly is that some of the work-in-progress currently under way but not yet completed does risk falling over and failing to reach fruition if it gets lost in the cracks between one Government and the next. Important elements that could be affected include bailiff regulatory reform, the implementation of a statutory debt Breathing Space and statutory debt repayment plans, the reform of public sector debt collection and enforcement, and the move towards piloting a No Interest Loan Scheme. We urge everyone involved to make strenuous efforts to ensure this doesn’t happen.Throughout the life of the previous Parliament, we’ve received outstanding support for some of our most important campaigning points from a number of MPs of all persuasions. We thank them all. Now, we look forward to working with the new Parliament and the new Government to make progress in tackling the many issues in the debt landscape that will await them when the campaign is over.

One year on from the launch of Help to Save, and the numbers are disappointing

By Grace Brownfield, Senior Public Policy AdvocateThe Help to Save scheme has the potential to transform the savings landscape for those on lower incomes, but the latest numbers suggest the Government isn’t doing enough to market the scheme to those who are eligible.It’s been a year since the Government launched the Help to Save scheme. In principle the scheme is good. It provides a strong incentive to save — eligible lower income working households can save up to £50 a month in a government account and, after two years, get a bonus of 50% of the highest balance they achieve during that period. For those who continue to save after this, there’s an additional bonus at the end of four years.We’ve long called for action to improve the financial resilience of UK households, and helping people build a savings safety net is a vital part of this. We supported the scheme from the start but have always been clear that having a good product means nothing if people don’t know about it or use it.While the scheme got off to a good start, a year on the numbers are disappointing. As of the end of August, 132,000 accounts had been opened[i]. Given the Government’s own target was for 500,000 people to have opened accounts in the first two years of Help to Save, it’s clear they’re falling well short of what is already a conservative target, given the 3.5 million people who could benefit from the scheme.[ii]There are some silver liningsThose who are using the scheme are making the most of it: over £31 million has been deposited since Help to Save began and 89% of deposits are for the maximum £50 a month. The average deposit across all account holders is £47.Some might argue that what we’re seeing are positive results from the small portion of those who can afford to save, and that low overall numbers simply reflect the fact many people cannot afford to save at all. This may well be a contributing factor, as we know that saving is a struggle for many people.However, this alone can’t explain the low take-up rates. We’re concerned many people either aren’t aware of it thanks to a lack of marketing; or don’t realise how the scheme can benefit them, even if they only make low value deposits.This has to fall at the Government’s door. It can’t expect to raise sufficient awareness with the very modest marketing budget it has allocated to the scheme. Officials at HMRC have been working hard to come up with creative ways to raise awareness, but with limited resources there is only so much they can do.If the Government is serious about getting people saving, they must invest in a proper budget to market the scheme as widely as possible to those who are eligible. The benefits of doing so would be far-reaching: we estimate that if every household in Britain had £1,000 in accessible savings, this would reduce the number of people in problem debt by half a million.If someone saves the maximum £50 a month into their Help to Save account, then after two years they’d have £1,200 saved (assuming they hadn’t made any withdrawals) and be in line for a £600 bonus. That’s before considering any further savings and bonus after four years.The scheme could therefore make a huge difference. But the numbers right now suggest it won’t. Let’s not waste all the work done to date by allowing the scheme to fade into the background. HMRC and DWP must invest urgently in a proper marketing campaign, so the benefits of Help to Save can really be felt by those who need it.[i] HMRC, Help to Save Statistics, 30 August 2019, Available: https://www.gov.uk/government/statistics/help-to-save-statistics[ii] Help to Save impact assessment, Available: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/560346/impact_assessment.pdf

David Mitchell Rants about Personal Debts