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Our comment on Treasury Select Committee report on household finances

26 July, 2018

We're pleased to see the Treasury Select Committee, in its report published today following the inquiry into household finances, show a clear understanding of the debt landscape and robust calls for action from the government.

Phil Andrew, chief executive of StepChange Debt Charity, who gave oral evidence to the Committee as part of its enquiry, said:

"The Committee’s report shows a clear understanding of the debt landscape, a keen awareness of where problems lie, and a robust identification of who has the power to solve them. In many cases, it is the government who needs to take action.

"We agree wholeheartedly with the conclusion that the breathing space scheme should include non-credit arrears and with the Committee’s incisive comments on how the over-zealous approach to enforcing government debt, including the routine recourse to bailiffs, should be addressed. We look forward to working constructively with policymakers to help them address the problems set out so cogently in the report.”

The Committee is urging the government to tackle the “over-zealous” pursuit of local authority debt as a priority. As the Committee observes, “the public sector should be leading by example in their treatment of the most financially vulnerable; but the current approach risks driving them into further difficulty.”

We also agree with the Committee’s conclusions of what the final debt “breathing space” scheme should look like. The Committee argues that government should carefully consider the case for extending the period to be covered beyond six weeks.

It also states that “Given the role of non-credit arrears in problem debt, and the aggressive collection practices used by many public sector creditors, the case to include non-credit arrears in the breathing space scheme is overwhelming. The Committee can only offer its support for the scheme if its scope is expanded accordingly.”

We also supports a number of the other recommendations, including that the government should take a more strategic approach in co-ordinating the expansion of mid-cost credit to reduce reliance on high-cost credit, that the FCA should intervene on overdraft fees “as quickly as it can” and should reconsider whether a wider cap on high-cost credit - including compulsory restrictions on unsolicited credit limit increases - should be imposed.

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