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Independent Debt Advice

Volume 523: debated on Tuesday 8 February 2011

Motion made, and Question proposed, That the sitting be now adjourned.—(Angela Watkinson.)

I am pleased to have secured this important debate and to serve under your chairmanship, Mrs Riordan.

Research from Money Advice Trust suggests that at any given time up to 5 million people report being in arrears with consumer credit and mortgage payments or find that their credit commitments are an unsustainable burden. However, planned cuts to funding will significantly reduce the capacity of independent advice agencies to assist such people, which could result in potentially serious consequences both to the individual and the state.

I shall quote an example from my local citizens advice bureau in Wigan. John—not his real name—was receiving numerous letters from creditors. He came for assistance when his debts were beginning to get on top of him. He had even mentioned suicide. His community psychiatric nurse was concerned that the increasing pressure from his creditors was causing further harm to John’s mental health. An urgent home visit was arranged. A specialist debt adviser went through John’s benefits and discussed his options. John had wrongly believed that bailiffs could take all his goods and that he could be imprisoned and evicted. Time was taken to reassure him and to go through both his options and rights, and those of his creditors. He decided that bankruptcy would be the right option for him. The adviser completed the forms and accompanied John to court. The creditors can now no longer contact him. Moreover, the adviser helped to reinstate John’s benefit entitlement, which had been the reason why he got into debt in the first place.

John now needs less input from his care co-ordinator. He said, “I was in a real state, but I am now no longer afraid to answer the telephone, open my door or open my post.” John needed face-to-face advice to help deal with his problem. Without it, he would still be a suicide risk, living in isolation and fear.

More than 500 specialist advisers in independent local advice agencies are funded by the financial inclusion fund. Since 2006, more than 380,000 people have been helped to manage debt worth more than £6 billion in an extensive network of outreach settings, community centres, GP practices and Sure Start units. People who do not normally feel comfortable about seeking advice are able to go to such centres and speak in a place where they feel comfortable.

The CAB service managed the largest proportion of that funding, and it supports 338 advisers in local bureaux. Loss of the funding reduces the capacity of the CAB service by more than 70,000 cases a year, which is a cut in casework capacity of between 40% and 50%.

I thank the hon. Lady for being generous so early in her remarks. I completely agree with everything that she has said. The financial inclusion fund is of immense importance to my citizens advice bureaux in South Lakes. Most people think that the CAB is a state service; they do not realise that it is a charity, and that its ability to raise funds from other sources is incredibly limited. The fund is critical to its survival and to its ability to help people who are often in the most desperate circumstances.

I totally agree. Having worked for a CAB, I know that people are extremely confused about where the funding comes from. The organisation gets very few donations. The depth of its service is often misunderstood as well. I have heard people say, “Oh, CAB, they tell people where to go.” We did not often do that.

My hon. Friend has given us some of the current statistics. Looking ahead over the next few years when hundreds of thousands of public sector workers will be sacked by the Conservatives and Liberal Democrats, what burden does she think that will place on Citizens Advice? In my constituency of Vale of Clwyd, some 50% of workers are in the public sector, about 4,000 of whom may be laid off. What effect will that have on citizens advice bureaux in my constituency and elsewhere?

Indeed, over the past year, the number of debt clients seen by the CAB has risen by 23%, and a significant increase is expected in the next few years as well, so the loss of skilled advisers in local bureaux will have a catastrophic effect. It is essential that local links are retained. The trust that has been built up between local agencies, such as that between the bureau and the local authority council tax collection department, will be lost, to the detriment of local people who are struggling to pay. St Helen’s citizens advice bureau had regular meetings with the head of finance and the bailiffs to discuss tactics and to raise issues from clients’ experiences. It developed a protocol to assist residents, particularly those entering employment who found that all their creditors immediately descended on them, causing quite a number to leave work, feeling that they were better off on benefits, despite their increased income, because their debts had come back to haunt them.

Does my hon. Friend not agree that debt problems often come with clusters of other problems, including some related to employment and welfare benefits, as she suggested? Is it not therefore regrettable that neither legal aid funding, which we have previously been able to look to, nor—now—funding for debt advice will be available to support people with a multiplicity of difficulties?

I completely agree. The idea that there were clusters of problems was identified at least 10 years ago. The legal aid cluster of social welfare law was developed so that the person could be addressed as a whole and not just seen as a set of individual problems.

A national telephone advice system could not help with our current problem of debt. Local knowledge, particularly about bailiffs, is vital. That was evidenced on Saturday in an article in The Times, which highlighted the different practices of bailiffs employed by neighbouring local authorities. The cuts cannot, however, be taken in isolation, as my hon. Friend pointed out. The consultation paper on legal aid proposes to remove debt from scope for all cases except those with an

“immediate risk of losing their home”.

That flies in the face of all the research demonstrating that early and timely intervention is crucial and actually saves the public purse money. For every £1 of expenditure on debt advice, the state potentially saves £2.98. Indeed the figure could be higher, particularly for the NHS.

Last Thursday in the Chamber, I mentioned a project that had been funded by my local primary care trust, which I managed until last May. It measured stress levels on a recognised NHS scale before and after the debt advice process. In the first nine months of the project, the PCT estimated that three suicides had been prevented. The project was a finalist for a national NHS innovation award due to its low cost and good outcomes for clients and the NHS.

Local authorities are also cutting the amount of money available for advice. The CAB in England and Wales faces an expected cut of 10% in 2011-12. If that is factored in with cuts to the financial inclusion fund and the proposed changes in legal aid from 2012, local bureaux can expect, on average, a 45% cut in funding.

With the cuts that we are seeing right across the spectrum, whether in local government or, in my case, the PCT, which part funds some of the posts in CABs in my area, does my hon. Friend agree that the only way to resolve the matter is for the Government to make a direct grant to citizens advice bureaux so that they can handle the massive increase in demand caused by the cuts imposed by the Tories and the Liberal Democrats?

I have long been a supporter of a statutory duty to fund advice services, and I still believe that it is the only way in which the absolute importance of advice can be highlighted to local government and other funders. The cut to debt advice funding and the proposed cuts to local authorities and legal aid will be felt most significantly in urban areas, which have the greatest numbers of clients. To whom are those people expected to turn for advice on their debts?

The Government have announced their intention to establish a national money advice service to deliver free financial advice and an annual financial health check to provide people with a holistic overview of their finances.

I am grateful to the hon. Lady for giving way and I congratulate her on securing the debate. I think that she will agree that it would be wrong to characterise the issue as simply an urban issue. Rural areas in west Wales, such as my constituency, are served by only two citizens advice bureaux. She is right to highlight the cuts that such bureaux will suffer; those cuts will make access to the existing services even more difficult for people.

I thank the hon. Gentleman for that intervention. I agree. There are already “advice deserts” and people in rural areas already have difficulty getting access to face-to-face advice. They have to travel long distances to get it. These cuts will only make that situation worse.

I welcome any expansion of financial education but I would like the Minister to answer two questions. First, where will people who are identified as being in debt by the financial health check offered by the national money advice service go, as the number of local debt advisers will be dramatically reduced—to nil in many cases?

I congratulate my hon. Friend on securing this debate. Merton and Lambeth citizens advice bureau operates in my constituency. We have one caseworker, whom we are to lose as a result of what the Government are doing. That caseworker has dealt with more than 400 debt advice queries. I asked what the effects of their loss would be and Merton and Lambeth CAB was very clear: without that debt adviser there will be nowhere else for people to go. Does my hon. Friend agree that that situation will be repeated up and down the country?

I thank my hon. Friend for that intervention. I completely agree. I will come to the issue of where people are likely to go in the future.

I am very grateful to my hon. Friend for giving way and I too congratulate her on securing this debate. On the issue of where people will go for their debt advice, I suspect that they will have somewhere to go, which will be into the arms of fee-charging providers who advertise their services and, according to the Office of Fair Trading, mercilessly use every opportunity to recruit people inappropriately to use their services.

I thank my hon. Friend for that intervention; I will come to the issue of fee-paying debt management companies shortly.

As I was saying, I have a second question for the Minister. Does he expect financial education to eradicate the need for debt advice in the future? It is my experience that most people fall into debt due to unplanned events, for example bereavement, illness or the loss of a job. People do not plan to get into debt, and borrowing is only debt when people cannot afford to pay the money back. At such stressful times in people’s lives as dealing with a bereavement or an illness, timely advice is vital. Indeed, one of the most distressing cases that I have dealt with personally was that of a family who had a child with a severe disability. They received all the disability and carers’ benefits, and they had taken out loans to adapt their home and car to enable their daughter to be cared for at home rather than in residential care. However, she died suddenly and unexpectedly, and they were left on vastly reduced benefits and facing a high level of debt.

Where are those people to go in the future? Like my hon. Friend, I fear that they will be thrust into the clutches of the fee-charging debt management companies, the same companies that the OFT found flouted debt management guidelines by misrepresenting their services as free when they are not free. The OFT also reported that many front-line advisers working for those companies lacked competence and provided poor advice based on inadequate information. Unfortunately, urgent action was not taken to address the problem and the issue is now being considered as part of the consumer credit and personal insolvency review. Unless action on the regulation of debt management schemes is fast-tracked, it is very unlikely that the necessary protections will be in place until autumn 2011 at the earliest, if they are put in place at all.

Vulnerable people should not be put into the position of paying unregulated and often incompetent providers to deal with the fact that they do not have enough money to pay their bills. The situation is becoming more urgent daily, with more and more advice agencies closing their door to new debt clients, so I urge the Minister to consider extending the financial inclusion fund programme until the review of advice services is complete, or to provide sufficient alternative funding for free face-to-face debt advice to continue in local agencies. Not to do either of those things will have a great cost—both in human terms and for the state.

I congratulate the hon. Member for Makerfield (Yvonne Fovargue) on securing this very important debate. To some extent, it follows on from the Opposition-day debate that we had in the main Chamber last week.

Obviously, everyone in this room wants to see the same thing. We want to see a fair and open system of financial support for people who get themselves into financial difficulty. I know personally that the National Association of Citizens Advice Bureaux is a wonderful organisation. It took on the role of providing specialist debt management advice and it has done a really good job, so I share the hon. Lady’s concern regarding the financial inclusion fund.

Local authority cuts will mean that the citizens advice bureaux will not have as much support as they have had. That is having a drastic effect in my own region, the west midlands, where all five bureaux are destined to be closed. I hope very much that the Minister will be able to intervene in some way to ensure that that vital service for the Birmingham area is maintained. In Solihull, we have faced cuts to our citizens advice bureaux before and we have managed to survive them.

I am grateful to the hon. Lady for giving way, but I must say that it is not good enough for Liberal Democrat MPs to come along to these debates and complain about what this Government are doing while they are supporting them. What has she said to Ministers? Has she threatened not to support the Government’s proposals? Has she told them that if these cuts go ahead she will not vote for something else that they are proposing? What have she and her colleagues done to try to prevent these cuts from happening?

I am glad that the hon. Gentleman made that intervention, because his Government caused cuts to be made to citizens advice bureaux. It is how the Government manage that is important. He asks what I have done and I will tell him. I have worked quite considerably on the issue of debt. In fact, I advise the Government and I am putting in my help and advice, as much as I can, to Government. That is what Governments do and that is what responsible coalition Governments do. We can make our points independently as Liberal Democrats, but we support what the Government are doing because of the financial situation that the hon. Gentleman’s Government left us in and everyone has to bear a share of the pain.

I would rather move on than talk about things other than the subject that we are here to discuss today, which is citizens advice bureaux and debt management.

Despite the heckling from a sedentary position, I will continue.

In 2009-10, citizens advice bureaux experienced a 23% rise in demand for their services. Of the queries that they dealt with, 150,000 were about quite complex debt problems, as outlined by the hon. Member for Makerfield. It is estimated that the loss of the financial inclusion fund reduces the debt advice capacity of citizens advice bureaux by 40% to 50%. So I am looking forward to hearing from the Minister today about what steps are being taken, particularly in relation to the national money advice service and how that service will help people and make up the shortfall.

If the hon. Lady will forgive me, I will not give way.

So how will the citizens advice bureaux replace that loss of support, because as I said we have faced such losses before? In relation to Birmingham, I am hopeful that the Minister will have some good news.

I also wanted to pick up on what the hon. Member for Makerfield said about debt management companies. I am absolutely delighted—as I am sure she is—that the licences of a number of debt management companies were withdrawn by the OFT. I think that 42 companies in all had their licences withdrawn. Those companies can lead to a spiral of debt. Some debt management companies operate free of charge to the recipient. They do that because they are able to be paid by the creditors. It is much better if those who stand to gain pay, rather than those who stand to lose.

The spiral of debt that comes with companies that charge up front is clear. Two months’ repayments are made up front, the company promises to get creditors off people’s backs, but often that does not happen and six months later the company says, “We’re very sorry, but we can’t do anything for you now. We think you should file for bankruptcy.” They then charge for bankruptcy, and the spiral continues.

In many respects, is not the hon. Lady seeking to face two ways at once? She makes these welcome comments on unscrupulous lenders, but she failed to vote in favour of the motion that was tabled by my hon. Friend the Member for Walthamstow (Stella Creasy) last Thursday. She says that she agrees with my hon. Friend the Member for Makerfield (Yvonne Fovargue), yet she refuses to vote against the measures to abolish the financial inclusion fund. The money will run out in March, so will she vote against the Budget if it does not reinstate the funding?

I was deeply disappointed by last week’s debate. In her last sentence, the hon. Member for Walthamstow (Stella Creasy) accused the coalition Government of being in the pocket of loan sharks. If any hon. Members imagine that we will vote for being castigated in that way, I am afraid that they have another thing coming. [Interruption.]

My hon. Friend is generous to let me butt in. Perhaps I could help Opposition Members. They spent 13 years in power towing the line and voting for things such as cuts in CAB funding—as they did in South Lakeland—and they do not seem to understand that it is entirely possible to be within a Government and at times be a critical friend instead of constantly being told what to think.

Thank you, Mrs Riordan, I am grateful.

I am disappointed with Opposition Members. I am sure that there must have been moments, in the 13 years during which they built up the biggest structural deficit in the G8, when it occurred to them that perhaps their Government were not going in exactly the right direction. We are a united coalition Government—[Laughter.] Opposition Members may laugh, but we are seeking to work together to help people in bad financial situations, situations that have been hugely exacerbated by the actions over 13 years of Members who are now in opposition.

In conclusion, I very much welcome the national money advice service. I ask the Minister: how will it help, and how will the Government help CABs to manage the shortfall caused by local authority cuts, and the cut in the financial inclusion fund?

I congratulate my hon. Friend the Member for Makerfield (Yvonne Fovargue) on securing this very important debate. I am extremely concerned about the ending of the financial inclusion funding, as is my local CAB, which has asked me to put forward some of its sincere concerns about the proposals.

There was a record number of insolvencies in England and Wales in 2010, which was an increase of 0.7% on the previous year. The 2010 figures have not yet been broken down by constituency, but in 2009 my constituency of Newcastle upon Tyne North had the highest rate of personal insolvencies in England and Wales, closely followed by North Tyneside, Newcastle upon Tyne Central and Newcastle upon Tyne East, in that order. Furthermore, the top 11 constituencies for personal insolvencies all fall within the north-east of England. I want to convey to the Minister that those are not just figures; they are real people with real lives. We all know that debt can expose vulnerable people to the threat of homelessness, to bailiffs seizing their possessions, and to the loss of essential services and even their liberty. Therefore, having access to free, confidential and trustworthy debt advice is absolutely fundamental.

As my hon. Friend set out in detail, the financial inclusion fund was established in 2004 by the previous Labour Government to support fact-to-face debt advice services, in areas of deprivation where there had been difficulty in accessing debt advice. At Newcastle citizens advice bureau there are eight full and part-time debt advice workers whose work has been supported by the financial inclusion fund, and in 2010 they supported more than 1,000 local people in relation to £14.3 million of personal debt. I was shocked by those figures. In the last quarter of that year alone, the service saw more than 300 clients, which was the highest number in the history of the project in Newcastle; the appalling weather at that time did not prevent people from getting to their CAB for help. However, as a result of the coalition’s decision to end the financial inclusion fund, there is huge uncertainty about what will replace it. On 4 February, the CAB stopped offering advice supported by the financial inclusion fund.

There are many similarities between the city of Newcastle and the city of Sheffield, which I represent. We have 12 specialist face-to-face debt advisers supported through the financial inclusion fund, and they process similarly staggering amounts of debt casework. During 2009-10, which is the last full year for which information is available, they dealt with £25.6 million of debt. Crucially, they prevented the loss of homes for 110 clients, through negotiation with lenders and landlords, or through interventions in county courts, and successfully negotiated 655 payment plans. Does my hon. Friend agree that the withdrawal of the financial inclusion fund, which will mean that all those posts in Sheffield will disappear and all that help will go, is a particularly callous decision at a time when debt is rising as a result of this Government’s policies?

I strongly agree; that is precisely the point that I want to make today. With no news of any funding beyond March, the service in Newcastle is winding down, and so are bureaux right across Tyne and Wear. The situation is deeply worrying because of the personal insolvency figures and also because people, particularly in places such as the north-east where more than 50% of the population is employed in the public sector, will find themselves in even more worrying financial circumstances.

Areas such as my hon. Friend’s constituency and mine, which have been hardest hit by the recession and are taking the longest to recover, will be most affected by the cut. In the west midlands, 62 staff are employed as a result of the financial inclusion fund, including five at the CAB in Dudley, and the staff there told me that it is hard-pressed families, the most vulnerable and people with learning difficulties who have got themselves into debt, who rely most heavily on the services. They also told me that their clients will have absolutely nowhere to go if the funding provided by the financial inclusion fund is withdrawn.

I thank my hon. Friend for reiterating the point that I am trying to make, which is that the cut is ill thought through and ill-timed for places facing an uncertain financial future. Unemployment in the north-east is rising, youth unemployment is at a record high and one in three young people in my constituency are out of work, compared with one in five nationally. At the same time, public sector workers face redundancy, the VAT rise and increasing fuel and energy prices. People will only get into more financial difficulty. It is shocking that at a time when increased demand on personal debt advice services is inevitable, funding for those services should be cut. It is also of concern that we are likely to lose highly skilled and trained staff who have built up a wealth of knowledge and expertise in helping people. Eight staff members in Newcastle are being made redundant, which is deeply worrying and shocking.

As I am sure the Minister is aware, in February 2010, the National Audit Office concluded that the face-to-face debt advice funded by the financial inclusion fund delivered good value for money. Indeed, the NAO found that the financial inclusion fund project was helping more people at slightly less cost per person than originally planned, and that the advice given was well regarded by those receiving it. That has certainly been the case in Newcastle, where 90% of clients who filled out a feedback form said that they would recommend the citizens advice bureau debt advice service to somebody with debt.

I recently saw at first hand the excellent advice services provided by the CAB during a special advice service day at a local community centre in the west end of Newcastle, the area that suffers the highest levels of deprivation and personal bankruptcy. The CAB brought together a series of advice services under one roof and took them out into the communities suffering the most. It was an impressive and productive day, and I know that it helped an awful lot of people in my constituency.

I support that point. I did a similar joint exercise with the citizens advice bureau in my constituency, which trained my staff and me so that we, who are in some cases the first point of contact, could address the issues and work in conjunction with the CAB. I fully support that action.

I agree. I too have been working closely with the CAB and taking its advice. The difficulty is that the office is losing eight staff members and will struggle to provide the same level of service. The suggestion that such expertise and advice can be delivered by a Member of Parliament comes from cloud cuckoo land.

The advice service day exemplified the importance of the CAB’s services and the fact that it can reach out to people. The CAB knows that people will not use telephone or online advice services. They need face-to-face, personal advice, because they cannot manage the paperwork and the complexity involved in dealing with debt issues.

For all those reasons, I have written to the Chancellor to urge him to rethink his decision or, if it is suggested that a fund continue, to ensure that face-to-face debt advice through the CAB continues to be properly funded. I believe, as I have said, that the problems in places such as Newcastle will only get worse; they must be seriously addressed.

I pay tribute to the hon. Member for Makerfield (Yvonne Fovargue), who made her arguments in a consensual, sensible and detailed way, avoiding unnecessary party politicking. I congratulate her on securing this incredibly important debate. It is sad that a debate about debt has become a little too polarised at certain points, and that silly comments have been bandied back and forth. That does not help the people struggling with debts whom we should be here to protect. As important and emotive as the subject might be, reasonableness is key to making progress at all times.

On whether personal debt levels are rising, I must confess that I am not aware whether they are at the moment—I have seen suggestions in both directions—but we do know that personal debt levels have risen substantially over the past 10 years. I am not making a political point; I think that it is due to how society has changed. Debt is much more a part of our lives these days, which perhaps demonstrates why it is so important to have appropriate measures in place to protect people who cannot manage their debt. Managing debt is undoubtedly a reality of life now, and we as elected politicians must ensure that there are processes, procedures and services in place to protect people with debt.

I will comment specifically on the role of the financial inclusion fund in my constituency. I see that my friend the hon. Member for Scunthorpe (Nic Dakin) plans to speak, so I will leave it to him to deal in more detail with Scunthorpe citizens advice bureau, which serves a large part of my constituency. However, I will discuss East Yorkshire CAB, which provides services across Hull and the East Riding, including through a centre in Goole.

East Yorkshire CAB helped 13,600 clients in 2009-10, and it tells me that more than half of those cases involved debt management issues. During that period, it assisted with about £14.5 million in debt, which gives the scale of the problem that we face in this country. As other Members have said, CAB advises face to face, which is key. I note the comments of the hon. Member for Newcastle upon Tyne North (Catherine McKinnell). Like my hon. Friend the Member for North Swindon (Justin Tomlinson), she and her staff have been trained in debt management. That is certainly something that I plan to do with my staff. People come to us with a range of complex issues, and the more we can skill up our staff, the better.

I have been going to a lot of law centres and citizens advice bureaux recently while considering legal aid cuts. The Mary Ward Legal Centre, which manages a big contract in London, is losing 57 debt advisers due to FIF cuts. Does the hon. Gentleman believe that it is realistic to think that training my three staff members and two caseworkers can replace the 500 expert staff across the country who are being cut? It is insulting people’s intelligence to say so.

That is an absurd comment. It is not in the slightest what I was suggesting. I simply said that those of us in positions of responsibility should do whatever we can to help in the circumstances.

Hon. Members should listen to what I have to say before jumping up and down. All that I am saying is that training our staff to assist people who come to us with a complex range of issues is important, and that part of that training might involve directing people to the most appropriate services.

Well, if the hon. Gentleman does not want to do that for his constituents, that is his choice. I certainly intend to do it for mine.

Of course all Members of Parliament ensure that our staff can provide advice to constituents, but surely the best way to help the most vulnerable people who rely on those services is to ensure that those services are not cut. Government Members have come here to go on about how serious the problems are and how valuable the services are that CAB provide, so why are they queuing up to walk through the Lobby to support a Budget that will remove that assistance?

That proves again that Labour Members cannot understand what they did to this country. The reality of the situation is that whoever might have been in Government now—

No, let me finish. If the hon. Gentleman is going to make a point, he should at least have the courtesy to listen to the response. He was part of a Government that ran up massive debts that the coalition Government must repay. Tough decisions have been made, but even when we are not necessarily happy with some of those decisions, our job as coalition Members is to come here and make it clear what we think our constituents deserve. In saying what I have, that is exactly what I have tried to do. I am trying to support exactly the point that Opposition Members have been making, which is that we need face-to-face debt advice.

The hon. Gentleman must have come across the same sort of cases that I have as an MP, in which people have been given bad advice. My worry about training someone for one day, or even one week, is that it will not provide the level of skills required to advise people in the best possible way. Bad advice is worse than no advice at all.

I think we are getting bogged down by this. Training our staff and ourselves so that we can guide people in the correct direction for debt advice is probably more important now than ever, and that is the exact point that I was trying to make.

We seem to be getting bogged down, but I will give way one more time before making some progress.

I thank my hon. Friend for giving way. In the spirit of trying to work together and helping Opposition Members, we need to be clear that this strengthens the argument for citizens advice bureaux. Help on the telephone and online cannot help provide training to other people who assist the most vulnerable. That supports the argument.

I thank my hon. Friend for that intervention. Perhaps Opposition Members will now reflect upon what some of us on this side of the Chamber are trying to do.

I shall move away from the help and assistance that I am trying to ensure that my staff are able to give people who contact me, and on to some of my concerns. The move away from a face-to-face debt advice service to a telephone or internet-based service has already been commented upon. I have bitter personal experience of debts. A few years ago, I tried to access assistance on some debts and, as much as I do not like to air my washing in public, it was incredibly difficult to access the correct advice on where to go with particular problems. I accrued debts through funding my postgraduate studies, as is the case with many people—in no way am I alone in that. [Interruption.] It was postgraduate education, which has had fees for a considerable number of years and is not affected by any current changes. It was incredibly difficult to access advice on where to go. As the hon. Member for Newcastle upon Tyne North has said, it is not always easy to interact properly with someone in a telephone conversation, and it is difficult to talk about one’s personal financial situation. Talking with somebody over the telephone is no substitute whatsoever for talking with someone face to face.

In support of the point made by the hon. Member for Makerfield, when searching for debt advice, particularly online, it is unclear who provides it at a profit to themselves and who does not. If a company calls itself a national debt or advice helpline, the natural assumption is to conclude that it is a charity, when in fact, as others have commented, it is out to make profits from people’s debts.

I am grateful to the hon. Gentleman for giving way. Would he support a scheme similar to that in Scotland in which debt management advice is more carefully regulated and caps are used to regulate provision?

We had an interesting debate about debt in the main Chamber last week. I was sorry that we could not get to the point where everybody was in agreement, even though I think that everyone was—the procedures and processes of this strange place meant that we ended up with a Division that we should not have had. We should certainly be looking at the way in which we manage people who want to put us into debt.

The issue has three parts. First, we need to deal with the companies that make money out of debt. They will always exist and, as I have said, that is part of life. Secondly, we need to deal with the sort of debt advice available to people who get themselves in trouble. Thirdly, we have to look at the provision for ensuring that people do not get into such a position in the first place. That is why the all-party parliamentary group on financial education for young people, which is chaired by my hon. Friend the Member for North Swindon, is so important. Only yesterday, I was at Goole high school and spoke to its deputy head about the delivery of financial education in schools and how he thinks we could roll it out nationally. That is certainly something in which I plan to play a big role in the all-party group, which he was so key in establishing.

In conclusion, it is not hypocrisy for us to say that people involved in citizens advice bureaux—

I must say that, sometimes, the debate in this place is worse than when I taught year 1 last year—the children gave more sensible responses. I have tried to make an important point on behalf of my constituents and have ended up being heckled in a childish way on an issue that is so important to people outside this place.

The reason that I have taken part in this debate is to say that the work that my local debt advisers have been doing through the financial inclusion fund is incredibly important. I know that the Minister shares my huge concern about the issue, so how exactly will the system that we propose to implement work, and what is his response to the comments made by Members on both sides of the Chamber about the face-to-face element? We need to know more.

As I said at the beginning—I will end where I began—this is such an important issue. Managing debt is a part of life now and, unfortunately, people get themselves into debt simply by making bad choices, which we have all made in our lives. We have to make sure that the support available to them is appropriate. I end with that plea. I am less concerned about the mechanism and more concerned about what is actually delivered to my constituents. In my view, that requires some sort of face-to-face interaction, whoever that interaction is with.

I apologise, Mrs Riordan, that I will have to leave before the debate’s conclusion in order to attend a Public Bill Committee. I am pleased to follow my neighbour, the hon. Member for Brigg and Goole (Andrew Percy), and I welcome the concerns expressed by Members on both sides of the Chamber. Our analyses may differ, but that does not alter the fact that we share a common concern. The reason why we are taking part in this debate and why it is so well attended is to get answers from the Minister to the points so ably made by my hon. Friend the Member for Makerfield (Yvonne Fovargue), whom I congratulate on securing this timely and important debate.

We are in a time of falling growth, rising unemployment and rising prices fuelled by the VAT increase. That may well mean that, notwithstanding the past, more families and people are more likely to get into financial difficulties in the future. They are, therefore, in danger of becoming prey to organisations that take advantage of the financially vulnerable, putting desperate people into a state of greater desperation.

My hon. Friend the Member for Walthamstow (Stella Creasy) has done much already in this Parliament to raise awareness of the need to control the actions of loan sharks. We also need to ensure that accessible, independent debt advice remains available for people so that they can square up their affairs and remain healthy and effective in society. Statistics nationally show that demand for debt advice is already on the increase. Last year, Citizens Advice assisted 580,000 people with £2.4 million-worth of debt problems, which is an increase of 23% on the previous year. In addition, 1.4 million people—one in every 33 UK adults—received advice from charities such as National Debtline.

The financial inclusion fund was deliberately located in areas such as Scunthorpe to meet the needs of communities that had difficulty accessing debt advice. The vision was to create a step change in the availability of face-to-face debt advice services, and Members on both sides of the Chamber who have spoken so far have insisted upon the importance of those services in addressing the issues. Every year, the FIF debt advice services have directly helped more than 100,000 people nationally to resolve their debt problems. Audits and evaluations show that the services have been effective and well targeted at people who need such advice.

The situation in relation to the provision of independent debt advice in my Scunthorpe county constituency is particularly concerning, and I fear that it is typical of many other parts of the country. Some 200 people a year are currently being supported by FIF debt advice, and many of them have problems or communication needs that require face-to-face support for it to be effective.

An additional problem in the Scunthorpe area is that there is currently no legal service contract for debt advice, which exacerbates the problem for all advice agencies. The previous contract allowed for 400 new matter starts, or cases, per annum. The local firm of solicitors who provide this service tell me that all their clients were referred to them from other agencies, such as the CAB and North Lincolnshire Homes, which do not have the capacity to provide that advice themselves. To its credit, that solicitor’s practice is providing advice on a pro bono basis, but that is clearly not sustainable.

Does my hon. Friend agree that a significant concern about solicitors providing debt and other forms of advice as part of a package is that the legal aid changes will narrow access to advice, so that it is given only when a family home is at risk? As we know, creditors like to negotiate the whole package of debt together, including mortgage debt and other personal debt. However, that will no longer be possible because we have no single funding stream through which all debt advice can be provided.

My hon. Friend is completely right. Early intervention in providing debt advice saves money, saves homes and saves lives. There is a real danger that the legal aid changes will exacerbate an already difficult problem. I hope that a new contract will be agreed in the Scunthorpe area, but when the contracts expire in 2014, no further debt advice of that sort will be provided locally.

All welfare debt legal aid will be taken out of scope if the Green Paper’s proposals go ahead. The financial inclusion fund provided a complementary service and was of a highly technical nature. Advice was provided on consumer credit, insolvency, mortgage arrears and other matters of that kind. The double-whammy of these cuts and the local authority cuts will be absolutely fatal to advice centres across the country. The type of advice provided shows that it is ludicrous for Government Members to say that the matter can in some way be picked up by amateurs. We are talking about highly technical issues that are for professional people to advise on.

I thank my hon. Friend. I think all hon. Members agree that these are specialist advice services with specialist staff. One of the points my hon. Friend the Member for Newcastle upon Tyne North (Catherine McKinnell) made was about the danger of losing specialist expertise. That is another consequence I am sure nobody wants to see. In Scunthorpe, the part-time debt adviser at Crosby community association was withdrawn in December. The area is now losing the FIF debt advice, and the debt advice provided through legal aid is not in place. North Lincolnshire credit union does not provide debt advice, so the local situation is bleak.

As my hon. Friends have pointed out, there is a direct correlation between debt advice and ill health. My hon. Friend the Member for Makerfield mentioned the case study of John. Grant Thornton’s recent study, “Psychology of Debt,” demonstrated that one in two adults with debts have a mental health problem and one in four people with a mental health problem is also in debt. It is therefore clear that the time spent helping people to address their debt problems can help their overall health and well-being. Money spent by the Government on debt advice is likely to save money being spent on the health service. Research by Friends Provident found that the provision of free debt advice allowed creditors to recover in one year £1 billion more than they would otherwise have done.

I am about to finish.

Independent free debt advice is good for the individual, good for the public and private sectors and good for UK plc as a whole. I hope that the Minister will take this opportunity to spell out the Government’s plans to ensure that independent debt advice remains available and accessible to all those who need it. It is crucial that the Government do not abandon people with debt problems at this time.

Order. There are two more Members who wish to speak. If they both keep their comments to five or six minutes, I shall be able to call them both.

I add my thanks to those given to the hon. Member for Makerfield (Yvonne Fovargue) for initiating a debate on an issue of massive concern for my constituents. As Members of Parliament, we often have to deal with constituents who, for one reason or another, have fallen into debt and are going through a difficult and distressing time. They need support and advice that is tailored to them directly because that can make the difference between getting back on track or falling off the rails completely.

I am sure that I speak for everyone in the Chamber when I say that one of the most important resources that we call on in our working lives is the local citizens advice bureau. I particularly call on the CAB in Warwick and Leamington, and I thank those who work for the CAB for their contribution to our local communities. Since becoming a Member of Parliament, I have been continually impressed by the work of my local citizens advice bureau, especially its professionalism and dedication. Through the CAB’s work, individuals are able to get the support that they need, and consequently overcome the difficult situations in which they find themselves.

Last year, Warwickshire citizens advice bureaux helped nearly 26,000 individual clients and resolved more than 92,000 problems. Nearly 300 local people gave up their time to help Warwickshire CAB and they generated unpaid work worth nearly £1 million. At my local CAB for Warwick district, 5,000 local people were helped with around 22,000 problems. Around 80% of CAB work is taken up with debt, benefit, housing and employment issues. We simply cannot afford to lose that service. Reductions in funding will damage citizens advice bureaux across the country, particularly in south Warwickshire. Such cuts threaten to create an advice desert for those who have problems with debt and social welfare law. Thousands of individuals could be without the help of organisations such as the CAB, and they will be prevented from receiving the vital help that they need.

It is not as if citizens advice bureaux do not provide value for money. In Warwick district CAB, over the past year, just one money adviser dealt with 217 new clients who owed a total of more than £3 million—an average of more than £20,000 per client. The CAB has saved tens of millions of pounds in the long term and it has brought considerable benefit to local communities across the country by helping people to move forward with their lives and access the support that they need. There is a clear case for maintaining spending on such things, and it makes no financial sense to push problems from one place to another. People’s problems will not go away merely because we stop funding help for them. Such problems will get worse, until the point when the state has to intervene in more expensive and intrusive ways. We are talking about a short-term saving at long-term expense.

I am hugely enjoying the hon. Gentleman’s speech. Does he agree that it is imperative that we do not lose the highly skilled and trained staff who are employed by the financial inclusion fund, because that too would be a short-term financial gain at the expense of a long-term loss to the service?

I am trying to impress upon the Minister that these services need to continue and that they are important to our communities. It is important to make that case today. Again, I thank the hon. Member for Makerfield for initiating a debate that gives us the opportunity to raise the profile of our CABs and the important work they do.

Organisations and institutions will still be required to channel their support. The CAB is an example of an organisation that is able to turn the desire of local people to help those in trouble into practical action. Warwick district CAB is assisted by more than 50 volunteers, who are able to make a huge difference to their local community. That capacity will diminish and the opportunity for individuals to help will be reduced if there are not enough full-time staff on hand to train, organise and manage volunteers. The loss of full-time staff will therefore have serious consequences that cannot simply be picked up by extra volunteers. If we reduce the funding given to such important organisations, it sends the wrong message at a time when we are looking to galvanise people into doing more for their local community and spend more of their time helping worthwhile causes. I appreciate why the Government are looking to reduce spending, but I do not believe that the calculus of cost has been accurately measured in this case.

My hon. Friend will be aware that only today the Government have announced that a one-off revenue of £800 million will be generated through changes in taxation on the banks. The interest alone that the Government will save on their own debt financing as a result of that move is enough to continue funding the financial inclusion fund in perpetuity.

My hon. Friend makes a very interesting point, which I am sure other people will pick up.

When we were campaigning during the last election, we made a promise to protect the front line. It does not get much more front line than the CAB. I urge Ministers to think again and look elsewhere for reductions in public spending. They should engage with the local legal profession, voluntary and community groups and other stakeholders to see whether other long-term savings can be made in an area of justice that will not impact heavily on our front-line services.

It is a pleasure to see you in the Chair this morning, Mrs Riordan. I congratulate my hon. Friend the Member for Makerfield (Yvonne Fovargue) on securing this important and timely debate.

A few months ago, I spent a morning in the court—which, incidentally, is also to be closed by the Government—in Bishop Auckland with a CAB adviser who was helping people who were in court because their rents or mortgages were not paid, and they were under threat of losing their homes. That morning I saw how vital the service provided by the CAB is to people at the critical moment when their homes are at risk. I was, therefore, absolutely appalled to discover that the Government are proposing to end the financial inclusion fund in March.

Last year, 1.5 million people were given advice on debt by citizens advice bureaux. Those services were concentrated on people who are most in need in deprived and low-income areas. In my constituency, there are three CABs. The Wear Valley CAB lost a grant of £95,000 in the FIF cuts, together with the legal aid cuts and the cuts that have been forced on the county council by the Secretary of State for Communities and Local Government. It will lose half its workers, which means that there will be no debt advice whatever in the whole of the Wear Valley district. The branch manager, Carol Shreeves, wrote to me in an e-mail:

“We have this week begun to tell clients coming to the bureau that we cannot take them on. Many have been very upset, as it has taken a lot of courage for them to come and seek help. The cut means that the bureau will have to reduce the number of hours it opens and will need to make approximately half its staff redundant. The difficulty is that since Christmas we have seen rise in demand for our services as various statutory agencies trying to save money at this difficult time have been referring clients to us…It seems to be generally accepted that debt advice is needed but the support for it is being withdrawn from all sides.”

Does my hon. Friend agree that when there is an expansion of debt relief orders, requiring skilled advisers who have to take a complex examination to qualify to be an intermediary in the scheme, it is completely the wrong time to take funding away from skilled debt advisers? The CAB deals with 70% of debt relief orders, so there is no point in expanding the scheme and then leaving people with nowhere to go. There is no point in the expansion of the scheme.

My hon. Friend has made an extremely well-informed point and demonstrates to us all the complexity of this area and the significance of losing that kind of advice. Of course, the one group of people providing more advice are the loan sharks and the independent debt advisers, who are going round my constituency putting cards through letter boxes, saying, “Come to us”. If people go to them, they will be directed to precisely the people who will put them into a worse situation.

At the same time that that is happening, the Government are cutting the growth fund, which is the money that the Labour Government put into support for credit unions—another place where people can get low-cost finance and have a chat with somebody about how to manage their money.

This is not just about CABs or other advice agencies. The benefits advice shop in Dudley does really important work to get local people the help they need if they have been made redundant or face losing their home, and helps many pensioners receive the benefits to which they are entitled. Is my hon. Friend aware that it is under threat from the local authority as a direct result of the Government’s cuts to local council spending? Does she agree that it is complete nonsense to cut such a service? It costs £300,000 to run but it brings in £2 million to local people, £1.5 million of which is spent in the local economy supporting local businesses.

My hon. Friend is absolutely right. Although Dudley is very different from Teesdale, which is another part of my constituency, the situation there is similar. The Teesdale CAB also lost its grant and will have to cut the jobs of two people. Last year, it dealt with 220 cases and a total of £2.7 million of indebtedness.

The third CAB in my constituency is in Sedgefield. It too lost its financial inclusion fund grant of £150,000. Last year, 41% of its work was debt-related. All the debt workers in the Spennymoor CAB will be made redundant in April. The CAB social policy officer in Sedgefield, Martin Jones, said:

“The effect of ending the FIF scheme…will be catastrophic. The level of services that we can provide to our clients will be totally decimated as the CAB will lose over half of our debt team. And all this at a time when unemployment and inflation are rising and putting increasing stress on our clients, many of whom are the most vulnerable in society”.

I confirm that that is correct. On Friday, I learned that in just one part of my constituency, housing benefit cuts will mean that people will have to find another £1 million from their own pockets to pay their rents.

The Minister does not seem to understand that it is all very well to talk about the big society, but the vision of the big society is collapsing. In these communities, where incomes fall and businesses do not do very well due to the Government’s irresponsible policies, CABs will not be able to raise alternative funds to replace Government grants. Furthermore, this is a policy of total financial lunacy. It costs £150 to give a family debt advice. It costs £15,000 to re-house a family. I shall be very interested to hear how the Minister can defend such a lunatic policy.

It is a great pleasure to serve under your chairmanship, Mrs Riordan.

I begin by congratulating my hon. Friend the Member for Makerfield (Yvonne Fovargue) on securing this debate on the very serious subject of debt advice, and on the important work that she herself has carried out to highlight the devastating effects that debt, and worrying about debt, can have on people’s lives. I will not repeat the excellent comments made by hon. Members who have outlined the problem clearly.

The number of people seeking debt advice is increasing, and the statistics are alarming. In 2009-10, the CAB dealt with some 2 million debt issues. The main non- fee-charging advice agencies offering debt advice are the CAB, National Debtline, Consumer Credit Counselling Service and Payplan. The CAB and National Debtline receive no money from the credit industry, whereas the CCCS and Payplan do. Of the four agencies, only the CAB offers an intensive, personal counselling service on debt.

Citizens advice bureaux, as we know, are generally staffed by volunteers, most of whom are generalist advisers, with some paid specialist advisers. Specialist advisers deal with the most complex cases, but they also supervise volunteers who undertake simpler casework in the specialist’s area of expertise. In the majority of cases, when a specialist adviser is made redundant, the bureau concerned generally no longer offers an advocacy service in that advice area. The bureau cannot expect volunteers to carry on without that back-up. The CAB is a highly professional organisation that recognises the considerable risks of people proffering advice that they are not qualified to give. Without the back-up of specialist advisers, they know that they have to limit the advice they can offer to clients.

In many cases that may mean that generalist advisers can only give the client access to information about the options and procedures that he or she might pursue. Providing information for a client to follow is a path used by bureaux when a client considers themselves sufficiently articulate, literate and confident to proceed on their own. However, most debt advice clients who approach the bureau for advice feel unable to communicate effectively with their creditors. They need the advocacy that specialist advisers provide.

Bureaux do not offer debt advice in isolation. The client also benefits from benefit, housing and employment advice. At the CAB they know that they are not just dealing with a debt problem; they are dealing with a human being. A person has their own unique set of circumstances: work circumstances such as losing their job or being put on reduced working hours, or retirement or giving up work to care for a family member; or personal circumstances such as relationship breakdown, dependent children and so on. People may not initially present as debt cases, but it may become apparent in talking through their other problems that they have an underlying debt problem.

Citizens advice bureaux have a highly trained network of volunteers who understand what they are and are not qualified to advise on. They know that if a client has complex debt problems that they are not qualified to advise on, they can arrange for them to see the appropriately qualified member of the team. CABs have led the way in using volunteers but making sure that they have proper training, and that they are backed up by qualified teams. In that way, they are able to make the most of their volunteers and to offer real value for money.

As Dame Elizabeth Hoodless, who is retiring after 36 years in charge of Community Service Volunteers, said:

“We know we need to save money, but there are other ways of saving money without destroying the volunteer army.”

She used the example of libraries and pointed out that people may want to help in a library but do not want to run it. The same is true of the CAB: volunteers are happy to come along and carry out clearly defined duties for which they have been trained, but they know that they can be more effective because they can call on a team of professionals when they recognise that a problem is beyond their competence. They certainly do not want to run the business.

We all appreciate the idea of a one-stop shop; we yearn to simplify matters, and we recognise that people often find themselves in a Catch-22 situation and have to deal with several different agencies. One of the vital features of CABs is their ability to deal with the whole range of problems that a client may have. That is why taking away any one of their streams of funding will have such a serious knock-on effect.

Let us look at the overall funding of the CABs. First, there is huge input from local councils, which provide some 43% of the total income of CABs. We all know that councils are facing severe difficulties in planning their budgets for the next few years and that in order to protect their statutory services, they will look at all options, including cuts to funding for CABs and similar organisations in their area.

Then there are the cuts in legal aid. A cut of one sixth of the legal aid budget will mean that some £350 million out of £2 billion will be cut. That, too, will have a serious effect on CABs because of the franchise work that some bureaux do. It is completely incomprehensible that legal aid will be available for debt work only when a person’s home is at immediate risk. One does not need to be a specialist adviser to recognise that early intervention is far preferable, much cheaper and more effective.

My hon. Friend is absolutely right. In my constituency, three of the four advice agencies have lost all their local government funding, and if the Green Paper goes through, they will lose 90% of their Legal Services Commission funding. Even services that the Government say they will protect will not be available because the advice centres will have closed, and areas such as my constituency will be advice deserts. There simply will not be any advice available to anyone in most parts of the country.

My hon. Friend vividly highlights a serious problem; that is exactly what will happen.

There will be cuts to advice on education, employment, family, housing, immigration and welfare benefits. Those cuts will have a direct impact on funding for CABs and their ability to provide a comprehensive service, but they will also have a direct impact on clients’ debt problems. If clients are unable to fight for the welfare benefits or extra provision for a special needs child to which they are entitled, they may be faced with a worsening debt problem.

Given the cuts to legal aid and to CABs through the withdrawal of the financial inclusion fund and local government funding, CABs will struggle, and many will close. The Government’s Office for Civil Society has a transition fund that will apparently provide grant funding to bridge any gap, at least in the short term, but it applies only to England, and it applies only to organisations with an income of between £50,000 and £10 million, which excludes some CABs. Can the Minister clarify whether any of the transition fund will be used for debt advice and, if so, how much?

What are the alternatives to organisations such as the CAB? How else can debt advice be delivered? Are the Government expecting the Consumer Credit Counselling Service and Payplan to deal with all the additional workload of clients who will no longer be able to go to a CAB? Those organisations receive funding from the credit industry, and although Payplan has considerably expanded its services in recent years, it is simply unrealistic to expect it to be able to expand quickly enough to deal with an additional 2 million cases a year. Moreover, it deals with debt; it does not deal with the full range of clients’ problems, which are often inextricably linked to their debt problems.

We have to ask the Government what alternative they propose. Is it debt management companies? The record and practice of many such companies gives rise to serious concern. In September 2010, the Office of Fair Trading told 129 debt management firms that they faced losing their consumer credit licences unless immediate action was taken to comply with its debt management guidance. The OFT found misleading advertising; in particular, firms fail to disclose that a fee is retained by the business. In fact, firms misrepresent debt management services as being free when they are not. That is serious, as clients already have enough difficulties without being exploited still further.

Does my hon. Friend share my concern that meetings were sponsored at the Tory party conference by the very organisations that are perpetrating scams on our constituents?

I certainly share that very real concern, because not only is the advice not free, it is poor. The OFT found that front-line advisers working for debt management companies lack competence, and provide poor advice based on inadequate information. Not only is the client landed with having to pay a fee that is not made clear in the firm’s advertising, they are then poorly advised. Receiving poor advice on debt management is a serious business; it can cost the client considerable amounts of money.

Furthermore, the OFT also reports that there is low industry awareness of the Financial Ombudsman Service rules for resolving consumer complaints. Even with all the work that CABs and similar providers are doing at present, we currently have a situation where 129 companies that are not fit for purpose are trading on people’s debt problems.

What will happen to a CAB’s clients when the funding for debt advice is withdrawn? Some may not seek debt advice at all, perhaps because they do not know where else to go, or perhaps because they realise that debt advice companies will charge them fees and they worry, rightly, about being exploited and getting into yet more difficulty. Many will be driven to seek advice from debt management companies.

Does my hon. Friend agree that the Government’s actions suggest that the concept of the big society is, indeed, a big sham, and that the real message coming from them is that if someone is struggling with debt, they are on their own?

Indeed I do.

People may not go to debt management companies because they realise that the advice given could be substandard, and that they will be charged fees and could end up in more difficulty, but many will be driven to seek advice from such companies, many of which have been shown to be doing a poor job. We could see a mushrooming of similar companies, out to profit from the loss of CAB advisers, and many more clients being charged fees for poor advice. No responsible Government should push forward policies that will allow that to happen.

What are the Government proposing as an alternative to the excellent work that CABs do? Can the Minister tell us how the proposed national money advice service will improve on the debt advice service that is currently funded by the financial inclusion fund and delivered through organisations such as Citizens Advice? Can he explain how clients who are currently being helped by CABs will be better served by the national money advice service?

Debt advice is a specialist area, and it is time-consuming and labour-intensive. No matter what expertise and computer programmes a debt adviser has, every client will have slightly different circumstances. It takes time to work through the problems, and for the client and adviser to discuss what the possible solutions might be and, when appropriate, for the adviser to arrange advocacy. Can the Minister explain what will happen to clients if the national money advice service is not up and running before CABs have to make their debt advisers redundant?

One of the problems for any new service is getting known and reaching the people who really need help. Citizens Advice is a well-established organisation—it is an established brand with a good reputation—and many people know that they can go to it to seek advice. People from all walks of life know where their local CAB is. Can the Minister explain how people will know about the national money advice service, and where they will go to access it? Can he explain the rationale for destroying an established service?

Given the economic outlook, with many more workers likely to lose their jobs due to Government cuts and the knock-on effects in the private sector, why does the Minister want to destroy a competent, independent, local, user-friendly service such as Citizens Advice and leave people bereft? At the moment, it is offering people very much needed and valuable debt advice.

I congratulate the hon. Member for Makerfield (Yvonne Fovargue) on bringing the subject to the attention of the House, and it is a pleasure to serve under your chairmanship, Mrs Riordan.

Many important questions have been asked in this debate. At the outset, let me commit the Under-Secretary of State for Business, Innovation and Skills, my hon. Friend the Member for Kingston and Surbiton (Mr Davey), who is responsible for this area, to writing to Members who raised questions that I am unable to deal with giving specific answers. That is the least that Ministers can and should do in response to Westminster Hall debates.

I will not give way straight away because I need to make progress. I have 10 minutes to deal with the debate. I will give way if I get the opportunity to do so.

I am not usually terribly critical about Back Benchers making comments. The contribution of hon. Member for Bishop Auckland (Helen Goodman) was pretty intemperate, so she will understand my response being in the same vein.

I made a commitment that the Minister responsible will write to Members who have raised sensible questions, as the Opposition spokesman, the hon. Member for Llanelli (Nia Griffith), did, and will deal with them in a particular and specific way. I shall restrict my comments to some points of principle and detail, and make one or two further commitments.

Before I make the points of principle, let me add this: three points have emerged from the debate. First, debt is closely related to more general well-being, and that needs to underpin the Government’s approach. Secondly, our approach should be co-ordinated and, thirdly, coherent. That has come across strongly from Members on both sides of the Chamber. We heard a speech from the hon. Member for Bishop Auckland, which I critiqued earlier, and speeches from my hon. Friends the Members for Solihull (Lorely Burt), for Warwick and Leamington (Chris White) and for Brigg and Goole (Andrew Percy) and from the hon. Members for Newcastle upon Tyne North (Catherine McKinnell) and for Scunthorpe (Nic Dakin). The hon. Member for Scunthorpe made one point particularly clearly when he rightly said that debt was related to well-being and mental health in a very broad sense. Other Members pointed out that we need a consistent and coherent approach.

I shall make six points of principle and then move on to some points of detail that inform the Government’s position.

I appreciate the Minister’s approach, but will he answer the central question? Face-to-face advisers cover up to £2 billion of debt every year and about 100,000 people are advised. Who will do that now that all those people will lose their jobs? Who will pick up the burden?

I said that in the second part of my speech I would try to come to the specific measures the Government will take. I hope I will have time to do so.

The first of the six points of principle is that we want to ensure that the debt management regime means that those who can repay debt do so and those who cannot pay get appropriate debt relief. Debtors and creditors should benefit from a system that is clearer about expectations and provides good advice in advance; I will come to how that advice might be provided later. The picture painted by a range of hon. Members of an entirely haphazard system is not the Government’s intention and it would not help either responsible lenders or debtors. I understand that and it will inform what we do.

Secondly, we want to see empowered debtors accessing good quality preventive advice, as well as advice to deal with debt, to ensure that the most appropriate solutions are found for the debtor’s particular difficulty. Thirdly, some stakeholders have called for a review of the whole lending and borrowing landscape—a point that has been echoed today. I think such a wholesale review is necessary, and the Government will go about that.

Fourthly, we are told that some debtors and, potentially, their advisers, are confused by the array of choice. We heard today about independent debt advisers. We are aware of the issue, and I take the point about the OFT’s condemnation. Fifthly, it is important that we clarify the responsible options available to people rather than allowing a free-for-all in which the advice they receive is of varying quality.

I will deal with that specifically in the second part of my speech.

The OFT survey, as the hon. Lady said, points out that many players in the field are less than scrupulous, and that must be dealt with. Finally, we are looking for evidence on how the regime should work. We have called for evidence, and much has been received. I invite the hon. Member for Makerfield, who has expertise on this issue because she managed the CAB in St Helens, and others to play their part in the review.

On the specific measures, the House will know that the Department for Business, Innovation and Skills has been responsible for face-to-face debt advice on behalf of the Treasury for about five years. I am sure the House also knows that the financial inclusion fund, which provided funding for that project, was always due to close in March 2011. I understand the worry about the decline of face-to-face advice, which all contributions today seemed to reflect. Face-to-face advice must support online and telephone advice, and we will look at how to reinforce that.

Funding of £1 million has been confirmed for next year for the National Debtline, as has been acknowledged. We need further work on how to support some form of continued additional face-to-face guidance. I will ask the Under-Secretary of State for Business, Innovation and Skills, my hon. Friend the Member for Kingston and Surbiton, to clarify as soon as possible, in a statement to the House, precisely how, when, why and whether that might happen.

Secondly, the Government are working with the Consumer Financial Education Body to provide better advice on debt. As hon. Members know, it will shortly be renamed the money advice service. It was set up to take over responsibility from the Financial Services Authority to promote understanding of the financial system and raise levels of financial capability across the UK. It is funded by a levy. We will launch the new service in spring. That preventive approach is critical to stop people getting into difficulties, with the results we heard about today.

The Government will also review the framework for financial services regulation. Two new regulators will replace the FSA: one focused on prudential issues with the Bank of England and the other on markets and consumer protection—the Consumer Protection and Markets Authority. We see this as an opportunity to improve how consumer credit is regulated and to create a simpler, more responsive regime.

As Members know, we have also launched our review of consumer credit and personal insolvency. It is taking an end-to-end view of consumer credit and personal insolvency, from the decision to borrow money through to how we support people in difficulty and help them to resolve their debts.

The feature that characterised most contributions to the debate was the CAB. As a constituency Member of Parliament, I am very aware of its work. I visited the CAB in Spalding to discuss these issues. Indeed, one of the many virtues of our system of parliamentary representation is that Ministers are also constituency MPs. I heard what was said today about the CAB and its importance in providing not only debt advice, but a holistic approach to advice that reflects the connection between debt, well-being and the wider range of challenges that many people face.

I welcome the announcements the Minister has made, but does he see that it is somewhat incongruous for a Government who are, rightly, concerned about getting their own debt under control to cease funding for voluntary sector support to people to get on top of their own debt?

Indeed. I think of John 8:7,

“he stood up and said to them, ‘Let him who is without sin among you be the first to throw a stone’”.

As the hon. Gentleman said, it is right that we should be consistent.

I shall make one further commitment on the CAB: as a result of representations received, and this debate, we commit to looking at what to do about the CAB on a cross-governmental basis. Ministers and Governments should be responsive to these debates and to arguments, which were sometimes well put, although at other times slightly partisan. They were no doubt put with a passion that reflects constituents’ concerns. On that basis, there will be a cross-departmental examination of what to do about the CAB.