Breathing Space, one month on

It’s now just over a month since the Debt Respite Scheme (Breathing Space) was introduced in England and Wales. With the first customers having reached the first milestone of their mid way review we thought it was a good time to take a breath, no pun intended, and look at how the scheme is working so far. 

Since the scheme began, we’ve recommended Breathing Space to around 5% of new enquiries which alignes to our forecast – and as expected for the vast majority of people who contact us for debt advice, we’re able to recommend a suitable solution or budgeting advice to them immediately. 

Customers we’ve been able to help start a period of Breathing Space have included: 

A, a 28-year-old with £20,000 of debt who had just been made redundant from an analyst job with a salary of £50,000,but was confident that he would secure a new job quickly. By applying for Breathing Space we’ve been able to make sure he is protected from interest, charges and collections action while he applies for jobs and for Universal Credit. 

L, who owes £13,500 and has a negative disposable income of £135 a month has been unable to work since October as he’s been caring for his mother. Thankfully her health has improved and he is now applying for jobs. 

K, who’s relationship has broken down and is currently out of work – has a negative disposable income of £600 a month and £10,500 of debt. Is now applying for jobs and trying to sell their house. 

Mid-point reviews are a requirement of the scheme, although somewhat superfluous, as often engagement between customers and their Adviser is ongoing – this engagement includes supporting customers with benefit applications, utility switching and other budgeting tips and support.  

So far, we’ve had strong engagement from customers with almost all continuing to engage in the advice process once Breathing Space has been applied. We haven’t yet had any scenarios where the customer is able to end their period of Breathing Space early, but some customers have had good news – such as finding work – that means their financial situation should be improving soon. 

On average each Breathing Space application has been generating three creditor queries. Typically, these queries have been around additional debts, creditors unable to locate the account and name mismatches. Whilst we’ve been able to respond to all queries within a 24hour service level, we are working with creditors to identify if there is more we can do to help reduce the number of queries they need to send.  

In the main we have found creditors, including local authorities and utility providers very receptive to providing support for those in need of Breathing Space and keen to work with us to streamline the way we support each other. We have only seen a handful of ‘Review Requests’ mainly where there has been a misunderstanding of the rules; for example believing that if an informal breathing space has been applied in the past 12 months that people are ineligible for formal Breathing Space under this scheme.  

As we’ve said before, Breathing Space is a pause, not a solution. But for customers like A whose financial situation is likely to change very soon, Breathing Space is exactly the kind of support that is needed. We’re pleased the scheme is up and running and working well so that we can help provide that vital support. 

We recognise though that for some customers with more complex circumstances 60 days just won’t be long enough and we will be keeping a close eye on how this scheme works for those customers. We see there are opportunities to strengthen the breathing space scheme which we hope will continue to be assessed.  

 

If you would like to discuss our approach to Breathing Space you can contact us at [email protected]