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Debt Advice and Debt Management

I certainly am, and I am going to deal with the issue later. I understand that a considerable number of this body's staff are to be cut, which is bound to have a tremendous knock-on effect for services across the piece, not just those for young people. Insolvency is also on the increase. Earlier this year, it emerged that 135,000 people were declared insolvent in England and Wales in the previous 12 months—the highest figure since 1960. It should also be emphasised that it is the legacy of debt that is the real concern. There was a huge rise in consumer debt from the 1980s until 2007, and although consumer spending has reduced in the last few years, the debt remains, accumulating vast amounts of interest as time goes by. Contrary to what some may think, such debt is not predominantly due to reckless overspending. According to figures from the University of Nottingham, 50% of debt problems can be attributed simply to changes in individual circumstances, particularly unemployment or a drop in wages—something that is not too uncommon in the present grim economic climate. I know that it would be easy to start outlining the reasons why even more people will need help in the coming years as a result of the Government's policies, but I believe that the purpose of the debate is to concentrate on how we can best help the victims. If we are to help people, we need to retain and enhance the right services and ensure that there is appropriate regulation. Tackling debt head-on can have far-reaching benefits. One pound spent on debt advice saves £2.98 in future spending. A report from the Centre for Social Justice, published in October and entitled ““Completing the revolution: Transforming mental health and tackling poverty””, estimated that debt advice could save about £30 million for the national health service, £50 million in legal costs and £220 million in productivity gains, as well as providing other benefits such as debt repayments to creditors. I am proud of the good work that the Labour Government did in helping those in debt. Since 2005 the financial inclusion fund has done tremendous work, focusing on the most vulnerable members of society and providing free advice for anyone who needs it. I was relieved when, despite the current Government's initial decision not to maintain the fund, it was announced in February this year that £27 million would be made available so that free face-to-face debt advice could continue to be funded during the coming year. Now I am concerned about future provision, and especially about the possibility that local government—which is also under a considerable financial constraint—will be required to do more in this regard and Government cash will dry up. The Money Advice Service, set up by the Government to co-ordinate debt advice, is evidently a new body still trying to find its feet, but we desperately need a clarification of its role. For example, if it aims to co-ordinate debt advice, does that include fee-charging services? I hope that the Minister will publish the whole business plan for the service, particularly as I understand that—as was suggested earlier by my hon. Friend the Member for Ochil and South Perthshire (Gordon Banks)—staff numbers are to be cut dramatically. We must also maintain the excellent practice that exists in our constituencies. In my own constituency the Cabin, part of the Stockton district advice and information service, provides targeted advice for young people. It depends on grants to survive, and I was pleased to learn that the lottery was helping to fund them, but that type of funding is extremely limited, and it will run out. One young person who was dealt with by the Cabin had approached a fee-charging money management company. According to its assessment, he would be able to pay £100 per month, of which £29.50 was a monthly administration fee. He tried his best to keep up the monthly payments, but knew that he could not really afford them in the first place. He visited the Cabin, which arranged a debt relief order for him, basing his monthly contribution on his current circumstances. He was then able to put his life back on track. The Cabin's manager, Janine Browne, is worried about young people finding their way to the very kind of organisation that we want them to avoid. She told me:"““We find the majority of debt collection agencies are very aggressive and if young people cannot access appropriate advice and support they will try other avenues which may not be effective or necessarily appropriate to their circumstances. Without support they bow to pressure.””" What is happening with debt management companies? In 2010-11, the Citizens Advice service in England and Wales dealt with 3,155 complaints about debt management services, 5% more than in the previous year. The key complaints were about poor advice, poor service, excessive charging, cold calling, and up-front fees for services that did not materialise. Most debt firms that have been audited have also failed to comply with guidance from the Office of Fair Trading in several respects, the main problem being misleading advertising that represents their services as being free when they are not. Through up-front fees, the companies take their clients' cash for themselves first and their creditors second, leaving people disheartened by the lack of progress in dealing with their debts. What can we do? I have a number of questions for the Minister. Free debt advice is currently widely available and easily accessed. How will he protect and promote those services? The current system of self-regulation is failing. How will he enhance it? Will he ban cold-calling canvassing for new business and the upfront fees? Will he introduce tougher licensing and a requirement for firms to make clear their fees on any advertising and on initially meeting clients?