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‘Welcome action’ on tackling problem debt

The Money Advice Trust has responded to today’s Budget, which it says includes ‘welcome action’ on tackling problem debt, including new details of the government’s Breathing Space scheme, plans to pilot a no-interest loans initiative and changes to address some concerns over Universal Credit.
 
Joanna Elson OBE, chief executive of the Money Advice Trust, the charity that runs National Debtline and Business Debtline, said:
 
“This budget contains welcome action on tackling problem debt – with improvements to the government’s planned Breathing Space scheme, a new pilot to boost the supply of affordable borrowing and changes to address some of the concerns raised on Universal Credit.”
 
On the announcement of a feasibility study to help inform a pilot of a no-interest loans scheme:
 
“Too many people fall into a vicious cycle of debt that starts by the need to borrow a small amount for something essential like a fridge or a cooker – with high interest and charges quickly turning small debts into big problems. 
 
“It's vital that we improve access to affordable credit for those who need it - and I am pleased to see the the government has listened on the merits of a no-interest loan scheme modelled on Australia's example. 
 
“We await details of what this scheme could look like in practice - but this announcement is an encouraging step.”
 
On new details, published alongside the Budget, of the proposed Breathing Space scheme:
 
“The government’s Breathing Space scheme has the potential to be a game-changer for the fight against problem debt, and we look forward to working through the detail to help make the scheme as effective as possible.
 
“The announcement today that the scheme will include small business debts for sole traders is particularly welcome.
 
“Applying Breathing Space protections for 60 days instead of six weeks is a positive step, and will give people in financial difficulty more time to start to resolve their debt problems.  There will still be some people who will need longer to do this – and we will continue to argue for this period of protection to be extended at the discretion of an expert debt adviser."
 
On changes announced to Universal Credit:
 
“The government has clearly listened to some of the concerns that have been raised about the design of Universal Credit.  In addition to the headline-grabbing announcements on increased work allowances and transitional protections, the Budget also contains some positive smaller measures.
 
"We are pleased to see plans for an additional payment in legacy benefits for claimants moving to the new system, and changes to ensure slower and less severe deductions to repay debts through Universal Credit, in particular.We are pleased to see plans for an additional payment in legacy benefits for claimants moving to the new system, and changes to ensure slower and less severe deductions to repay debts through Universal Credit, in particular.
 
“However, even with these changes, the Universal Credit roll-out still presents significant challenges and we hope the government will continue to adjust the scheme in response to concerns raised on the ground.”
 
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