A new scheme to break the wave of post-Covid debt

A new wave of post-Covid debt looks to be on the horizon. But as Russell Hamblin-Boone and Paula Stringer write, new measures set to be introduced later in the year look to ensure Britain's poorest are not swept away.

The last year has been defined in terms of 'peaks' and 'waves'. But while we have become glued to daily stats about cases and jabs, another wave has been charted by the Government's money and pensions service (MaPS). Their preparations suggest there is a tidal wave of debt curling on the horizon.

To its credit, Government interventions (including the furlough scheme and over £800 million of funding for council tax relief) staved off a potential debt catastrophe when Covid first reached our shores. Yet these schemes, like all good things, will come to an end. After all, the economic shock of the pandemic – which on top of accelerating profound changes in the way we live, work and consume has seen more than half of low-earners increase their borrowing and an additional three million people claim universal credit – could be buffered and delayed, but never fully contained.

As this impact continues to materialise, MaPS expects demand for urgent debt advice to rise by over 60 per cent on the previous year, with the peak expected in late 2021. Meanwhile, just as the furlough scheme winds down, cash-strapped councils will understandably be looking to recover the £4.4 billion of council tax arrears. Last year saw the largest rise on record, as people fell behind on council tax bills to the tune of £1.5 billion.

What this means in practice is that tens of thousands more people will encounter debt collectors and bailiffs in the months and years ahead. The spiral of indebtedness is closely linked to family breakdown, addiction, unemployment and deteriorating mental health. Over a quarter of clients helped by the debt charity Christians Against Poverty have considered or attempted suicide as a way out of their problems. So, more than any time before, debt collection today must be carried out fairly, sensitively and in a way which does not cause harm to people in already vulnerable circumstances.

There is a crucial balance here to strike between the need to fund local services through taxation, while recognising the profoundly vulnerable situations many people find themselves in post-pandemic.

Bailiffs have a particularly important role to play in this balancing act. Perhaps more than people realise, they are often society's first point of contact with its most vulnerable members. But while for some the word 'bailiff' still conjures daytime TV and blokes in leather jackets, enforcement agents (as they became in 2014) have undergone significant evolution in recent years.

Increasingly the industry has made efforts to provide tailored support for people in debt, employing specialist staff and analytics software to identify people with additional needs, while carrying out their duty to the courts who order them to enforce money that is owed. While efforts to raise standards are welcome, they must be consistent and universal for them to be effective. And while bailiff firms were commended for their responsiveness at the height of the Covid crisis, the ambition cannot stop there.

Indeed, in what has been described as an 'historic breakthrough' spearheaded by the Centre for Social Justice (CSJ), the civil enforcement and debt advice sectors came together in 2021 to develop, for the first time ever, a shared vision of reform. Today, we are delighted to jointly announce the culmination of this endeavour: the Enforcement Conduct Authority (ECA). As set out in the CSJ's Taking Control for Good report, the ECA will launch later in 2021 and will bring an unprecedented degree of independent scrutiny of enforcement firms and their agents, improving standards and protecting the public from poor practices. Administering a new complaints procedure and developing new affordability and vulnerability protocols, it will ensure that all bailiffs are working to the very highest standards.

In this initiative, bailiffs are embracing evolution with a proactive response to current socio-economic conditions. Likewise, the Taking Control campaign, led by the debt advice sector, has succeeded in its effort to secure independent oversight of the bailiff industry.

We celebrate this moment as a shared achievement, but the hard work starts now. When the tidal wave of debt finally breaks, all those working to stop the most vulnerable in society being swept away will find a crucial ally in the Enforcement Conduct Authority.