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To be published as HC 271-iii

House of commons



Treasury SUB-Committee

Money Advice Service

Wednesday 5 September 2012

Gillian Guy

Evidence heard in Public Questions 329 - 423



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Oral Evidence

Taken before the Treasury Sub-Committee

on Wednesday 5 September 2012

Members present:

Mr George Mudie (Chair)

Mark Garnier

Stewart Hosie

Andrea Leadsom

Mr Andrew Love

Mr Pat McFadden

Jesse Norman

Teresa Pearce

Mr David Ruffley

Mr Andrew Tyrie


Examination of Witness

Witness: Gillian Guy, Chief Executive, Citizens Advice, gave evidence.

Q329 Chair: Good afternoon. I am very sorry we are running late but, on the basis that the Minister felt that he could not possibly follow you- No, to be fair, with the change of Minister, we have put him off for another day. In view of the first name fuss with Mr Diamond, do you mind if I call you Gillian?

Gillian Guy: Not at all.

Chair: Right, Gillian. Thank you very much for coming. We had a very interesting session with MAS. Jesse, you are going to start.

Q330 Jesse Norman: Thank you for coming in, Ms Guy. I want to ask you a very simple question. What is the point of the Money Advice Service? It costs £40 million a year and, as far as I can see, it is a quango in search of a role.

Gillian Guy: I am sure that the Sub-Committee will form a view for itself, but what I can say is that the Money Advice Service is clearly part of this landscape on money advice and debt advice. Our concern is to make sure that that kind of money gets as much to front-line service as is possible and demonstrates that it is adding value to that landscape. The difficulty that we have in the value that it currently adds is on its focus. From our point of view, it is perhaps undertaking the wrong job with the wrong focus. With a bit of redirection towards its strategic and statutory objectives, but also probably with firmer and better governance, we might see better value coming from that investment.

Q331 Jesse Norman: How large is your total top team-your administrative team-in the CAB?

Gillian Guy: We have five people in the top team.

Jesse Norman: Five?

Gillian Guy: Yes; including me.

Q332 Jesse Norman: What do you make of an organisation that has staff and associated costs of nearly £14 million a year and a CEO’s office with 7.1 people in it?

Gillian Guy: That would be nice. Seriously, it is part of our argument about the resources that come in, which are not insignificant-we are talking about over £80 million. In Citizens Advice, for less than £20 million, you buy a debt advice service, at the moment, which covers a large proportion of our bureaux and buys the full-time equivalent of 320 staff and 500 people giving money advice to hundreds of thousands of people every year. In our terms, we look at what we could do with that resource and very clearly say that the main problem in this arena at the moment is that demand outstrips the capacity to give the advice. We don’t have a problem with getting demand. We would not focus resources on overheads, which we like to keep at a minimum, and certainly we look at the executive and non-executive team of the Money Advice Service and see that it costs about £1 million a year. That is quite luxurious, in our terms. Also, we would not stray into marketing and creating a separate and new brand when what we need is capacity to deal with all the people-who will be growing year on year-needing financial capability, money advice and debt advice.

Q333 Jesse Norman: MAS has a communication and service delivery team of 73 people and a strategy innovation team of 33 people. Do you see any of these people? Are they ever helpful to you? Do they do anything that helps the CAB in the delivery of advice to people who need it?

Gillian Guy: I think the fundamental issue here is the focus of the Money Advice Service that leads it to have those teams. That is about building a separate and new brand, and marketing financial capability, particularly. Our argument, which is quite clear to the Money Advice Service, is that that is not the right focus. There are plenty of things that can be done in this area that an organisation that does not deliver could do. It could make the delivery arms more effective and it could make them work together better. It could have common case management systems. It could have standards and validation of those standards. It could have verification of the people who give the advice. We could have a common portal so that members of the public would not have to go from one place to another in giving their information, but could deal with creditors and advisors all in one place and at one time. There is plenty that could be done.

Q334 Jesse Norman: In Hereford we have an excellent CAB. We used to have a CAB in Ross-on-Wye, which was built on a local organisation set up by local people offering good-quality local advice. That has now been centralised. If you had more money because the MAS was disbanded or its income differently allocated, how quickly would you be able to feed that through to people on the ground who need it, and what is the overhead cost that would you apply to the money you receive?

Gillian Guy: We look to keep our overhead costs as low as possible. The more we expand our business, the less the percentage is of those overhead costs because you do not have to replicate.

Q335 Jesse Norman: What are they and what would they be if you had-

Gillian Guy: They would be under 10%.

Q336 Jesse Norman: Under 10%. The staff cost of the MAS at the moment is 30% and, as far as I can see, it does not deliver any debt advice.

Gillian Guy: The other aspect from the Citizens Advice point of view is that we do not just give face-to-face advice. We give advice over the telephone, which is where we believe there is some duplication going on. I would point out that this year it looks like about 80% of the phone referrals to the Money Advice Service are going to come from Citizens Advice, because we are lacking capacity to deal with them.

Q337 Jesse Norman: Was that 80%?

Gillian Guy: About 80%.

Q338 Jesse Norman: Would you be able to move quickly on any new money allocated?

Gillian Guy: We always move quickly on that.

Q339 Mr Tyrie: If the Money Advice Service ceased to exist, how much more money do you think you would need to maintain the service that you feel is needed for the public?

Gillian Guy: The first thing we would do is analyse what is needed for the public. One of the issues that is hurtling towards us is welfare reform and the demand on the back of that. About 8 million people are going to be affected over the next four years. I just want to say that welfare reform does not appear in the business plan of the Money Advice Service at all.

Q340 Mr Tyrie: I am going to come on to that in a moment. You are looking forward and I am asking a question about the snapshot now. I just want to get a feel of how much of this MAS activity you think that we could do without, without there being any loss of welfare to the people who are benefiting.

Gillian Guy: There are various strands to that. The first is not to stop what we are currently doing. In much the same situation as last year, we still have not had certainty about continuing our face-to-face debt advice that is funded through the Money Advice Service. The first thing I would ask for is to confirm that that is going to roll forward and then we can carry on with our over 300 full-time-equivalent advisors.

For every £18 million that is put in, we could provide at least another 320 full-time advisors and we could extend that throughout our bureau network. More than that, we could also cost a telephone service, which is what we are endeavouring to set up at the moment, which is advice over the telephone on any issue.

Also, remember that this is not just about money advice and debt advice because every person comes with a package of problems. That is when they are amenable to financial capability and education, because they have a problem in the first place. We would not be segmenting this. We would be dealing with people on a general basis. Our touchstone has to be what we provide at the moment. For £18 million, we provide over 320 full-time-equivalent specialist advisors on debt advice, and we do that across more than half our bureaux. We could double or treble that and we would still not meet all the demand.

Q341 Mr Tyrie: I think we all heard those numbers, and I think they are very important for us. We have an excellent CAB in Chichester as well and demand always exceeds supply, exactly as you describe.

Let us move on to the question not of what is happening right now, but looking forward. Were you consulted on the Money Advice business plan before it was drawn up?

Gillian Guy: Is that the 2013-14 business plan?

Mr Tyrie: Yes.

Gillian Guy: I believe that consultation started yesterday.

Q342 Mr Tyrie: I see. So you have not had any contact with it. What about the last one?

Gillian Guy: We had very limited contact with the last one. That was something that the Money Advice Service took on board-that it was not fully engaging with the advice sector. The disappointment this year, which I have expressed to the Money Advice Service, is that this is a bit late in the day to start talking about the business plan for next year. The consultation is likely to happen, which I would not term as full engagement, in a series of interest group meetings that I believe started yesterday. The trouble is that that business plan has to be signed off by the Money Advice Service board later this month or in October, and then it has to go to the FSA by the end of the year. That is a very tight timescale for the business plan. It is a very short timescale if we have to wait until then for a decision on the debt advice contracts.

Q343 Mr Tyrie: What would you say to those listening to your evidence who might feel that you were just advancing the cause of your own organisation, as anybody at the head of an organisation might do?

Gillian Guy: I would say that I am answering the questions that are posed to me and some of those are geared towards what Citizens Advice could do as an organisation. I am answering those questions as frankly and honestly as I can. I have not said that that is the position I am advocating. I am just saying that that is what we could do. That said, all our comments about the Money Advice Service are based on what is in the interests of the people who need the advice right now and have a shortage in the capacity to give that advice. We would like to see investment in that capacity, rather than developing a contrary and different brand. At the moment, it seems to us to be about raising awareness of an organisation rather than giving help to the people themselves.

Q344 Mr Tyrie: Looking specifically at debt advice and noting that demand will always exceed supply, do you think the main gaps that currently exist can be filled by you?

Gillian Guy: I believe they can, because of the brand recognition that we have. There was 97% brand recognition in recent studies. I believe we are trusted as an organisation. The most important thing is that we do not just give debt advice. When we give debt advice, we give budgeting advice and "how to control and handle your money" advice. We go into financial capability and education at the same time. That is another argument we have with the Money Advice Service: those things need to be integrated for people and not separated.

Q345 Mr Tyrie: Your argument, in a nutshell, is that you just offer much better value for money than anybody else who could do this.

Gillian Guy: Were I asked to make an argument for Citizens Advice to move into Money Advice Service territory, I would say that we have the brand, we have the people, we have the training, we have the capability and trust, and we have the wherewithal and the channel spread, to give all that advice combined so that it suits people better. I am not asked to do that. What I am asked to do, obviously, is look at what we are currently facing: the best use of the huge resources that the Money Advice Service currently has.

Q346 Mr Tyrie: I thought for a moment you were going to say, "We have the men, we have the money and, by jingo", or whatever that particular-

Gillian Guy: I would not want to be corny about it.

Q347 Mr Tyrie: It sounds as if it is a value-for-money argument, combined with the branding, that leads you to feel that-

Gillian Guy: There is a value-for-money argument. There is a governance argument and there is a focus argument, which is about delivering to people and not talking about developing a brand.

Q348 Teresa Pearce: We have spoken about the large amount of the Money Advice Service’s outgoings going on marketing. You have just said that the CAB is a trusted, well-known brand, with lots of brand recognition. How much money do you expend on marketing?

Gillian Guy: It is a difficult question to answer fully because everyone has a different interpretation of what marketing is. When we can promote ourselves, we do. Strictly speaking, it is hardly any on marketing.

Q349 Teresa Pearce: Apart from the CAB dealing with people who come through the door and all their problems, they are in a unique position where they can look at policy across the country. They can see how it affects all types of people in all types of ways and they can feed that up. Would the Money Advice Service have any way of doing that?

Gillian Guy: It would probably lack access to our data in that we are unique, and this is another point that I drew out from the Money Advice Service directors’ report that recently went to the FSA. The Money Advice Service is claiming to be the unique organisation that gives all this advice; discounting our role completely, which is a bit of a shame. We have unique access to data through over 2 million people coming through our doors every year with 7 million different issues, most of which are around debt, money management and benefits. We also have about 12 million hitting our website every year and a large proportion of those, of course, will be looking for money guidance and advice. We use all that to try and change things for the better so that people do not undergo those difficulties again.

Q350 Teresa Pearce: So that I can join in, I can say that I also have an excellent CAB in my area. Sometimes when we see a problem with a policy or the way a policy has been implemented, it first comes via the CAB. We have seen that in a number of instances and it is a useful way of picking up early where there is a problem. Turning to the business plan of the Money Advice Service, what would you say its business is?

Gillian Guy: I could say what its business should be.

Teresa Pearce: No; what is its business?

Gillian Guy: I will say again; I think its business at the moment is to become a household name, and I have heard it terms in this way by the Money Advice Service. That means promulgating a brand or a name-a trademark if you like-that will encourage people to recognise it. I say "recognise" only because, when I asked the Money Advice Service how successful this marketing work is, the reply that I got was that when it is current, there is more flow to the website-although it has not tried it on the telephone-but that when that stops, that also stops. My question would be: what difference is it making? What is the business case for that? Anyone can read the business plan, as you clearly have, but there seems to be an emphasis on creating that brand. There is also managing other people, such as Citizens Advice, to give debt advice and money advice. That is transporting funds from the levy through to direct service delivery. In our view, the transporting of those funds costs quite a lot of money, so there is a middle function there that is quite expensive.

Q351 Teresa Pearce: You have mentioned increasing demand. I also sit on the Work and Pensions Committee, and this morning we took some evidence about universal credit, the movement to monthly payments and the increase in debt that that might bring. There are also the cuts to council tax benefit coming up next year where the working poor will have to pay council tax. Anybody can see that there is going to be a huge increase in demand, yet you mentioned that it is not reflected in the business plan. It is not mentioned.

Gillian Guy: That is correct. I cannot find mention of it. However, we have identified that we will probably see another 350,000 clients come to us as a result of the introduction of universal credit and we are still working on the numbers. As you rightly point out, a lot of that focuses on who will now be caught in potential debt situations because of the constraints that will come through welfare reform and universal credit. We are worried about the council tax benefit cut as well because that will hit working-age families, particularly as the protection is ring-fenced for older people.

Q352 Teresa Pearce: In your role with the Money Advice Service, how can you feed that information up to make sure it understands what is coming down the road? Is there a conduit for that?

Gillian Guy: I suppose there are two aspects to that. One is that we mentioned it because we were surprised that it was not appearing. Apparently, there are conversations between the Money Advice Service and the DWP, which we are pleased to hear. The other issue is that I am not sure it is Citizens Advice’s place to draw up the business plan for the Money Advice Service.

Q353 Teresa Pearce: No, but you would hope that they would draw on your knowledge.

Gillian Guy: There will be some working groups between now and October that will look at the business plan. We do not think that is sufficient engagement, but that is what is planned.

Q354 Andrea Leadsom: Is it realistic for the MAS to provide only financial advice? As you have said before, CAB provides a wide range of advice. Do people present just with financial problems on the whole, or is that not the case?

Gillian Guy: Generally it is not the case; sometimes, financial problems are identified later in a conversation. Face to face we see about 2 million people with 7 million issues, as I always say. That is an immediate multiplier that says there are many more things that go on. If people are in financial difficulty, they may well have issues around utility bills that they want us to sort out, for example. They may well have rent or mortgage repayment problems and possible repossession actions hanging over their heads. That may be affecting their health and it may be affecting them with regard to the education of their children. All of those things or some of those things present at once, and then we then try to unpack all of it so that we can solve the whole problem.

Q355 Andrea Leadsom: From visiting CABs, I think you now have a system so that each advisor can go into the system and look up frequently-asked questions, solutions and so on. Are you aware of whether MAS has any link to that? Does it have access to being able to signpost people on if something is outside its area of expertise?

Gillian Guy: I am not aware of its signposting. The only signposting I am aware of is where we signpost to it. As I have said, this year there are going to be about 68,000 calls; about 80% of its throughput to the telephone advice.

Q356 Andrea Leadsom: How many calls get passed between you both ways; so you refer to it and it refers back to you and so on? Is that something that you monitor?

Gillian Guy: We certainly monitor referral to it. I do not have figures for referral to us, but they do not feature as a significant statistic for us. Because we are a recognised brand, people tend to pick up the phone to Citizens Advice. If we cannot deal with that through our automated system, we are on track for about 68,000 calls going from us to MAS.

Q357 Andrea Leadsom: At what point in the conversation do you tell your advisors to refer on to MAS?

Gillian Guy: Only when they cannot pick up.

Q358 Andrea Leadsom: When they cannot pick up? What do you mean?

Gillian Guy: It is an automated system. It is when our capacity is lacking.

Q359 Andrea Leadsom: So it is a call centre issue.

Gillian Guy: If we had the capacity, we would not refer any at all.

Q360 Andrea Leadsom: I see. In other words, what you are saying is that there are no questions that would be put to the MAS that you could not answer, if you had the capacity?

Gillian Guy: No.

Q361 Andrea Leadsom: So there is no unique expertise that it has over the advisors in CAB.

Gillian Guy: That is probably a broader question. None that I am aware of. There is nothing that I am aware of that we could not deal with.

Q362 Andrea Leadsom: I would not want to put words in your mouth, but would you say that what MAS is doing is providing a subset of what the CAB are doing and, if you are looking at a Venn diagram, that its offering sits entirely within your broader picture and there is no particular expertise it has that sits outside CAB’s-

Gillian Guy: The difficulty we have, which I have explored with the Money Advice Service, fits into two categories. One is this duplication, as we have called it, which is that we do not really need another telephone service and we do not really need another web service. We need capacity within the existing services. The other category is that, therefore, we do not need a focus on marketing and creating a brand and moving resources away from that capacity, which is crying out for more investment. Those are the two main areas.

No one is currently operating effectively, including Citizens Advice, on bringing the whole sector together and potentially having common systems-common case management, common training and potentially this portal that allows people to share information without having to repeat it. If I were asked, "Is a role that such an organisation could carry out," those are the kinds of things. We have shared with the Money Advice Service and it is looking at that quite positively.

Q363 Andrea Leadsom: In terms of the legal advice side of CAB, is there any overlap there whatever? Does MAS get involved with providing people with legal advice on financial matters that would cross over with what citizens advice bureaux do, or is there no overlap there at all?

Gillian Guy: That should not be its business. In terms of its direct service delivery, as opposed to buying services from organisations such as ours, which does come into that kind of advice, it is there to give people financial capability and education. That ought not to be about legal advice.

Q364 Andrea Leadsom: So it does not provide any legal advice?

Gillian Guy: It shouldn’t.

Q365 Andrea Leadsom: Potentially, if it came to an issue of providing legal advice, it would need to refer back to Citizens Advice. I am just trying to understand how much to-ing and fro-ing there is likely to be.

Gillian Guy: If it strayed from financial money advice, which is about education and capability, into debt advice, debt management plans or legal advice-any of those things-it would need to refer elsewhere.

Q366 Andrea Leadsom: That addresses my next question: when you try and establish a debt management plan for someone, where you arrange with all their utilities for them to pay a set amount over a period of time, it would need to refer back to you to provide that set-up, would it? MAS would not be involved in that sort of activity either.

Gillian Guy: I do not believe it is. It does not have to refer just to us. It could refer to anyone else who provides debt management plans, including some companies that charge for doing so.

Q367 Andrea Leadsom: The impression I get is that there is an unnecessary, enormous overlap and duplication of fixed costs.

Gillian Guy: I think there is a duplication, but there is an attempt to separate out financial advice, which is about enabling people to manage financially, and debt advice, which is about trying to get them out of difficulty. We do not believe that you can separate those two out, because people need both at the same time. For example, when we do a debt management plan for an individual or a family, we try to give them some financial capability advice at the same time. We talk to them about budgeting and how not to get into the situation again.

Q368 Andrea Leadsom: Does the CAB also include somebody who perhaps got their house repossessed in the past? Would you give them advice-in other words educate them-on how to avoid those pitfalls in the future, or would that be something that would get referred to MAS?

Gillian Guy: We would do that in the natural course of a conversation giving advice. Whatever your experience of Citizens Advice and its advisors, I am sure it will be that they see the person and the problems that they have as something that needs to be taken completely to resolution. It is not the kind of service that says, "We don’t do that bit. Go away."

Q369 Mr Love: Can I take you back to a question that I think Teresa Pearce raised, which is the essence of what we are trying to get at? From the Citizens Advice viewpoint, what would be the role of the Money Advice Service in assisting you in providing the best service you can, but also reaching out to the other parts of debt advice and financial advice that you are perhaps not reaching at the present time?

Gillian Guy: The front end of that would be about providing the glue for the advice sector in this area. There are lots of organisations that do bits of this. One of the primary aims of an organisation such as the Money Advice Service could be-and indeed some say is-to facilitate all of those organisations working together to make it work for people, as opposed to the organisations. When I talk about a common case management system, training or standards, and things like that, that is something that one organisation holding the ring could probably do. That is an important function and there are many parts to it. I do not anticipate that that would cost over £80 million a year. The other part of it is to make sure that the bulk of the money that is available gets invested in the capacity to deal with the demand that is already there, let alone what demand might grow in the future.

Q370 Mr Love: Effectively, you are saying that the branding, which takes up such a lot of their finance at the present time, should be redirected into a co-ordinating service and then to filling out where there is demand, but not the capacity to meet that demand?

Gillian Guy: Indeed.

Q371 Chair: That is an important question, but Andy has left the amount. It is actually a quarter of the money available to MAS that is going on marketing this financial year. That is £20 million out of £80 million. That is quite a sum, is it not?

Gillian Guy: It is a huge sum.

Q372 Chair: Let me take you back to the first lot. I do not think the Committee wants this to be seen as an argument of CAB versus MAS. There are a number of organisations and we have had evidence from them. What has not become clear, even after seeing MAS, is what on earth they do. The starting point was that they were going to co-ordinate. There is an acceptance that some co-ordination might be useful, particularly on the financial advice side-I would even say some weeding out, if you wish-but what are they? They do not seem to have set their stall out to co-ordinate. They are talking about a direct service from themselves, taking work from others. Are they commissioning, because they are talking about putting you out to tender? Are they regulating? What are they, in your view? Have you made any sense of what they see as their role?

Gillian Guy: That is the role as is articulated; it is all those things. Our argument is that, given that resources are so stretched and demand is so great-and is increasing and will increase-we want to see value for that money. As we see it, the main role that would bring value is the piece that is about facilitating, co-ordinating and bringing together the advice and making sure that the gaps are identified and filled. That would serve people well. The other issues are ones that we do not see a need for, but that is another argument.

The point about the marketing budget-which, to the likes of Citizens Advice, looks colossal because what we do for £20 million is all the debt advice, for example, or a large proportion of it-is we have not seen a business case for it. If I were to go to my board of trustees and ask to spend probably a third of that on marketing, I would expect to have to bring a business case about what I expected to achieve and how I was going to evaluate that. I do not know to what extent the FSA has or will become involved in this, but I find it very difficult really to understand where the checks and balances are on that sort of sum of money-as you say, £80 million over four years-seemingly going to no great effect.

Q373 Chair: One of the criticisms they write in their report is the inefficiencies in the debt advice sector. I think it is in your organisation. They claim some of your advisors see five people a week. In actual fact, when they came in, they forced new performance targets upon you without any more resources. Are you aware of any debt advisor in a CAB who only sees five people a week?

Gillian Guy: I am not aware of any. That is not entirely impossible, because all our debt advisors work for different times. If a debt advisor works half a day a week, for example, they may only see five people. I cannot fully say that. The change in the specification in their commissioning role-debt advice-has been that they are very much wedded to numbers, probably because they are judged by them. We are anxious to get to quality of service as well as the numbers; so what difference does it make to see all these people?

As I believe some Committee members are aware, we had some difficulty in a contract that was presented to us that had a 50% increase in output with no additional resources. Looking underneath that, it was quite clear it was less contact with individuals that was to give that rise in throughput. We have accommodated that. We are going to meet the targets that we have to meet through the ways in which we manage the contract, but we are concerned about not being able to spend enough time on case handling where people need more of our time and more input. Sometimes it is right to spend a long time with one particular client to get them through a whole range of problems and get them into resolution control.

Q374 Chair: Are you aware that they are working on a common debt advice model, which they feel is much needed within the debt advice field?

Gillian Guy: I have heard of that, yes.

Q375 Chair: Have they spoken to you about it?

Gillian Guy: Not me personally. I cannot say whether that has surfaced elsewhere in the organisation. Our concern is always that we are not dealing with a perfect science when we deal with people in debt.

Q376 Chair: Are you aware that nearly £3 million of the money that flowed from the DWP to yourselves for debt advice is being taken over to staff costs at MAS?

Gillian Guy: I am certainly aware that there is an overhead cost, as I would call it, to the functions that MAS performs, which is why I am anxious to see the added value that could come from bringing the advice sector together.

Chair: Jesse, you are back on executive pay, I think.

Q377 Jesse Norman: We have touched on this already and it goes to the question of cost for MAS. As you know, a lot of that cost goes on staff turnover. Recently, the head of MAS resigned after it was revealed that he was on a salary of £350,000 a year. Could you talk a little bit about that? There have been other reports that senior figures at MAS are on large six-figure salaries. Can you comment on how those would compare to the kinds of costs that you have at CAB? How much does your senior team get paid, broadly or roughly? Is it significantly different from those kinds of sums?

Gillian Guy: Yes, it is significantly lower than those sums. Also, our trustee board-

Q378 Jesse Norman: Is your pay a matter of public record, Ms Guy?

Gillian Guy: I am not sure whether it is. It ought to be.

Q379 Jesse Norman: Would you like to make it so?

Gillian Guy: It is certainly less than half the figure that was put around for the retiring chief executive of the Money Advice Service.

Q380 Jesse Norman: So it is under £175,000?

Gillian Guy: Oh, yes.

Q381 Jesse Norman: You could be more precise if you wanted to be.

Gillian Guy: The other issue is that my trustee board get some expenses, but that is all they get; whereas obviously there are payments to the board here.

Q382 Jesse Norman: If you look at the board’s costs for the MAS, even the non-executives are getting paid £25,000 a year, I think. You have five of those and expenses as well, I imagine. Again, none of your trustees is paid for that trustee role?

Gillian Guy: That is right. My recollection is that the non-executives costs add about £500,000 to the overheads.

Q383 Jesse Norman: This is an organisation that is being run on a kind of large state-type budget rather than what you might call a voluntary organisation-type budget. There seems to be a completely different ethos between what MAS is paying people, how it sees people and how it sees its own directors, and how you pay people, how you see them and how you do not pay your own trustees. Is that correct?

Gillian Guy: Yes, it is. It feels a bit like the split between public and private sector.

Q384 Jesse Norman: You regard yourself as a kind of private sector organisation?

Gillian Guy: Public sector.

Q385 Jesse Norman: Right. They are paying themselves like a large corporation?

Gillian Guy: Yes.

Q386 Mark Garnier: Can I turn to financial literacy and financial education? As I think you know, I am a vice-chair of the all-party parliamentary group on financial education for young people. It is worth mentioning that now.

Have you done any assessment, either formally or informally, as to the financial literacy of school leavers? Even on an informal basis, what would be your appraisal of the financial literacy of people coming out of school?

Gillian Guy: We do not have data on people coming out of school and what their level of literacy is. I do not want to stray into anecdote and gut feeling, but the people we see who come to us for advice clearly did not have the level of financial literacy at the time they left school that would have enabled them not to get into the difficulty that they have got into.

The other thing to say is we have a few programmes within Citizens Advice where we are able to do it, where we try and work with schools to bring financial capability and education into that younger age group. We believe that that kind of investment is well worth while. It is something that is not easy for an organisation such as Citizens Advice to do because most of our money has to go to giving advice, but we like to get more into prevention wherever we can.

Q387 Mark Garnier: So you are spending your resources more on resolving problems as opposed to trying to prevent the problems?

Gillian Guy: That is where the balance is, yes.

Q388 Mark Garnier: If I was to ask whether financial education should be part of the school curriculum, what would be your reply? Why don’t I put that another way: should financial education be part of the curriculum?

Gillian Guy: Given our experience in seeing how people get into difficulty later in their lives, after their education, we would probably welcome that as part of what goes on in schools to give them that wherewithal.

Q389 Mark Garnier: How do you think that should be delivered? Do you have any thoughts about whether that should be in maths or PSHE, or spread throughout the curriculum?

Gillian Guy: I suspect I am straying outside my area of expertise here. I would want to analyse what works best.

Chair: There is no need to be modest.

Q390 Mark Garnier: Your experience is incredibly valuable to this whole debate. The reason I am asking these questions is because you see the genuine effects of financial illiteracy day in, day out-people coming along who simply do not understand how to resolve their own problems.

Gillian Guy: Indeed, yes.

Q391 Mark Garnier: The reason I keep going on about this, and the reason I am very interested in your thoughts about this, is that we have a hugely indebted nation, with £1.46 trillion of household debt, difficult economic conditions and a super-low interest rate environment. If that interest rate just goes to being just a low interest rate environment, in which case the base rates could double or quadruple and we would still have a low interest rate environment historically, there could be knock-on effects for lots of people. As part of the help that is going to be available when that starts happening, your input on the financial education that people have to start off with is incredibly important. To a certain extent I completely appreciate that a lot of your answers will be gut feeling or instinct, rather than from any qualitative analysis. Nonetheless, as the CAB, your input on this is incredibly important.

Gillian Guy: We have limited experience in schools and education. It is difficult, at that stage, to give the full cost-benefit analysis of what that input has given. We also have a lot of financial capability activity, which has been going on for 10 years at Citizens Advice-we have some experience of that-which is more about getting organisations and getting them educated to educate others, but also with people directly. We have undergone a lot of evaluation of that to feed into improving what we do and some of our evaluation has indicated the real difference that it makes. About 78% of the people who have been through our financial capability say to us that they have changed the way in which they manage their money. About 71% of them say they feel much more confident in handling money and dealing with financial institutions and a percentage of those have changed their savings behaviour as well. We do follow that up and do see a very positive impact.

Q392 Mark Garnier: The OECD has recently looked at financial capability in the international context and published a working paper, defining that a national strategy is a nationally co-ordinated approach to financial education which, first of all, recognises the importance of financial education, but then also identifies a national leader or co-ordinated body for delivering it. Do you think MAS is capable of being our national leader in terms of delivering financial education?

Gillian Guy: I do not think that it was set up to do that, so I would be very surprised if it was equipped to do that.

Q393 Mark Garnier: If I may, I will paraphrase that as, "No." Who do you think should be the national leader for financial education in schools?

Gillian Guy: I would like to see some leadership coming from the Department for Education.

Q394 Mark Garnier: That is very interesting because, during the scrutiny of the Financial Services Bill, there was certainly a stimulating and useful debate about the role of the regulators in terms of providing financial education. MAS is now sort of charged with doing this, but as a quango below an independent regulator below the Treasury. You definitely think the Department for Education should stand up and take on this role.

Gillian Guy: There does need to be some leadership in the area. I suppose, in a fairly simple way, I am saying there is a Department for Education and surely that has a role to play, because things are not going to change in schools unless that leadership is present.

Q395 Mark Garnier: Do you think financial literacy should be tested in schools?

Gillian Guy: I think that most things need a bit of testing before they are rolled out, yes.

Q396 Mark Garnier: One of the interesting points that has come from a number of teachers who have come before the APPG is that if you do not test something, it tends not to be taught. On that basis, do you think it should be tested?

Gillian Guy: Oh, that sort of testing.

Q397 Mark Garnier: Yes, examinations. Do you think that financial literacy should be part of the curriculum in terms of the exams that students take?

Gillian Guy: I am not an educationalist. I do not really have data to support an argument that what is examined is what gets taught. I know what gets measured gets managed and this argument is akin to that, but I do not know enough to say for definite.

Q398 Mr McFadden: Debt advice and money advice are not the same thing, are they?

Gillian Guy: No.

Q399 Mr McFadden: So, in terms of the talk about overlap in the field, is it fair to say that the people who are coming to CABs-I add to the chorus by saying that the one in Wolverhampton, where my constituency is, does a great job-are coming because they are financially stressed, often to a significant degree? They cannot pay their bills, they are in debt and they need help. The job of MAS is much broader, isn’t it? That is about people who may not be really struggling to make ends meet on a month-to-month basis, but they might be able to make significant economies in their budget by using their savings properly, by changing their utility deal, by claiming what is available to help them with childcare and in other ways. These are two different jobs, aren’t they?

Gillian Guy: They are not different people; they are very similar people. Through Citizens Advice, we assist people with accessing the income they are entitled to, whether that is through benefits or anything else they are entitled to. As I said, we try to get involved in education, prevention and capability activity where we can, alongside difficulty. It would not be very difficult to expand promotion of that kind of preventative and education activity, which is what we intend to do as an organisation. That does not necessarily need a whole separate brand. That is our argument.

Q400 Mr McFadden: Do you get significant numbers of people coming in your door who are not financially stressed, but who might say, "Look, I’m confused by the range of utility tariffs on offer," or, "My family has a sum of savings of a few thousand pounds and we’re not sure what is the best thing to do with it."? Do you get those kinds of questions, as well as people saying, "I can’t pay my electricity bill this month."?

Gillian Guy: We do get those questions and we will get more and more of them, given that we are about to expand further into the consumer space as we pick up consumer advocacy. We have started with the Consumer Direct helpline, which has been run by us since April. So we get many thousands of such calls along those lines. We also deal with financial services and products, and what choices one can make. Only on Friday I was on the radio talking about what people can do about their energy bills and the increases that are coming, and how they can save energy and reduce their expenditure and get help. That has been expanding for us. It has always been there, because once people know us they ask anything-we encourage them to do so-but as we pick up the consumer territory, that will get bigger and bigger.

Q401 Mr McFadden: So you do not think that it is a defence of MAS’s role if it was to say, "It is not just our job to help people with debt. We have a broader financial literacy-a ‘get the best deal for yourself’ role-which is different from what CAB or the other organisations who deal with financially stressed people do."?

Gillian Guy: I am not here either to defend or attack the Money Advice Service, but I can see the argument that there is a different remit. I am not sure that is playing out in the way in which the business planning is proceeding for that organisation. I have talked about a remit for bringing the advice sector together. There may be a remit for getting people to access organisations such as Citizens Advice and perhaps promoting it so that more financial education goes on. There may be a remit for encouraging education to pick that up, but I do not see that in the business plan. There is certainly a remit for picking up lots of the difficulties that are going to come about as a result of welfare reform. I do not see that in the business plan either.

Q402 Mr McFadden: Let me ask you about this. My local CAB gives all the MPs for the city very good maps of the casework that is coming in through the office, down to a ward-by-ward basis, which is very helpful. You have a national view of this. What do you think is happening in terms of the need for debt advice and how much has that changed in the past couple of years?

Gillian Guy: We are certainly seeing an increase in the complexity of debt advice, and a change, albeit not wholesale, in the trend of the people who require debt advice. Our typical demographic of those who might seek advice has changed to working families and people who have not necessarily previously thought that they needed any support, because they are finding life tough, getting into debt and needing some help with that. Our concern is to be there for them and have the capacity because, otherwise, they resort to other companies and other people holding out support, which can get them into even greater difficulty. We certainly see it increasing. We see a different demographic, so a much broader span of people. That gives us a massive opportunity to get into financial capability and education with people who will not necessarily stay in difficulty and in debt, and to keep them out of that situation. That is how we see it developing.

Q403 Mr McFadden: Is there an easy-to-read-and-digest report that you do of this on an annual basis?

Gillian Guy: In terms of our projections?

Mr McFadden: About the caseloads you are dealing with.

Gillian Guy: There is plenty of data that we can crunch in, as you have already said, in all sorts of ways about what we see on a regular basis, and we could take that a bit further into projection.

Q404 Mr McFadden: I do not know if this is in order, Chair, but a short note on that would be quite useful so that we could see CAB’s debt caseload and what it is dealing with, and how that has changed over the past couple of years.

In terms of this caseload, do you think that lack of trust in the banks has become a bigger factor in terms of people coming to see you for advice?

Gillian Guy: I think people are driven to seek advice for all sorts of reasons and it is usually something that hits them personally. The general atmosphere and environment of a lack of trust in financial institutions, and indeed in energy institutions and others, leads people to feel powerless, and that is what takes them into needing advice.

Q405 Mr Ruffley: You have made it clear that quite a bit of the financial capability service that the CAB provides is given at the same time as debt advice-I understand that. Could you give me an indication of the proportion of your budget that is devoted to delivering CAB financial capability services in schools, in rough terms?

Gillian Guy: It is a very small proportion and, generally, it would be where there is external funding to support that.

Q406 Mr Ruffley: Where do you sense that most of the financial education service delivered to individuals in this country is coming from?

Gillian Guy: I do not think that there is enough of it, so we are not dealing with a large span of that.

Q407 Mr Ruffley: Would it be schools?

Gillian Guy: Currently, I would not think that there is much of that. No, I wouldn’t.

Q408 Mr Ruffley: If not much is being done by schools and not much is being done by you, for entirely understandable reasons, who would you say is the lead provider of financial capability services in the UK?

Gillian Guy: Financial capability in schools is one issue and financial capability more broadly is another, so I am separating those out. We have had a slight discussion about what is going on in education and where the leadership for that might be required to make it happen in schools. As far as the broader issue is concerned, there is a money guidance contract as it used to be called-now a money advice contract-that gives probably the bulk of a service contract in England, Scotland and Wales. That is currently carried out by those people who hold the contracts. We hold two of them and A4e holds the third.

Q409 Mr Ruffley: On financial literacy-I suppose it is numeracy-one key concept is that of compound interest, which is quite important. I have come across schools where 16-year-olds are not aware of ever having been taught about the concept of compound interest. Is that the sort of gap that your people find when you do CAB lessons on financial capability in schools?

Gillian Guy: It is that sort of thing. It is how financial institutions and others operate-what do you need to be familiar with to have control, as far as is possible, so that you do not experience unintended consequences of your actions and do not get yourself into difficulty as a result of not understanding.

Q410 Mr Ruffley: You mentioned the Department for Education. Has the CAB, in relation to financial capability, had any discussion with or made any representation to the Secretary of State for Education or the Schools Minister?

Gillian Guy: Not recently I would say.

Q411 Mr Ruffley: Do you think you should?

Gillian Guy: I think we could.

Q412 Mr Ruffley: But is that something that you are minded to do?

Gillian Guy: Yes. There are two aspects to that. First, I do not think that it is just Citizens Advice, but many others would need to point out the importance of that and we can do that by reference to some of our data later in life. Secondly, we cannot undertake to execute all that in schools because we do not have the resources to do it. We have to be careful that we do not hold ourselves out in cases that we cannot execute.

Q413 Mr Ruffley: Sure, but on this very important issue, which colleagues have referred to, it is an old chestnut or a hardy annual. For the last 10 years I know that this issue has been raised: should it be explicitly on the national curriculum or should it not? Do you not think that the time has come for a bit of action and that an organisation as august and respected as yourselves should probably be making this point?

Gillian Guy: It is a very good point that we will take back. Of course, at the moment it is vying with welfare reform, legal aid and many other issues as well, but I take the point because prevention is important.

Q414 Mr Ruffley: I want to move from financial capability to go back to MAS. In your written evidence you refer to existing funder initiatives: "There is significant overlap of the clients using the Money Advice service and clients using the debt advice services previously funded through the Financial Inclusion Fund and now funded by MAS". You then go on in that part of your written submission to say: "MAS case management system is poor and increases the administrative burden on providers." Could you explain what that overlap is, because I am not entirely clear?

Gillian Guy: I think that is a reference to the way in which the contracts are managed.

Q415 Mr Ruffley: Could you just give an example? These are contracts for what, exactly?

Gillian Guy: That would be for debt advice.

Q416 Mr Ruffley: Pure debt advice. What are the "existing funder initiatives"?

Gillian Guy: Without reading the whole context of it, I am afraid I cannot answer. I can certainly give you more information on that.

Q417 Mr Ruffley: What caught my eye was your reference: "MAS case management system is poor and increases the administrative burden on providers." It is really a question about the performance of MAS and how it sets itself up.

Gillian Guy: I will need to check it out and give you further information, but my assumption is that this is about the management of the contract that we undertake on debt advice under the auspices of the Money Advice Service. What we are trying to say, in plain terms, is that we are not massively impressed with the way in which that contract is managed, and it adds a burden to us in terms of providing the service.

Q418 Mr Ruffley: Is that something you have made representations to MAS about?

Gillian Guy: Yes, and we will do so again this year, should we be lucky enough to secure a contract in time.

Q419 Mr Ruffley: You have mentioned welfare reform a couple of times, quite importantly, and it not being in the remit. Could you say a bit more about that? There seems to be rather a gap. Why is it not in?

Gillian Guy: In the business plan?

Mr Ruffley: Yes.

Gillian Guy: I cannot fully answer that. From our point of view, it is a very large oversight because it has to be one of the biggest financial capability challenges that is coming out-

Q420 Mr Ruffley: It is very complicated from the existing system.

Gillian Guy: Yes. It is already confusing and worrying people through either the disability provisions, council tax or the way in which the benefits are going to be paid on a monthly basis, which is absolutely a case in point of how people need to budget differently in the future.

Q421 Mr Ruffley: What have you been told about the absence of that in the business plan when your colleagues have queried it?

Gillian Guy: I think we have been told that discussions are now going on between MAS and DWP.

Q422 Mr Ruffley: In relation to the way MAS goes about its business-and obviously it has an impact on your organisation as well-do you get the sense that it is being overseen effectively by HM Treasury?

Gillian Guy: I am not fully aware of how it is overseen by the Treasury. I think the device is through the FSA. I have to say, as an onlooker, it feels as if the governance of MAS falls between two stools.

Q423 Mr Ruffley: That was precisely what was behind my question. Could you say a bit more about that-the falling between two stools?

Gillian Guy: I will give an example from a contract point of view. As you might imagine, I am agitating to know whether, from next April, we have the continuation of the debt advice contract, because I have 500 people waiting for their redundancy notices or not; let alone having to manage people who will not get that service from us any more. The difficulty that MAS has in telling me whether that is going to go ahead or not is that it has to go to the FSA board meeting before its business plan is signed off and before it can say definitely that it can go ahead with the contract. I looked with interest at the evidence that the FSA gave to this Sub-Committee, and it did not feel to me that the FSA felt that that level of detail was really being controlled. I do not know who takes the decisions round here and, therefore, where the accountability sits.

Mr Ruffley: I think that is something that we will pursue with the new Minister when he comes before us.

Chair: Gillian, thank you very much. That was some very useful evidence.

Prepared 13th September 2012