Update on debt advice commissioning – 14 February 2022

We are acutely aware that the delays and uncertainty in moving away from grant funding to longer-term commissioned contracts have impacted morale across the sector. We recognise the importance of completing the process as fast as we can while delivering a robust procurement process that ensures a smooth transition and that delivers best value for money. We are grateful for the continued engagement and commitment from incumbent providers, bidders and other interested parties, who are united with us in wanting to minimise any disruption faced by debt advice clients.   

Our priority is to make sure that we can collectively deliver more expert debt advice that achieves good outcomes for more people, including those in vulnerable circumstances.

We are now in a position to confirm funding levels for commissioning debt advice services in England.

For the next three financial years, we have a maximum annual funding envelope of £76 million for the delivery of debt advice services in England, subject to the usual annual budget setting by government. This represents a significant increase from pre-pandemic funding levels, which totalled £43 million in 2019/20. This is also an increase in our business as usual funding for debt advice services in 2020/21 and 2021/22, excluding additional funding received in response to the pandemic.

We will allocate this funding for Lots 1, 3 and 4 as follows:

• Lot 1 (national) – £37 million
• Lot 3 (business debt) – £3 million
• Lot 4 (debt relief order (DRO) administration hubs) – £6 million.

Our rationale for allocating funding for Lots 1, 3 and 4 in this way is to maximise the number of clients advised, and maintain the viability of the contracts and lots to ensure value for money is achieved.

We previously communicated that we will not be proceeding with the current procurement of Lot 2 (regional). We can now confirm grant funding levels for regional services will be maintained at similar levels in 2022/23 to currently. Once the new contracts are in place across Lots 1, 3 and 4, our intention is to fund regional services at £30 million per annum until we conclude our work with the sector to identify the best approach and level of funding required to deliver local services.

As we are now able to confirm the funding envelope for commissioned debt advice services in England, we will be inviting existing bidders only in Lots 1 and 4 to re-submit their tenders to make any adjustments they wish to reflect the confirmed contract values. We will not be inviting existing bidders to re-submit their tenders in Lot 3 but we will be undertaking a new evaluation of existing tenders in Lot 3.

Instead of the short-term grant extensions we indicated in our December update, we will offer our current debt advice delivery providers interim grants for a period of 10 months starting from 1 April 2022 (including DRO arrangements and the advisers trained and funded as part of MaPS’ pandemic response) at the same levels to the current year. This is to ensure adequate time to evaluate the re-submitted tenders, mobilise new contracts in Lots 1, 3 and 4, and to protect continuity of service for people seeking debt advice.

Following the interim grant of ten months, our intention is to put in place a further grant for our current regional providers whilst we work with them and other stakeholders to shape our longer-term plans.

We will share more information about how interested advisers and organisations can work with us as we take this forward.

– ENDS –