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Press Release

Debt advice gives a helping hand

23 March 2007

A major research report has provided clear evidence of the positive impact debt advice can have. It also confirms that debt problems can have a major impact on people's lives, bringing about ill-health, relationship breakdown, loss of employment, as well as distressing impacts on parents’ relationships with their children.

It is currently estimated that 3.7 million people are having serious financial problems.

The report, A Helping Hand: The Impact of Debt Advice on People’s Lives, has been produced by the Legal Services Research Centre (LSRC) and is launched today at the Advice Services Alliance conference in central London by Professor Pascoe Pleasence, Head of the LSRC.

Commenting on the report, Professor Pleasance, said:

“The report confirms that debt problems make it difficult for people to live a normal life.  This was graphically illustrated by one of our case studies, ‘Lisa’*.  A random control trial of the provision of advice to people facing debt problems was carried out for this report.  This is the first ever time such a research methodology has been used in this area of study. 

“The results of the random control trial showed that people offered advice were significantly more likely to view their situation as improved after three months.  Participants in our studies indicated that their financial circumstances improved following advice, and the random control trial demonstrated that this improvement was greater than would have been the case had no advice been provided. There was also evidence that advice improves people’s understanding of their personal finances and, seemingly, helps them to better target the most important debts, such as mortgage/rent arrears and court fines.
 
“The report confirms that education and initiatives that increase people’s knowledge and confidence to avoid and deal with problems are important.”
   
The LSRC has calculated that the average cost per debt problem to the public (including lost economic output) can be estimated at over £1000, with more serious problems involving costs of many times this amount.  These costs can be set against the cost of advice, estimated at around £25 in the case of National Debtline (who provided the advice in the random control trial).  This clearly shows the benefit that providing debt advice can have on society as a whole.

The research also indicated that people’s levels of anxiety, general health, relationships and housing stability benefited from advice. 

*‘Lisa’ felt hopeless and desperate about her situation.  The hopelessness led to depression and she was put on anti-depressants by her GP.  The depression also led her to become bulimic and consequently she was referred to a local psychiatric unit.  She then became suicidal.  Due to her illness and state of mind, she started to neglect her children.  She ensured they wore clean clothes and were fed, but was not capable of anything else as she felt ‘zombified’.  She said, “my responsibility as a mother diminished to…not even a carer…because I didn’t care…I cared whether they were hurt…But probably no more than a stranger in the street would have cared because I was that numb.

Media information

Richard Shand   Tel: 020 7759 0491

Notes to editors

1. Copies of A Helping Hand: The Impact of Debt Advice on People’s Lives are available from Richard Shand or the LSRC website.
2. The Advice Services Alliance conference is being held at Friends House, 173 Euston Road, London, NW1 2BJ.
3. The Legal Services Research Centre is the independent research division of the Legal Services Commission (LSC). It was set up in 1996 to inform legal aid policy and the implementation of reform.  It has a broad remit to conduct strategic research in the civil and criminal justice fields.
4. The LSC administers the legal aid scheme in England and Wales.  It works in partnership with skilled and dedicated advice providers (solicitor firms and advice agencies) to provide information, advice and legal representation to help about two million people each year get access to justice.
5. Research methodology: A Helping Hand: The Impact of Debt Advice on People’s Lives reports on four separate studies. They were:

1. Quantitative interviews with 176 clients of 14 advice agencies, at the time they received advice and six and twelve months later.
2. Analysis of quantitative data drawn from the 2004 English and Welsh Civil and Social Justice Survey (CSJS), a large-scale nationally representative survey of people’s experiences of civil justice problems.  Looking just at those people who experienced debt problems, the survey allowed an insight into the consequences of problems, advice seeking strategies and the impact of advice on problem outcomes.
3. Qualitative interviews with people identified as having experienced debt problems through the 2004 CSJS. This allowed people to express their experience of debt problems and advice in their own terms, thus enabling a fuller interpretation of the quantitative findings from the other surveys.
4. A random control trial to explore whether the offer of debt advice to a group of people facing problems would improve their life circumstances, relative to a similar ‘control’ group of people to whom the offer was not made. 

 

Last updated: 23 March 2007