6 March 2024
With almost three quarters of its clients who face insolvency going through Debt Relief Orders (DROs), Christians Against Poverty (CAP) has welcomed the UK Government’s concession on scrapping the payment for DROs, following its campaigning on this issue.
Gareth McNab, Director of External Affairs, said: “We’ve been working for many years to push the UK Government to remove the barriers that our clients face to becoming debt free. Debt Relief Orders — a debt solution for people with low disposable incomes and few assets — have had a fee of £90 that needs to be paid before someone can become debt free. But the majority of our clients do not have that money available.
“We have campaigned for reform of DROs for a number of years, highlighting the key barriers that have prevented thousands of households from breaking free from the chains of problem debt. We know that the need to pay a fee was the biggest barrier — and so we are delighted to see this removed from April in England & Wales. Alongside this, the limit on levels of debt that people could have also meant they had to explore more costly solutions out of debt — we recommended that this be set at the level the Chancellor has now agreed of £50,000.
Finally, the limit on the level of assets preventing people with even a modestly priced used car from accessing a DRO was fundamentally unfair. We’re delighted to be able to deliver more hope to more people through our Debt Help Service as a result of this change, and to show that the collective effort of many people coming together to challenge power when a system is broken can make a significant change.
These breakthroughs are hugely important for so many of our clients — but in our celebration, we cannot let anyone forget the around 1 in 2 of our client base who will find little hope in this news since their budgets are broken. Around half of our clients are on deficit budgets, where they have insufficient income to meet even the barest of essentials, even after our expert help. The average deficit of £255 a month is an often insurmountable gap that means households are trapped in debt in order to eat & pay rent.
Becoming debt free today on budgets that are under this much pressure doesn’t enable people to remain debt free tomorrow, and this is where the Chancellor needed to go further and shore up people’s incomes.
Our work with thousands of people each year shows us that poverty robs people of their dignity; at CAP half our clients don’t have enough income to live on, even after we have explored all the options available to them. We believe that in a fair society we can make a commitment to helping people who are struggling so they can thrive, and not just barely get by.
Next week CAP is launching a landmark report looking at the ways in which low incomes trap people into debt and poverty. As part of this we are asking Government and employers to review social security and wages against the Minimum Income Standard*. This would help ensure that everyone has the chance to live a full life and feel part of a thriving community.”
Post expires on May 9th, 2024
