Advice service cuts

Manchester City Council has announced the complete closure of its in-house advice service, Manchester Advice, as part of £40m in cuts to its adult services department.


Manchester Advice was one of the first such council advice services established in the country. Around 100 staff will be made redundant and LAG understands that they are currently being asked to consider taking voluntary redundancy. A total of £1.68m will be saved if the service closes.

Manchester Advice offers free, confidential and independent advice on benefits, housing, debt, and consumer issues. Last year it assisted 80,000 Manchester residents and brought them around £30m in income from entitlements and savings. A letter, seen by LAG, sent to Manchester City councillors by a campaign group called Access2Advice argues that while the group is 'reconciled to share the pain over cuts', the complete closure of Manchester Advice is 'a scorched-earth policy which will bring devastating effects for many tens of thousands of vulnerable Manchester residents'.

The council’s paper detailing its budget proposals argues that the services in the city provided by the Community Legal Advice Service (CLAS) will provide an alternative to the directly run council service. The CLAS was established last year and is led by Manchester Citizens Advice Bureau Service. It is funded by the council and the Legal Services Commission. However, if the government’s planned legal aid cuts go ahead the CLAS would lose much of its income from legal aid next year. This would leave Manchester residents without advice on benefits, debt and other civil legal issues. Clearly a rethink of the council's strategy for advice is needed as the plan to close Manchester Advice could not have envisaged that legal aid funding for advice would be cut.

Birmingham Citizens Advice Bureau Service seems to have avoided a funding crisis which could have resulted in the immediate closure of its five open-door services in the city. The city council has withdrawn its £600,000 grant to the bureaux. However, after meeting with councillors, the Citizens Advice Bureau Service withdrew its threat to immediately close its five offices in the city after being given assurances regarding a new council grant pot for advice services. LAG understands that around £300,000 will be made available by the council to fund such services in the city later this year, but this will still mean a large cut for the bureaux.

LAG is calling on the government to conduct an urgent review of legal advice services in social welfare law jointly with the not for profit legal advice sector. Local government as a whole has to find 28 per cent in cuts and it is clear that advice services, as they are mainly non-statutory, are in the firing line. Through a combination of council and legal aid cuts we believe many areas like Manchester and Birmingham will lose the advice centres which provide a lifeline for thousands of people with housing, benefits and other common civil legal problems.

Image: South Manchester Law Centre. The Law Centre now provides a much reduced service after losing most of its funding from the city council last year.

Financial Inclusion Fund cuts confirmed

LAG has learnt that the Financial Inclusion Fund (FIF) will end in March. FIF pays for just under 500 debt advisers based in Citizens Advice Bureaux and other not for profit (NFP) advice centres. LAG believes this will be a devastating blow to many of the centres as they are also facing cuts in legal aid and local government grants.

The FIF was established in 2004 by the last government. A total of £45m was allocated from the fund to pay for face-to-face advice services in the NFP advice sector to help people facing debt problems. Around 100,000 people a year were assisted by the money advisers paid for by the fund. Most of these advisers now face redundancy. News that the fund was to be discontinued was given by Mark Hoban MP, Financial Secretary to the Treasury, in response to a written question in the House of Commons. Advice agencies, though, are still waiting for official confirmation that the scheme will end from the Department for Business, Innovation and Skills which administers the cash.

It is difficult to exaggerate the impact of the abolition of the FIF grants. Many in the NFP sector had feared that the fund would discontinue due to public spending cuts. Prior to the election, Labour was making no promises over whether the FIF would continue, but the coalition government is now also planning to discontinue funding for debt advice under the legal aid scheme, except if people are in immediate danger of losing their homes.

LAG believes that the decision to cut the FIF and the government’s threat to end legal aid funding for debt advice is remarkably short sighted. Early intervention in debt cases ensures people deal with their money problems before they spiral out of control. Often, when mortgage and rent possession proceedings are imminent, it is too late to keep families in their homes. Aside from the damage this causes to people’s lives, the loss of a family home brings an enormous cost to the state. Shelter, the housing charity, recently calculated that each family forced out of their home costs the state £50,000.

Anyone can face money problems caused by the loss of a job or when something else goes wrong in their lives. LAG is calling on the government to establish a commission or review of the services and funding in place to help people with debt and other civil law problems. The FIF decision shows a lack of strategic thinking on civil legal problems by the coalition government. We believe this has to be addressed as a matter of urgency, before more of the services people rely on when they are hit by common legal problems disappear for good.

Andy Murray of Unite, the trade union which represents many of the advisers now due to be made redundant, told LAG: 'It is absolutely staggering at a time when City bankers are receiving massive bonuses after being bailed out by the taxpayer that the government decides to withdraw this key support to members of our society in distress. The claim that "We are all in this together" is increasingly hollow.'

Update today (24th January). LAG has contacted Phil Jew at Advice UK, the national organisation for independent advice centres. Jew is asking for clarification from the government about the future of funding for debt advice, "Mark Hoban's statement caused alarm by seeming to signal an end to the Government funded face to face debt advice scheme. Such a cut would be a huge blow and would not make economic sense. If there's a possibility of an alternative scheme, we need to know - now!"


The Treasury announcement in full

Image: South Manchester Law Centre

Debt advice strategy 'deficient'

A report critical of the government’s strategy for debt advice has been published by the House of Commons Public Accounts Committee. A total of £600m will have been spent on the strategy between 2004 and 2011, but
The Department for Business, Innovation and Skills: Helping over-indebted consumers (thirty-first report of session 2009-10) argues that it lacks co-ordination and effective evaluation.

Around 11 per cent of the UK population struggles with debt problems says the report, which was published on 8 April. Responsibility for managing the 51 different initiatives to help these people is split across three government departments - the Department for Business, Innovation and Skills (DBIS), the Department for Work and Pensions and the Ministry of Justice. The DBIS is supposed to lead the strategy, but has not produced an annual report on it since 2007. Due to various problems the individual departments have been left to evaluate their own programmes and so comparisons on costs and effectiveness between the different programmes are difficult to make.

While the report recognises the success of the face-to-face advice services funded by the DBIS, it argues that this is the most expensive form of provision and is concerned about the variation in costs between different providers. These range from £201 to £377 per client. The report observes that two-thirds of debt management plans are arranged by private sector providers and argues that the quality and capacity of these services needs to be evaluated.

Looking to the future, the grants for face-to-face services funded by the DBIS are due to end in March 2011. Further funds will depend on the government being able to find the cash from its overstretched budget. This report seems to hint that more services could be provided by the private sector and that telephone and internet services might be a more cost-effective way of providing debt advice. LAG would argue that this is true to a point, but the report acknowledges that demand is increasing for debt advice services. A high proportion of this and ongoing demand will be led by client groups, such as people without cheap internet access, who are best served by face-to-face advice.

With such tight public finances, LAG believes that funding for advice services will be subject to even greater scrutiny from government and this will be accompanied by a desire to join up different funding streams to avoid real or perceived duplication. Advice providers and their various umbrella organisations will need to respond to this by putting aside some of their traditional rivalries to work closer together in the planning and delivery of services.

Picture: UK Parliament website

Nottingham rethinking advice?

Last week people from the advice world travelled to Nottingham to be taken on a journey through systems thinking (to paraphrase the blurb), the new model of planning advice services which AdviceUK, the national organisation representing independent advice centres, is pushing. While it sounds like the jargon of management speak, the Nottingham experience seems to demonstrate that the approach is worth looking at, though in Nottingham it is limited in the areas of law it covers and does not include private sector solicitors.

Nottingham City Council currently spends £3m on advice services. These are spread across an in-house welfare rights team, which specialises in benefits and debt, and the voluntary sector. A Law Centre®, a Citizens Advice Bureau, a Housing Advice Centre and an independent advice centre have signed up with the council for this experiment in advice services planning. Four hundred and eighty four interviews with clients were observed by researchers. What they found was that 280 interviews dealt with a life event such as a client losing his/her job and needing advice on benefits. The big revelation was that 204 interviews were to do with a failure in the system - in other words government agencies getting it wrong.

An example of a systems failure given by the council is the procedure over benefit appeal tribunals. Once a client appeals, a TAS1 form is sent to him/her which s/he has to respond to within 14 days. Many do not. This results in advisers having to apply to reinstate the appeal. AdviceUK argues that by adopting a systems thinking approach such waste can be reduced by joint working and the spare capacity which is freed up can then be used to improve services.

The researchers found that 15 per cent of clients presented with multiple problems. They also found evidence of the need to triage cases. For example, straightforward enquiries, which would only take a few minutes to deal with, were having to join the same waiting list of a few weeks for interviews as those clients with more complex cases.

A few alarm bells did ring when LAG interviewed advice workers at the Town Hall event. There seemed to be very little referral to solicitors, apart from some cases going to the Law Centre. Even in disrepair cases, advisers seemed to believe that expert reports and experience of litigation were not generally necessary. Another problem was the lack of understanding regarding the potential for conflicts of interest with council-run advice services.

What the Nottingham experience does show is that systems thinking can be used to improve advice services by identifying waste caused by systemic failures and act as a way to galvanise services to work more effectively together. The overriding impression of the Nottingham experience is that the advice sector had a unity of purpose to serve people more efficiently. This is perhaps the systems thinking project's most useful achievement.