Following the announcement of severe cuts in public spending last year, we are now starting to see the impact of these on services offered to the public, with the latest casualty being the provision of free debt advice services, with the removal of the Financial Inclusion Fund last week.
This Fund amounted to £25m a year and was used to pay the costs of up to 500 debt advisers, operating out of Citizens Advice Bureau (CAB) offices across the country.
The CAB was already steeling itself for a substantial reduction in its funding through charitable donations and money from both local and central government, as local councils announce their plans to address the cuts imposed upon them.
The impact of the drop in funding could mean the removal of up to 900 jobs at the CAB, while some offices will close completely, causing a devastating impact on local communities, which rely heavily on the support of the CAB for advice and assistance.
Notably figures published last week show personal insolvencies rose in the past 12 months to 135,089 from 134,142 in 2009.
Teresa Perchard, Citizens Advice public policy director, says:
Unemployment is rising, the economy is in a difficult situation and there is increasing demand for debt advice. To lose frontline services at this time as a result of funding cutbacks doesn’t make sense.
Debt charities fear the cuts will force desperate borrowers into the hands of fee-charging debt-management companies.
Clare Stott, Director at National Money, observed:
Such a comment implies that in some way, fee charging debt management providers are less capable and offer a lesser service than the debt charities. Where the borrower chooses a reputable debt management company, this is simply not the case; there are some very good, professional companies such as ourselves who have a good track record of success in putting in place arrangements which take the pressure off our client whilst providing creditors with the payments they need.
Separately, the Treasury has announced a free and impartial national financial advice service, which will be largely web-based. It will include a financial health check and a free personalised action plan for users to implement for themselves. The service will be launched in the coming months.
