Government announces extra £38 million funding for debt advice providers to help people affected by coronavirus

Money and Pensions Service will set out process for allocating funding 'in the coming weeks'

The government has announced an extra £38 million funding for debt advice providers in England to help people affected by coronavirus (COVID-19).

Acknowledging the need for services to help people who are struggling with their finances due to COVID-19, HM Treasury said today that the £37.8 million support package will be managed by the Money and Pensions Service (MaPS) and will be made up of £20.6 million from the government, £14.2 million raised through a one-off increase to the Financial Services Levy, and a further £3 million from the existing MaPS budget.

NB - the government also advised that, as delivery of debt advice is a devolved matter, the additional funding will be matched for the devolved administrations, resulting in an extra combined £5.9 million for Scotland, Wales and Northern Ireland.

Confirming that it will set out the process for allocating funds in the coming weeks, MaPS says that it has committed to the following - 

• ensuring 1 million additional people in England get debt advice over the next 12 to 18 months;
• delivering enhanced money guidance for a further 2 million across the UK, to offer an earlier intervention for people affected by the coronavirus outbreak and to reduce the number who go on to need full debt advice; and
• advancing projects to maximise the capacity of existing debt advice and help as many people as possible, such as the Pilot of Adviser Capacity and Efficiency.

Commenting on the new funding, Chief Executive at the Money and Pensions Service Caroline Siarkiewicz said - 

'This pandemic is first and foremost a health emergency, but for many the longest lasting impact will be a financial one. Experience and evidence tell us that the number of people needing formal debt advice in the wake of a major event like this increases slowly at first but is then likely to grow for many months. When the greatest demand for debt advice hits, potentially in 18 months’ time, we need to be ready and that means acting now.

Debt services are already over-subscribed so we’ll be working hard to help people early, before their financial situation gets too bad. We already have projects under way to help deliver debt advice differently, making better use of data and helping people find the advice that is available more efficiently. For people facing money struggles it’s important they know we are by their side to help them through – not just now, but for the many months to come'

For more information see Extra £38 million for debt support in England in the wake of Coronavirus from singlefinancialguidancebody.org.uk

Update (2 September 2020) - the first tranche of the funding has now been allocated by MaPS with up to £7.5 million being allocated to three debt advice providers – Christians Against Poverty, PayPlan and StepChange.