The Money and Pensions Service (MaPS) – an arm’s length body of the Department for Work and Pensions (DWP) - has been severely underestimating the extent of Britain’s debt problems, leading to a lack of funding and over-stretched advice services.

A new report from the Centre for Responsible Credit (‘CfRC’) finds one in four adults (13.5 million people) are in desperate need of advice and support with their debts.

MaPS - which conducts a survey of ‘debt advice need’ each year - is underestimating this number by more than 5 million.

This has left HM Treasury and DWP unaware of the true scale of debt problems when setting the levy that financial services firms pay for debt advice services.

CfRC estimates around 7 million people in debt are going without the support they urgently need.

Launching the report, CfRC’s Chief Executive, Damon Gibbons, said:

“We analysed the same survey data as MaPS but found their definition of need was very restrictive. It excludes many people with severe debt problems. In fact, it’s so restrictive it even excludes a third of people who are actually receiving debt advice.”

CfRC is calling for the financial services levy to be increased and for an urgent expansion of debt advice services: a call which is being championed in Parliament by Stella Creasy MP who has tabled a question to the Chancellor for answer in the Commons today (3rd December). Stella explains:

“Personal debt is a huge problem for millions across the UK making getting help on how to stop it spiralling is critical - yet advice services are over-stretched and there are long waiting lists. The previous government didn't do their homework about the true level of need, which is why I’m now urging this Labour Government not to make the same mistake and ensure those who profit from selling credit actually cover the cost of ensuring those who get into trouble with it get the support they need.”

- ENDS -

Notes to Editors

CfRC has undertaken secondary data analysis of the Debt Need Survey 2023: a UK wide survey commissioned by MaPS with over 22,000 respondents, weighted to be nationally representative. The report is available at https://bit.ly/4fMxkFz

CfRC’s analysis of MaPS’ own survey data indicates their measure is excluding 5.1 million people who have a clear need for advice.

Most of these (61%) are behind with repayments on their consumer credit debts. Many also face ‘extreme financial pressures’: seldom having money left over after paying for food and bills; frequently borrowing to pay for essentials, or frequently borrowing to pay off debts and/or using non-mainstream forms of credit such as payday loans, unauthorised overdrafts and Buy Now Pay Later. People in this group are likely to have received Default Notices concerning their consumer credit debts which – as required by Financial Conduct Authority rules – signpost them to debt advice services (i.e., they are told to seek debt advice by their lenders).

The remainder may not yet be in arrears with credit repayments but are struggling to repay or are in trouble with household bills. Most have been unable to pay for food or essentials, are using non-mainstream credit, and/or have had visits from bailiffs in the previous six months. People in this group would benefit from debt advice because many are cutting back on essential expenditure or falling into arrears with bills to maintain credit repayments they cannot realistically afford.

Stella Creasy MP has tabled a question to the Chancellor, to be answered in the Commons today. This asks: “What assessment she has made of the adequacy of funding for the Money and Pensions Service." Stella will refer to the CfRC report’s findings in the discussion.

Stella Creasy is the Labour (Co-op) MP for Walthamstow. Stella is available for comment via sophie@workingforwalthamstow.org.uk

CfRC’s Chief Executive, Damon Gibbons, is available for comment on 07961869473.

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