National Audit Office Press Releases
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Business, Innovation and Skills: Helping over-indebted consumers

"Many people are able to manage their debt, but for some the problems may seem insurmountable. When that is the case, people need good advice which they can trust and which is accessible. BIS’s project to offer face-to-face advice has done well and has helped those who have used it. But demand is outstripping capacity and the Department needs to look at ways of reaching even more people; and it must establish a coherent framework for delivering the Government’s wider strategy for tackling over-indebtedness."

        Amyas Morse, head of the National Audit Office, 4 February 2010

The Department for Business, Innovation and Skills’ (BIS’s) free face-to-face advice for people struggling with debt has helped more people than planned, at slightly less than the planned cost per person, and is highly regarded by those that use it. However, demand is now outstripping capacity and support could be provided to more people through further efficiencies, the National Audit Office has reported.  BIS also needs to engage more effectively with other parts of government working to help the over-indebted and with private sector advice providers. 

UK consumers had £1,459 billion of outstanding debt at November 2009 and personal borrowing represented 160 per cent of household annual pre-tax income. While many people successfully manage their debt, research in 2008 by the Bank of England found that 11 per cent of people reported difficulty keeping up with their bills and credit commitments.

Since it began in April 2006, BIS’s face-to-face debt advice project has delivered help to some 270,000 people to the end of September 2009. An NAO survey found that 81 per cent of people who received the advice said it helped, compared to 69 per cent for advice received from a fee charging professional and 59 per cent for advice received from a bank.

In the recession, demand for support and advice has become greater than capacity. Between July 2008 and July 2009 there was a 28 per cent increase in the number of people contacting advice providers and, in some instances, there is not the capacity to cope. A quarter of advice agencies are either refusing new clients or have a waiting period of over a month.

BIS’s debt advice project is part of a government-wide strategy to support those struggling with debt. The strategy is complex with over 50 different projects, a number of funding streams, and diffuse responsibilities. Risks to value for money created by this complex delivery structure are not being controlled effectively by the current programme management arrangements. If the strategy is to succeed, there needs to be better governance, performance management and evaluation.

The NAO has also called for the Department to do more to evaluate how advice can be provided more efficiently, and to assess the role that all debt advice providers, including the private sector, could have in meeting Government’s aims for debt advice provision.

over-indebted

http://www.nao.org.uk/publications/0910/over-indebted_consumers/what_is_over-indebtedness.aspx

The Problem

http://www.nao.org.uk/publications/0910/over-indebted_consumers/the_problem.aspx

Case Studies

http://www.nao.org.uk/publications/0910/over-indebted_consumers/case_studies.aspx

Where to find help with debt