The North East chair of insolvency and restructuring trade body R3 has welcomed new government plans to introduce a formal ‘breathing space’ period to give financially-troubled people time to start tackling their money problems.
But Andrew Haslam, who is head of specialist business advisory firm FRP Advisory LLP’s Newcastle office, is calling for more detail to be provided on exactly how the new system will work.
The new ‘breathing space’ proposals, which are due to come into force from 2021, will prescribe that people affected by debt would be exempted from further interest, charges and enforcement action for a period of up to 60 days in order to give them a chance to seek qualified advice.
And with North East England having had the highest rate of personal insolvency of any part of England and Wales in each of the last ten years, Andrew Haslam is hoping that this move will enable more people around the region to find solutions to their financial problems that are appropriate to their individual situations.
He says: “We’ve long-supported the idea of a formal Breathing Space, and the Government’s plans for its introduction will help those struggling with debt to get the advice they need to begin to resolve it.
“We also welcome the commitment that individuals using the Breathing Space must seek professional debt advice, which is a must for individuals struggling with debt issues and gives them the chance to talk to an experienced, independent third party who can help them find the fairest, most practical way of resolving them.
“Including arrears owed to central and local government in the Breathing Space is also a positive step and will mean individuals in debt will be more fully protected from creditor pressure and from the risks of making a quick decision rather than a considered one.”
Recent R3 research found that 18% of adults across the North East, Yorkshire and Humberside said they didn’t have any savings at the moment, while more than two in every five adults (42%) across the same area said that they often or sometimes struggle to make their money last from one payday to the next.
Andrew Haslam continues: “The North East has a particularly stubborn problem with personal debt levels for a range of reasons – insolvency rates are typically highest on the coast and in places where major industries have declined, and these are both factors which are having a significant impact on our region.
“We need to see the Government’s full response to the Breathing Space consultation, rather than just a press release, before we can see how this policy is going to work more fully.
“There are still many questions that need to be answered, such as how will the mental health support proposals work, what will the eligibility criteria for accessing the Breathing Space will be and how will the mooted Statutory Debt Repayment Plan will operate in practice.
“More information is needed about how these proposals translate into policy, and we’re looking forward to seeing the details of what the Government has planned, as well as to working with them to ensure that the finer points of this very worthwhile initiative work for everyone affected by problem debt.”