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In The Spotlight
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Worry as debt charities could be hit by funding cuts
Wednesday 2nd June 2010As a recent report from the debt charity Citizens Advice Bureau shows that staff fielded an additional 2.4 million debt enquiries last year, there are now worries that potential spending cuts could hit the debt charity sector hard.
Many of the CAB centres have said that they are concerned that local councils will slash their funding, as public spending is cut in an attempt to reduce the budget deficit.
David Harker, chief executive of the CAB, has said: “We were able to help more people last year thanks to some generous additional funding from the government and many local councils.
“However much of this was short term, and our network of community based services, which rely on the generous help of 21,000 volunteers, may not be able to help as many people in future if funding is cut.”
Debt advice was the biggest topic of advice for CAB callers in 2009, making up 34% of all enquiries.
Enquiries about private bailiffs soared from 13,845 in 2008 to 19,090 in 2009. Meanwhile, enquiries about mortgage and secured loan arrears shot up by 21%.
As the public sector comes under pressure from looming cuts, the private debt advice sector is gearing itself up to help bear the burden.
According to one debt expert, a recent government enquiry highlighted that the private sector already provides an estimated two thirds of debt solutions in the UK.
Kevin Still, debt expert and director of Atlantic Financial Management, warned that middle class Britons suffering debt problems may be overlooked as charities could be forced to focus on the most vulnerable cases. He said: “The new coalition government will probably focus their attention on the most vulnerable, and cases of severe financial hardship. This will probably mean that professional debt solution providers in the commercial sector will take up the slack as more middle class, homeowners and self-employed fall into serious debt problems as the wake of the recession and further cost cutting measures take effect.”
He continued: “At Atlantic Financial Management we have set out to establish a lost cost service that enables people with debt problems to obtain immediate debt relief and speak to a trained debt advisor exactly when they want to. It can take months to take the decision to deal with your household debts, but when you do you want to speak to somebody straightaway and feel that they are there for you when you need them.
“The CAB does a great job, but by their own admission they are under-funded and reliant on volunteers, with high turnover, and each advisor needing a high level of training to become a proficient specialist. With over a third of the enquiries on debt, this places a huge pressure on each CAB. We aim to be able to offer all-round debt advice and a full range of debt solutions, including Debt Management Plans (DMPs) and Individual Voluntary Arrangements (IVAs). We have an excellent record of getting interest and charges frozen and for our Insolvency Practitioners to get IVA proposals accepted at creditors meetings.”
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