An extra £37.8m will be available to debt advice providers this year (20-21) so they can continue to provide essential services to help more people who are struggling with their finances due to Coronavirus, minsters have announced
The Money and Pensions Service (MaPS), will oversee the allocation of the funds, including to charities, for debt advice and other money guidance services.
The support package, which will bring the MaPS budget for debt advice to over £100m this financial year, will help providers to 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.
The funding consists of £20.6m from the government and £14.2m raised through a one-off increase to the Financial Services Levy. MaPS will also be contributing a further £3m from their existing budget.
The economic secretary to the Treasury, John Glen said: ‘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.
‘This extra funding comes on top of the unprecedented package we have put in place to support individuals, businesses and the economy through the coronavirus outbreak.’
The government has put in place an unprecedented package of support to help people with their finances during the Coronavirus pandemic.
This including the Job Retention Scheme, which has helped to protect 8.7m jobs with £17.5bn claimed so far, and the Self-Employed Income Support Scheme which has seen 2.5m claims worth £7.2bn.
The government has also made changes to the welfare system including Universal Credit and Statutory Sick Pay, making support quicker and easier to access, as well as more generous.
It is also working with the banks and financial regulators to give people payment holidays on their mortgages and a range of consumer credit including credit cards, personal loans, motor finance and payday loans.
The Financial Services Levy provides funding for debt advice through MaPS and this one-off increase to the levy will see finance firms providing an extra £14.2m in 2020-21. The Financial Conduct Authority (FCA) will consult on the details of this one-off rise in due course.
Delivery of debt advice is a devolved matter, so the additional funding will be matched for the devolved administrations, resulting in an extra combined £5.9m for Scotland, Wales and Northern Ireland.
The distribution of the funding across England being overseen by MaPS will come from a combination of sources: £20.6m from government, £14.2m will be raised through a one-off increase to the debt advice levy and a further £3m contribution from MaPS. For the Devolved Authorities, £2m (out of an additional £5.9m) will come from the Devolved Authorities’ debt advice levy.
The FCA is responsible for collecting funding amounts requested by government for free-to-consumer debt advice provided by MaPS in England and by other financial bodies in Scotland, Wales and Northern Ireland. FCA do this through the debt advice levy, which funds MaPS, and the Devolved Authorities’ debt advice levy.
Given the FCA’s role as collection agent for these levies, they will consult on details in due course.