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'Breathing space' scheme would help vulnerable families get free from debt

3 min read

Kelly Tolhurst MP argues that the 'breathing space' scheme would allow families a period of time free from enforcement action and rising interest payments while they get their finances in order.


While the economy grows we are also seeing the rise of personal borrowing, which has led to mounting concern that households who get into debt need safer ways to manage when they get into difficulties.  

Credit can be a good thing, helping people smooth their finances and make purchases today to be repaid out of future income. However, problem debt makes people ill; it causes families to break up; it stops people from working and makes people less productive at work.  I am pleased to have the opportunity to raise this to Treasury ministers on Wednesday.

Sadly, almost a quarter of children in debt-ridden families - equivalent to more than 500,000 children - are unhappy with their lives. This means that children living in families struggling with debt are five times more likely to be unhappy than those in families without debt troubles, putting them at greater risk of developing mental health problems later in life. 

Seeing the impact of debt on children and families both nationally and in my constituency, I decided to take this issue on in my first Private Members’ Bill.  The ‘Breathing Space’ scheme would introduce protections for families who are doing the right thing – getting debt advice and wanting to repay their debts over time in a safe and affordable way.

Often families can fall into debt due to a one off circumstance in their life - an illness, bereavement or job loss.  The Breathing Space period - where families are free from enforcement action, additional fees and interest on their debts - gives them time to get their finances back on track without fear their debt will mount even further. 

There is precedent for a scheme of this sort we can build on.  In Scotland, the Debt Arrangement Scheme (DAS) offers legal protection to families in debt who seek advice.  In 2015/16 £38m was repaid through the DAS.  Crucially over time the number of people using the DAS has increased as a percentage of available debt options.  At the start of available data in 2009/10 over half (57%) of debt options were bankruptcies – this has now shifted significantly down to 36% bankruptcies and 22% for the DAS. 

I want to make sure families are protected, that those who are repaying their debts have a legal guarantee against poor practices – ultimately protecting the children in these households.  Unfortunately, what so often happens is one poor creditor sending round the bailiffs or another adding charges to a family’s account completely derails any carefully balanced debt repayment plan.

The Breathing Space scheme is a win-win-win.  It works for creditors who get the money owed to them back, rather than seeing it written off through bankruptcy; it works for the state and services who support families and most importantly, it works for families who can repay their debts free from enforcement action, rising fees and interest repayments.

This is a great opportunity to support the vulnerable in our society that would be a shame to miss.

Kelly Tolhurst is the Conservative Member of Parliament for Rochester and Strood 

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Read the most recent article written by Kelly Tolhurst MP - An end to homelessness can be Britain’s positive legacy of the pandemic

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