2 Improving the overall approach to
tackling over-indebtedness
11. Current outstanding consumer debt is around £1,500
billion, and some 11% of the UK population struggle to manage
their debts.[21] The
Government's strategy to tackle problems faced by those struggling
with unmanageable debt was introduced in 2004. The strategy aims
to reduce the number of people who become unable to manage their
debts, and to improve support for those who do become over-indebted.[22]
The strategy contained 51 different interventions, including both
the Department's debt advice project and its work to combat loan
sharks. The interventions were to be delivered by different Government
departments, local authorities and the devolved administrations.[23]
Spending on the strategy's main interventions, including more
recent projects totals some £600 million for the period 2004-2011.[24]
12. The Department shares responsibility for co-ordinating
the strategy with the Ministry of Justice, and the Department
for Work and Pensions. As the 51 different interventions of the
2004 strategy are spread across various departments and cover
a wide range of different activities, a co-ordinated approach
is necessary to achieve coherence and control the risks to value
for money, such as an inability to respond effectively to change.[25]
13. There has been little co-ordination of the strategy,
which has been implemented as a collection of separate projects
rather than as a coherent whole, despite mechanisms being put
in place at the start which were intended to ensure effective
co-ordination.[26] Oversight
of the strategy was intended to be provided by three working groups
composed respectively of Ministers, officials, and wider stakeholders.
Of these, the Ministers group did not meet, with the only contact
being by correspondence, and the officials group last met in March
2006.[27] Furthermore,
no single department took on the responsibility for managing the
programme of activity as a whole, and no alternative arrangements
were established. There is no one in charge of the strategy and
the lack of co-ordination has resulted in confusion as to which
activities of Government actually constitute the strategy.[28]
14. Despite the lack of formal co-ordination on this
strategy, there have been other attempts to co-ordinate an effective
response to financial problems for consumers arising from the
recession. The Consumer Finance Forum has been established, and
the Department for Communities and Local Government has conducted
a number of cross-departmental meetings on support for people
struggling to pay mortgages. The officials have also met through
the National Economic Council to address issues relating to debt.[29]
15. The Department has specific responsibilities
for evaluating the strategy. However, the strategy has never been
evaluated as a whole, so it is not possible to know if it is meeting
its objectives of minimising the number of people who become over-indebted,
and improving support for those who do.[30]
The Department has found it difficult to evaluate the strategy
because of the number of policy interventions, the influence of
external variables and the complexity of the drivers of over-indebtedness.
Individual departments had therefore remained responsible for
evaluating the success of their own interventions, and there was
no information on the relative cost-effectiveness of different
interventions. Furthermore, the Department itself did not know
the relative cost-effectiveness of those interventions for which
it is wholly responsible.[31]
16. Annual Reports were produced in 2005, 2006 and
2007. These provided operational plans for the following year,
but did not assess progress against the original Action Plan in
the strategy. No report has been produced since 2007 as the Department
considered that events were moving so quickly that a Report would
be out of date by the time the Department had published it.[32]
17. The Treasury was uncertain as to whether the
current interventions are indeed the most appropriate ones to
achieve the strategy's aims. The Department had not yet considered
the future of its interventions beyond the end of the current
funding period to March 2011, but agreed that it needed to focus
its interventions more effectively in order to achieve maximum
value for money.[33]
21 Q 53; C&AG's Report, para 1 Back
22
C&AG's Report, para 3 Back
23
Qq 3, 4 and 36 Back
24
Q 32; C&AG's Report, para 3 Back
25
Qq 4, 19 and 27; C&AG's Report, para 3 Back
26
Qq 4 and 6; C&AG's Report, para 16 Back
27
Qq 7 and 20-23 Back
28
Qq 4, 53 and 59-60 Back
29
Q 7 Back
30
Q 8; C&AG's Report, para 3 Back
31
Qq 8, 45, 62 and 65; C&AG's Report, para 3.34-3.35 Back
32
Q 9 Back
33
Qq 8, 9, 53 and 59-60 Back
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