Why Breathing Space matters
Guest post by John Glen MP, Economic Secretary to the Treasury
Breathing Space should help more than 700,000 people in its first year after launch, eventually rising to more than a million annually, according to HM Treasury. Treasury Minister John Glen MP (left) visited StepChange yesterday, and tells more here.
Debt can be a lonely and, at times, overwhelming challenge; one that can quickly spiral out of control. As an MP, constituents regularly come to my surgery to tell me about how their money problems forced them into a corner. Many fall on hard times only to have their situation made worse by high cost credit. The knock-on effect this can have on family and friends is often heart-breaking.
As Economic Secretary to the Treasury, I’ve made it my mission to tackle problem debt, including working with the regulators to clamp down on exploitative and predatory lenders, boosting the role of credit unions and providing better, more joined-up support and advice. I’m pleased by the action we’ve taken, but I know that more needs to be done in all these areas.
Moving ahead with Breathing Space
Time to Talk Day reminds us of the particular link between problem debt and mental health. When the financial pressure builds, it can be difficult to think clearly or to know where to get help. That’s why I’m delighted to confirm that the new Government is moving ahead with Breathing Space. From next year, it will start to help thousands more people struggling with debt to find a manageable way of paying back what they owe and will eventually help millions of people.
I’m grateful to all those who contributed to our Breathing Space consultation last year, including StepChange. You do an amazing job to provide free advice to those who need it most and your insight has helped shape breathing space’s development for the better.
So how does Breathing Space work? It’s simple really. We want to give people the time and space to focus on finding a way out of crippling debt without building up even more interest in the meantime. So we’ll stop the clock for 60 days.
During this time creditors will be prevented from taking enforcement action and interest will be frozen. Those receiving treatment for a serious mental health crisis will receive the same protections until their treatment is complete. In each case, we’ll provide professional debt advice so people can better understand the options available.
We want to help them develop an affordable long term plan so they don’t have to rely on quick fixes or high cost credit.
Help more than a million people
We have high hopes that this can make a decisive and lasting difference for people facing money worries. Our estimate is that Breathing Space will provide professional support and advice to over 700,000 people in its first year — and within a decade it could help more than a million individuals. But the benefits will be felt by creditors too, who could receive over £400 million in additional payments in the first year, and perhaps as much as £6 billion over the course of the decade.
Of course, Breathing Space isn’t a silver bullet — rather it’s one of a series of measures designed to give people the support they need to make the right decisions for their individual circumstances. Education, regulation, legislation and product innovation all have a role to play and I’ll continue to listen to charities, financial advisers and others as we look for new ways to break the cycle of debt once and for all.
