The Treasury Committee has published its response to the Household Finances Report from July. Commenting on the response, Rt Hon. Nicky Morgan MP, Chair of the Treasury Committee, said “In its report, the Committee expressed concern about the over-zealous debt collection practices of public authorities. The Government’s rehashing of existing policies in its response adds nothing new. It should face up to the evidence that shows such uncompromising practices. The Committee also expressed concern about the complexity and perverse incentives of the Lifetime ISA. It is disappointing, therefore, that the Government ignored the Committee’s call for the Lifetime ISA to be abolished, and will press on without reform.”

“Tax relief on pensions is not an effective or well-targeted way of incentivising saving, and the Committee encouraged the Government to consider replacing the lifetime allowance with a lower annual allowance. Following reports that the Chancellor is considering a range of options for reforming pension tax relief in the Budget, the Committee will keep a close watch on any announcements. The Treasury has not moved on several of the Committee’s recommendations, or demonstrated an increased sense of urgency required in some key areas identified by the Committee. We will continue to hold the Government to account for its record on improving household finances.”

Commenting on the government’s response to the report today, Gillian Guy, Chief Executive of Citizens Advice, said “The Treasury has failed to address the recommendations in the MP’s report. Firstly, they should measure and report household bill debt each year. We’ve shown this is possible by revealing a hidden debt problem worth £19 billion.”

“Secondly, the government must improve the way it collects that debt. As a start, the MOJ must use its call for evidence into aggressive collection practices to introduce an independent regulator for the industry. These issues are causing real harm to people. It’s time the government started taking this seriously.”

Figures from Citizens Advice show that:

  • UK households owe £18.9 billion to essential service providers and government in arrears. This includes tax credit overpayments of almost £7.5 billion, £2.84 billion owed to local authorities in council tax arrears and £2.20 billion owed to water companies.

  • Household debt has now overtaken consumer credit as the key money problem people bring to Citizens Advice.

  • Last year we helped people with 690,000 household bill debt problems, compared to 350,000 consumer credit issues.

  • Since the  2014 reforms were brought in to protect people from unfair practices by bailiffs, Citizens Advice has seen a 25% rise in issues. Last year we helped 1 person, every 3 minutes with a bailiff issue.

Citizens Advice is calling for:

  • The government to commit to measuring the levels of household debt. The government should collect and report annually on the level of debt to government and to essential service providers in a similar way to the Bank of England’s monthly statistics on consumer and mortgage lending.

  • The bailiff industry to be independently regulated. The Ministry of Justice should use its announced ‘crackdown on rogue bailiffs’ and 3 year review of the 2014 Taking Control Regulations, to bring bailiffs and bailiff companies under an independent regulator.

People who are concerned about their finances can contact Citizens Advice for budgeting and debt advice.