A new report has assessed the problems of debt in Cumbria and recommends that more needs to de done to support those who find themselves in the grip of a debt crisis.
'Debt in Cumbria: A scrutiny review of the problem of indebtedness and financial exclusion in the county' has been produced by Cumbria County Council's Scrutiny Management Board at a time when the global 'credit crunch' has come to the fore.
The review has considered evidence from a range of government departments and agencies, local authorities, local housing associations, the Community Law Centre and third sector groups (including Citizen's Advice Bureaux and Credit Unions) committed to addressing the problems of debt and financial exclusion.
The report criticises the existing debt support and advisory programme in the county as 'dis-jointed and short-term', saying: 'Feedback from key players suggests it is particularly difficult to work in a true partnership situation, when everyone is fighting for money. Many organisations are in the same game but are competing for scarce resources for the same project.'
It also recommends that core funding should be found to help cover the running costs of voluntary organisations which offer debt support and advice. The report says: 'The dilemma for these organisations is that instead of being able to devote their energies to providing services for people, managers have to use blocks of their time fighting for future funding and not building partnerships. This brings about a piece-meal and short-term solution.'
Cumbria County Council directly supports debt counselling through a contract worth £311,000 with Cumbria Citizen's Advice Bureaux (CAB). The scrutiny report praises the county council for playing a major role with the Legal Services Commission in the development of a more integrated and accountable debt advice and counselling Service Level Agreement for the authority. This means that countywide debt advice will be provided by a network of CABs on behalf of the county council. The report says the new set-up will be 'more structured and accountable' and allow CABs to identify the communities of greatest need. 'This form of service commissioning has been recognised nationally as being on the cutting edge by the Office of the Third Sector,' says the report.
It also highlights the Debt Rescue and Money Advice (DRAMA) project as a very good example of of local authorities, housing associations and the voluntary sector getting together to tackle the issue of debt. DRAMA is a loan guarantee scheme for West Cumbria which started after Derwent & Solway Housing Association successfully hosted a bid for government Growth Fund monies. It pools resources and moves towards a ‘federation’ of Credit Unions to offer people within the designated Credit Union ‘common bond’ areas loans from a £300,000 fund. Six Credit Unions –Carlisle, Cleator Moor, Maryport, Millom, Whitehaven and Workington have joined forces with local councils, CABs and the county’s largest housing providers in setting up DRAMA. It is hoped that drama can be rolled out across the county and more people (particularly low-income families) will be encouraged to join their local Credit Union and save on a regular basis.
Key findings in the scrutiny report include:
- Currently 30-35% of the work carried out by voluntary advisors at Cumbria's Citizen's Advice Bureaux is debt-related and evidence presented to scrutiny by CAB representatives strongly suggests demand for professional support is outstripping supply.
- In Barrow-in-Furness, CAB staff saw the total amount of new debt rise to nearly £6m in 2005-06, nearly double the amount for the previous year. In addition there were ongoing cases amounting to £3.7m.
- Average levels of new debt in the most deprived parts of the county are well above the national average figures. Barrow CAB reported an average debt figure of £30,560 for 2005-06.
The Scrutiny Management Board makes a series of recommendations, including:
- Better access to debt support and advice in rural areas. Rural libraries, small voluntary community-based groups and doctors surgeries can often provide a valuable first point of contact for people in need of help.
- Local authorities need to recognise the important role of Credit Unions in steering people towards cheaper borrowing and better management of their financial affairs. This could involve financial support, promoting the work of Credit Unions among employees, looking into how they could be rolled out into areas that don't have them (e.g. Eden and South Lakeland) or even offering a high-street presence to help become collection points for Credit Unions. They also need to recognise the knock-on impact of money being taken out of the local economy via doorstep lenders.
- As well as the remedial action of offering debt advice, more preventative work needs to be carried out to prevent future generations falling into the same spirals of debt and financial exclusion. This could include increased promotion of financial literacy in schools as part of the curriculum and liaising with Housing Associations to ensure early contact and intervention takes place before problems get too big.
David Southward, Chairman of the Scrutiny Management Board's Debt in Cumbria Task & Finish Group, said: "Debt can be a terrible thing when it takes grip, destroying families and lives as problems escalate. This review has looked into how the support mechanisms operate in Cumbria and it's clear that more can be done to help those needing support and advice. We also need to look at how to be more proactive in preventing debt becoming a problem in the first place. Some of the work at the coalface is excellent and all the bodies involved are trying hard to help people with their problems, but this scrutiny review has revealed a need for a more strategic approach, with focused resources put into the right places."
ENDS
Media enquiries to Gareth Cosslett, News Manager on 01228 606332
Notes
Follow the link below to view the paper which will be presented to Cabinet next week (March 11) addressing some of the issues raised in the report: