Unite calls on Chancellor for action to help families plunging into desperate debt
- Monday 13 March 2023
What: Activists demand increased funding for debt advice services
When: Monday 13 March 2023
Where: 11.45 – 12.30pm HM Treasury, 1 Horse Guards Road, SW1A 2H
Petrifying paradox of funding for debt advice falling while demand soars
All businesses which profit from household debt should be compelled to fund debt advice.
Unite activists and debt campaigners will stage a protest outside the Treasury and the Department of Work & Pensions ahead of the Budget to demand increased funding for debt advice to support desperate communities in the grip of a cost of living emergency.
Unite has written to the Chancellor of the Exchequer, Jeremy Hunt to call on the Treasury to increase and expand the funding of debt advice (for full content of the letter to the Chancellor see below).
The largest source of funding for debt advice is an annual levy on business, distributed by the Money & Pensions Service (MaPs). Funding of MaPS has fallen in real terms by more than 20% to just £30 million (see notes to editors).
But between January 2022 and January 2023 Citizens Advice reported an 88% increase in debt assessments. Meanwhile, StepChange debt charity workers are facing an estimated 200 job losses.
The levy is currently only applied to consumer credit and home finance (mortgage lenders). Unbelievably, other sectors like big energy, which contribute to household debt problems do not have to pay towards the levy.
For example Centrica, which reported annual profits trebling to £3.3 billion does not have to provide any financial support for debt advice.
In a letter to the Chancellor, Jeremy Hunt, Unite national officer, Alan Scott warned of a “Petrifying paradox for thousands upon thousands of families in the UK. As more plunge into desperate debt, the services to help them are falling dramatically.
“The evidence is compelling, there is an urgent need for HM Treasury to increase and extend the levy on identifiable businesses which are compelled to fund debt advice services.”
Amy Taylor, chair of Greater Manchester Money Advice Group and Unite member said: "As a frontline debt adviser, I’m seeing a huge increase in demand for our help. People are coming to us in desperate situations, with more complex problems.
“Debt advice services make all the difference. We stop evictions, help to write off debts, find extra benefits and grants, and so much more. The work we do changes lives, but in the current crisis we’re badly underfunded and there’s just not enough of us.
“Some of the big debt advice charities are even looking at redundancies, at a time when our help is needed more than ever.
“Government needs to act right now. We know the money is there to properly fund debt advice services, and government must make businesses pay their fair share to fix the debt crisis they’ve profited from."
Notes to editors
The largest source of funding for debt advice is an annual levy on business, distributed by the Money & Pensions Service.
- This totalled £80.7m in 2022/23
- This levy is currently only applied to consumer credit and home finance (mortgage) lenders. Other sectors which contribute to household debt problems do not pay towards the levy.
- The existing levy could be increased, or an emergency additional levy applied, at the discretion of the Secretary of State for Work & Pensions. There is precedent for this when an extra levy of £14.2m was applied in 2020 in anticipation of extra pandemic demand.
Dear Chancellor of the Exchequer
The Money and Pensions Service Levy and debt advice services.
I am writing to you as the Unite the Union national officer for the Community, Youth Workers and Not-for-Profit sector. You will know that due to the current cost of living crisis there is a spiralling of debt problems confronting historic numbers of families across the UK. For example, StepChange Debt Charity reports client numbers increased by 32% between January 2022 and January 2023, while new clients assessed for debt problems at Citizens Advice increased by 88% in the same period.
The government’s record on tackling these shocking statistics is falling disastrously short. This needs to be addressed in your forthcoming budget. Money & Pensions Service (MaPS) funding of regional community-based debt services in the UK, in the last three years, has fallen in real terms by more than 20% - to £30 million.
Please note that number because it is another petrifying paradox for thousands upon thousands of families in the UK - as more plunge into desperate debt, the services to help them are falling dramatically. Take the case of Unite members at StepChange Debt Charity which is now facing an estimated 200 job losses this year following the loss of its MaPS funding.
Chancellor you have lectured the British public at length about your spending plans being constrained by crisis. Well, Unite for a Worker’s Economy have a proposal for your budget that would not cost your government a penny in the expenditure side of your Budget. Not a penny.
Please hear us out. The largest source of funding for free debt advice in Britain is MaPS. Currently, the levy which pays for this funding is only applied to consumer credit lenders and home finance (mortgage) providers. This is not enough to fund the scale of debt advice services – community-based, telephone and online – that are needed to support struggling households in the current crisis.
The evidence is compelling that there is an urgent need for HM Treasury to increase and extend the levy on identifiable businesses which are compelled to fund debt advice services. On budget day you have the powers to do just that. One example makes our case.
Last month Centrica announced its profits for 2022 had trebled to £3.3billion. At the same time, it intimated that its shares buy-back plans would be increased to £500m for a bonanza pay-out for its shareholders. Now in the Centrica case if there was a Money and Pensions Services 0.5% levy on the profits for 2022 that would create a £15m bonanza for debt services in the UK as well as the promises of their share buy-backs for their blessed shareholders.
Chancellor, do the maths. It doesn’t cost you a penny and a minimum levy on Big Energy profits would transform debt services for the poor across our country, creating jobs instead of watching them go in their thousands. Recent research conducted for Unite illustrates the scale of the debt emergency. A survey of 6,000 adults revealed that almost a third (27%) of people have already gone into debt or increased the levels of their debt just to put food on the table. The question is faced with these facts, can you afford not to do anything about the debt services crisis?
In these desperate times the case for increasing and extending the Money & Pensions Service levy is a powerful one. This serious issue needs urgent government action.
For this reason Unite is asking HM Treasury;
- Will you substantially increase the debt advice levy, and extend its scope so that other sectors which are major contributors to household debt also pay their fair share?
- Will you commit to protecting jobs across the debt advice sector, so that no debt advice provider is in a position – as StepChange and Christians Against Poverty currently are – of having to reduce their workforce in a time of national crisis?
Unite will continue to campaign on this issue and we look forward to a positive response to these reasonable expectations.
National officer for the Community, Youth Workers & Not-for-Profit sector