What do the parties’ election manifestos offer for people in problem debt?

By Grace Brownfield, Senior Public Policy Advocate, StepChange

We’re now just two weeks away from Election day and each of the main parties has published their manifestos. We take a look at what they did, and didn’t, offer for people in problem debt.

By the time the Westminster Parliament is back in full swing in January, StepChange will be in the midst of our busiest month of the year. January tends to see more people than any other month getting in touch for debt advice. This is the result of a perfect storm of factors such as the pressures of Christmas spending, people desperate to use the new year to get out of debt, and other life changes that cause financial difficulty (unemployment and relationship breakdown, for example, are common reasons for debt among our clients).

It doesn’t take a political genius to predict that this election is being fought primarily on a few key issues: primarily Brexit and public spending on the NHS and education. However, for the over 3 million people heading into the new year in severe problem debt and the further 10 million starting 2020 showing signs of financial distress, the big question is what will the next government do to help them?

The answer is, unfortunately, that the picture is mixed.

The good news

There are some welcome commitments littered through the main parties’ manifestos to improve the social security system — an important safety net that can, when it works properly, help people cope with life shocks and avoid problem debt.

Labour pledged to remove the Universal Credit five-week wait, which we know is an avoidable driver of financial difficulty and hardship, as part of a package of reforms with a view to scrapping and replacing the benefit in the longer term. The Liberal Democrats said they would reduce the wait to five days and set out other measures to build “a safety net that works”. The Conservatives pledged to “do more to make sure that Universal Credit works for the most vulnerable” while the SNP said they would push for a halt to the roll-out, among other measures.

We would welcome greater clarity on key issues like how social security payments will meet and keep pace with the cost of living, and how vulnerable people will be protected against unaffordable deductions from benefits to repay debt, and we will keep pushing on these issues post-election — but it is positive that all of the main parties acknowledge the need for change.

The bad news

Given the millions of people in debt now, it is disappointing that there was not more in the manifestos about how the parties plan to support people to get out of debt and to reduce the harm that it causes.

To give credit where it’s due (excuse the pun), Labour said they would cap the total amount that can be paid in overdraft fees or interest on a loan. The Liberal Democrats, meanwhile, highlighted the link between mental health issues and financial difficulty, pledging to end threatening debt collection practices (although they did not go into detail about exactly what this meant). In Scotland, the SNP has pledged that the party’s MPs in Westminster would push for the payday loan cap to be lowered, while also extending it to cover credit card interest and unauthorised overdrafts.

Our verdict? All the parties need to go further

We’re disappointed not to see more in the manifestos, but it shows us how much more we still need to do to push problem debt up the policy agenda.

We want to see clear commitments to push forward with changes that could make a huge difference to people in debt: most notably for England and Wales, implementing a statutory breathing space scheme — giving people time to get help with their debts without being chased for what they owe — and introducing an independent regulator for the bailiff sector.

Good progress on both of these issues has been made during the course of the previous Parliament. Both have strong cross-party support. Yet there is now a real risk that they get lost somewhere between this government and the next. This must not be allowed to happen.

Breathing space and bailiffs — top of our list

We know that regulations to create a statutory breathing space scheme in England and Wales (Scotland already has a similar scheme) are drafted and ready to go. The next government must introduce these into Parliament as soon as possible, alongside legislation for accompanying statutory debt repayment plans.

On bailiffs, it has now been over a year since the Ministry of Justice launched a Call for Evidence on bailiff reform, but it’s time to announce action as a result. We call on the next Justice Minister to set out clearly how the government intends to go about setting up a new system of independent regulation.

What about Scotland?

Those two provisions mainly apply in England and Wales. The picture is different in Scotland where a number of areas related to debt and advice are devolved. The Scottish Parliament elections in 2021 will therefore be a key opportunity to commit to progress on these issues.

We continue to call for the development of a coordinated action plan for Scotland that addresses the impact of problem debt and alleviates hardship. Crucial to this is how Scotland can unlock increased funding for all channels of free debt advice, as well as ensuring Scottish debt solutions administered by the Accountant in Bankruptcy are fit for purpose and accessible for those that need them.

Of course, manifestos aren’t the only way for the parties to promise action. We’ll continue to look to all parties to commit to offering much needed help to those facing the difficulties of debt right now. Come December 13th, the New Year and beyond, we’ll continue to make the case to whichever party forms the next government about just why this is so important.

To find out more about what we’re calling on the next government to do to help people in debt, read our manifesto.