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Coronavirus Budget provides short-term boost – but debt problems likely to increase

The Money Advice Trust has responded to today’s Budget and the Bank of England’s interest rate cut announced this morning.

The charity, which runs the National Debtline and Business Debtline advice services, has welcomed announcements designed to support households and small businesses affected by Coronavirus in the short term.

Joanna Elson OBE, chief executive of the Money Advice Trust, the charity that runs National Debtline and Business Debtline, said:
 
On Coronavirus-related measures

“Families and businesses across the country are worried about what Coronavirus will mean for their finances – and today’s Budget provides a much-needed boost to help them through the economic shock ahead. 
 
“The newly-announced hardship fund for households and new support and forbearance for small businesses affected by the outbreak are particularly welcome – but it will be crucial to make sure that this support reaches those who need it most.

“Together with the Bank of England’s interest rate cut and the welcome additional forbearance measures announced by several banks in recent days, we are reassured that the impact of Coronavirus on household and business finances is being taken seriously.

“However, we can expect debt problems to increase significantly as a result of the financial shocks ahead for households and businesses.  This comes at a time when the debt advice sector is already struggling to meet current levels of demand – and it will be crucial to work together to ensure that everyone who needs advice is able to access it.”
 
On the rest of the Budget

“Today’s Budget includes welcome changes to Universal Credit, with a lower cap on deductions from benefits and more time for people to repay advances.  This is a further step in the right direction, but a more fundamental review of the deductions system is needed – along with a firm commitment to include Universal Credit advances and deductions in the government’s new Breathing Space scheme as early as possible.

“We are pleased to see further action on affordable credit, with plans to allow credit unions to offer a wider range of products and services.  However, 18 months on the Budget makes no mention of the No Interest Loan Scheme and we would welcome clarity on the government’s plans in this area.”
 
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