A ‘savage cut’ or sensible move?

February 5th, 2011

Hundreds of Government funded debt advisers have stopped taking on new cases because their funding is to be stopped next month.

For the past five years, the £25m-a-year Financial Inclusion Fund has been paying for about 500 specialists in England and Wales to give free advice. But the cash is due to run out in March and the government has said it will not renew the fund.

The news means that advisers will have to switch to the private sector at exactly the right time, when demand for their advice is forecast to grow. The debt advisers affected have been sent redundancy letters and been told to stop taking on any new clients, other than those with the simplest problems.

The Money Advice Trust, a charity which promotes independent help for people with debt problems, forecasts that 200,000 extra requests for free debt advice are expected this year, taking the total to a record 1.6 million.

This story was reported by the ‘impartial’ BBC as a terrible tragedy which it is, if you believe that the answer to any problem is to wildly throw taxpayer’s money at it in the hope it will go away.

One example of the hype and exaggerated claims is this one from a government funded debt advisor: “Not only am I going to lose my job but the service is going to go, the service that sees thousands queuing outside the door on busy days, appointments booked up weeks in advance and that’s all going to be lost.”

Well, no ‘all that’ won’t be lost actually, but your place on the Government debt funded gravy train will be. What a shame. Let me grab the tissues.

The Treasury, which is the responsible Government department, is setting up a new web and phone based service which would be able to refer cases to specialists. This is aimed at making sure that individuals facing financial difficulty can get advice early, rather than wait until their problems become much more difficult to resolve.

There are problems with the Government’s approach, primary of which is the scope for profit making debt management companies to take advantage of vulnerable people. The Office of Fair Trading (OFT) has already had to step in to deal with many such firms.

There is also still free advice available from several bodies, including Citizens Advice. The specialist advisers trained to deal with complex cases and to represent clients to their lenders are expected to switch to working for Citizens Advice or the new Government service.

Debt advice and counselling is a very important issue, especially at this difficult economic time. However, no matter how much the hard-left in the BBC would like it, the role of Government is to protect consumers from unscrupulous advisors, not provide the advice directly themselves.

It is precisely that kind of micro-managed, financially incontinent patronisation that got us into this situation. The Treasury has to ensure that the new service is effective and efficient; it does not have to keep wasting money like the previous administration.

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