Extra £38m for debt support in wake of coronavirus
The Money and Pensions Service (MaPS), will oversee the allocation of the funds with the extra cash bringing the MaPS budget for debt advice to more than £100m this financial year.
The money will help providers deliver advice to more people in England who may be experiencing financial problems due to coronavirus. It will also help providers who have seen a fall in their income streams, enabling them to continue their vital work and supporting their staff to deliver these services.
A separate £5.9m of funding is also being allocated to Northern Ireland, Scotland and Wales.
The £37.8 package consists of £20.6m from the Government and £14.2m raised through a one-off increase to the Financial Services Levy. In addition, MaPS will also be contributing a further £3m from its existing budget.
John Glen, economic secretary to the Treasury, says: “We know that some people are struggling with their finances during this difficult time, which is why we want to make sure people can access the help and support they need to manage their debts and get their finances back on track. The joint funding package will help debt advice providers to continue with – and increase – their vital work.”
The funding will allow MaPS to:
- Ensure an additional 1 million people in England get debt advice over the next 12 to 18 months
- Deliver enhanced money guidance for a further 2 million across the UK
- Advance projects to maximise the capacity of existing debt advice
MaPS is also working with the FCA to establish a fairer and more sustainable debt advice funding approach for the future.
Caroline Siarkiewicz, chief executive at the Money and Pensions Service, says: “This pandemic is first and foremost a health emergency, but for many the longest lasting impact will be a financial one. Experience and evidence tell us that the number of people needing formal debt advice in the wake of a major event like this increases slowly at first but is then likely to grow for many months. When the greatest demand for debt advice hits, potentially in 18 months’ time, we need to be ready and that means acting now.”
The new debt advice support package comes as Step Change debt charity warned that the UK faces a £6bn “debt tsunami” with demand for debt advice expected to double by the end of the year.
Coronavirus and debt: what should people do?
There is already help available for people facing financial difficulty in the wake of coronavirus. Here are some initial steps to take:
- Do an emergency budget. It’s important to have a full picture of what you’re spending and what income you’ve got coming in.
- Talk to your creditors if you might miss payments. Many firms are making allowances or adapting repayment schedules to help people manage their cash flows.
- Be careful about borrowing. If you have emergency savings, this is the time to use them. If you do need to borrow, be wary of high-cost credit and make sure you understand how much you could end up repaying in total.
- Read our guide about the help you can get with your finances due to coronavirus.