A year of Labour: How has the Starmer government fared in helping people out of debt?

One year on from the general election and a new government, it’s time to take stock of what’s changed in terms of the personal debt landscape.

Before the election, we at StepChange Debt Charity had four key asks that we wanted any new government to act upon to improve policy and outcomes on personal debt. In essence, these were:

• To reduce the risk of debt causing people to lose their homes in the rented sector
• To introduce statutory regulation of bailiff firms and stamp out bad practice in the debt enforcement sector
• To provide a sustainable environment for debt advice provision and debt solutions
• To support UK households to rebuild the financial resilience by addressing cost of living pressures, supporting savings and expanding access to affordable credit.

So what’s actually happened?

In housing, we’ve seen the introduction of the Renters’ Rights Bill, which is likely to become law later this year. We welcome that this will abolish ‘no fault evictions‘ (often used by landlords as a convenient way of circumventing court discretion). The government has also used the bill to increase the amount of arrears tenants can have before facing potential automatic eviction from two to three months, which will give struggling tenants more time to resolve problems and stay in their home.

While this is a good start, the end of no fault evictions could mean landlords use other routes to eviction more readily – like rent arrears – in future, so it is important the government monitors the situation closely. Ultimately, we would like to see wider reforms to housing legislation to deliver greater security and support to private renters affected by cost of living problems.

The government’s flagship commitment to get 1.5 million more homes built is something that we welcome to improve the upward pressure on housing costs which the imbalance between demand and supply exacerbates, but it’s not a quick fix. Making sure people have enough money to pay their rent is the only real solution.

On bailiffs, we’re delighted that the government has announced that it intends to introduce statutory regulation and has issued a consultation on its proposals. It’s taken many years to get to this – frankly – commonsense position, and we hope that the implementation of these proposals will be speedier.

And crucially, the government’s public commitment to consult on reform of council tax debt collection – one of the most significant drivers of enforcement – offers the opportunity to better help those who fall behind so that collection does not escalate to bailiff enforcement in the first place.

As for debt advice provision, we’ve proved that we can deliver our service innovatively and with funding from a variety of sources, but that doesn’t mean that government support isn’t needed. For a stable, effective debt advice sector that puts the interests of clients at its heart and isn’t swayed by commercial interests, the government needs to ensure that everyone who needs high quality help can get it.

Finally, on financial resilience we’re pleased to see modest but meaningful progress on a range of fronts. Measures like the widening of access to the £150 Warm Home Discount to around 2.7 million households this winter is a good ‘downpayment’ on a longer-term transition to a social tariff needed in a world with sustained high energy prices.

And the rise in the national living wage and expansion of free school meals supporting ongoing work on a strategy to reduce child poverty – accompanied we hope by an end to the two-child limit and benefit cap – are important structural measures that ought to help families make ends meet and reduce the risk of problem debt.

The transformation of the temporary Household Support Fund into a new long-term Crisis and Resilience Fund, announced in the recent spending review, is hugely welcome. Similarly, the significant reduction in the maximum deductions that can be taken from universal credit to repay debts like benefit overpayments will better protect those relying on the safety net against destitution.

Of course, the government’s proposals to reduce key working age disability benefits is a big concern and we are adding our voice to those calling on the government to rethink its plans.

Ultimately, we still have over 13 million people (nearly one in four of the population) with low financial resilience according to the FCA, with one in twelve people in the UK experiencing problem debt, and a disproportionate debt burden on lower income households. So, if we’re marking the government’s annual report card, we’d say it’s been an encouraging start in many areas, but the real work has only just started.

Vikki Brownridge is CEO of StepChange Debt Charity

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