Better Debt Advice and COVID-19

• Context
• The study
• Key findings
• Points to consider

Context

‘Better Debt Advice’ is one of the five Agendas for Change that the Money and Pensions Service identified in its UK Strategy for Financial Wellbeing 2020-2030. The goal of Better Debt Advice is to make sure more people who need debt advice access it and get high quality advice,, by virtue of stronger and earlier engagement as well as better matching of debt advice funding, supply and services to need.

Prior to the COVID-19 pandemic, 1.7 million people were understood to have received debt advice, and a further 3.6 million people were estimated to have needed it and not received it. The goal of the Agenda for Change was to increase the number of people who receive the debt advice they need by 2 million by 2030. Prior to May 2021, when this report was published, it was unclear how the impact of COVID-19 and the policies introduced to control it had impacted progress against the goal.

The study

The report sought to compile early evidence on the likely impact of COVID-19 on progress towards the goal for ‘Better Debt Advice’ in the context of the wider impacts of the pandemic (and Government policies in response to it) on household income, spending, the use of online services, and credit use and debt.

The evidence referred to was drawn primarily from research, press coverage, comment and other information published online since the onset of the pandemic. The sources of evidence used in the authors’ search encompassed debt advice providers, market research companies, universities, charities, and government and official organisations.

The report uses the terms ‘borrowing’ and ‘debt’ in accordance with how they were used in the source evidence, even where those terms may arguably have been used incorrectly.

Key findings

Levels of debt: Many societal inequalities worsened during the pandemic, and the pandemic intensified the difficulties faced by many people who were already struggling financially:

• After a drop during the first COVID-19 lockdown, levels of household debt steadily rose during the latter part of 2020. Many people needed to borrow to cover basic living costs. Office for National Statistics data showed that almost 9 million people had needed to borrow more, whether formally or informally, due to the pandemic, and the proportion borrowing £1,000 or more increased from 35% in June 2020 to 45% in December 2020.

Debt advice need:Debt advice need was most common in relation to council tax bills and rent arrears.

• People from black communities, women, people with disabilities, including mental health problems, private renters and younger people were expected to be among those in greatest need of debt advice.

Debt advice provision: The number of debt advice consultations fell initially around the start of the pandemic and with the introduction of the first lockdown, when face-to-face consultations ceased. Requests for debt advice nonetheless increased steadily during the rest of 2020.

• In June 2020, MaPS secured an additional £37.8 million for debt advice providers in England and a further £5.9 million to providers in Scotland, Wales and Northern Ireland.
• The proportion of consultations delivered remotely grew, and new online tools were developed by individual providers in response to the pandemic.

Points to consider

• Methodological strengths/weaknesses: Although the paper is subtitled as a rapid evidence review, the few methodological details provided suggest that the systematic or quality assessment elements that are typical of rapid reviews were not employed. The report may be better treated as a narrative review of the evidence.
  • The literature search was reportedly focussed on individual research-generating organisations and did not apparently include a wider search of peer-reviewed academic databases, preprint servers or generic Internet search engines. This suggests the coverage of the overview is partial.
• Applicability: The overview is likely to be incomplete and, with the exception of official statistics, the limited scope of the search strategy risks the evidence reported being biased by organisations which have partisan interests in the topics.