Introducing a Breathing Space

At the last general election I stood on a manifesto which included a promise to introduce a ‘breathing space’ scheme for people with problem debt.

Problem debt, often caused by sudden events such as the death of a family member or losing a job, can place a great burden on families and individuals in addition to being a cause of stress or mental health issues.

Recently, HM Treasury have announced new plans to support people in these circumstances. The Breathing Space scheme has two parts. The period of 60 days would see people in problem debt be protected from enforcement action, and have interest on their debt frozen. During this time, individuals would be expected to use the help of debt advice services to find a sustainable resolution.

People in mental health crisis will see further protections while they receive treatment. Those receiving NHS treatment for mental health crisis will not need to seek debt advice during the 60 days, therefore removing a barrier to access. Indeed, they will continue to receive the same Breathing Space protections during their treatment.

This announcement from the Treasury follows a recent consultation on this Government’s policy. It is expected that regulations on the Breathing Space scheme will be put to Parliament before the end of the year, so they can be fully implemented soon.

In recent years we have seen action taken to support families with high levels of debt. For example, at the Budget in 2018, measures were announced to enhance the social lending sector and increase access to affordable credit.

The Money & Pensions Service has also been established to bring together three existing publicly-funded guidance services to provide free-to-user support on people’s financial lives. Debt advice funding has increased to almost £56 million in 2019-20, delivering some 560,000 sessions across England this year.

Henry Smith MP