The Department for Business, Innovation and Skills: Helping over-indebted consumers - Public Accounts Committee Contents

Conclusions and recommendations

1.  The face-to-face debt advice project has gone well but management of the over-indebtedness strategy that it supports has been seriously deficient. Our recommendations are aimed at obtaining even greater value for money from the debt advice project and addressing the weaknesses in managing the strategy.

2.  The arrangements established to co-ordinate the 51 different interventions making up the strategy have not worked, and it is unacceptable that no one is in charge. The groups responsible for oversight and co-ordination met rarely, if at all, and no single person or department has taken overall responsibility. The Department should work with Treasury and the other key departments to establish proper oversight of the strategy, starting with allocation of responsibility for the strategy to a senior responsible owner.

3.  The over-indebtedness strategy has been in place for six years but its success has never been evaluated, there has been no annual report since 2007, and the Department does not even know which are the most and least cost effective of its own interventions. The Department should work with Treasury and the other key departments to assess the relative effectiveness of the interventions making up the strategy. It should then use this assessment to review whether the interventions currently making up the strategy still present a coherent programme of action and where best to devote resources in the future.

4.  The Department does not know why the cost of providing face to face advice ranges between its providers from £201 to £377 per person. More people could be reached if the Department better understood the cost base and efficiencies of the advice providers. However, the Department does not analyse cost variations in detail and does not know how much variation is due to efficiencies that could be applied more widely. The Department should examine why variation occurs, and promote shared learning between providers on efficient ways of working.

5.  The Treasury does not permit the funds it provides for face-to-face advice to be used for other, cheaper, forms of advice, even though they are preferred by some users. Face-to-face advice costs an average of £265 per consumer, once start up costs are stripped out, while telephone advice costs £51 and internet advice is cheaper still. Directing consumers who could be supported by telephone or internet to those forms of advice would therefore allow more users to be helped, and highlights the importance of assessing the relative effectiveness of the interventions making up the strategy. The Treasury should allow the Department greater flexibility in the use of funds, and evaluate urgently the potential for other forms of advice to deliver help to more consumers than it can currently reach.

6.  The growing demand for debt advice is outstripping the Department's capacity to provide it. As well as the Department's project, debt advice is available from a variety of bodies in the public, private, and third sectors, but the Department lacks a clear picture of the quality of this advice, or the potential for such bodies to help meet future demand. The Department should evaluate the likely level of future need for advice, and the ability of all providers in the field to contribute to providing advice of the quality and quantity required.

7.  It is not clear that the Department's debt advice services are targeting those most in need. For example, younger people are particularly at risk of becoming unable to manage their debts, but seem no more likely than other groups to receive advice. The Department should compare in more detail the profile of those accessing its debt advice services with that of the wider population of over-indebted people in order to target its services more effectively.

8.  The Department's programme to tackle illegal lending by loan sharks has resulted in 150 successful prosecutions, and is projected to cost £16.5 million. The Department has yet to evaluate the value for money of this programme. It should do so urgently and report back to the Committee on the outcome.

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Prepared 8 April 2010