Debt Respite Scheme Statutory Debt Repayment Plan
There are an estimated 9 million overindebted people in the UK (Money Advice Service, ‘Independent Review of the Funding of Debt Advice in England, Wales, Scotland and Northern Ireland’, 2018), of which only around 1.1 million receive debt advice each year. The Government wants to incentivise more people to access professional debt advice and to access it sooner, helping them reach sustainable debt solutions.
	The Financial Guidance and Claims Act 2018 (FGCA) made provision for the creation of a debt respite scheme by regulations. The scheme consists of two parts: Breathing Space and the Statutory Debt Repayment Plan (SDRP).
	The first part of the scheme is Breathing Space. It offers people in problem debt a 60-day moratorium on enforcement action, fees and certain forms of interest while they engage with professional debt advice. The Government is delivering this part of the scheme for England and Wales through the Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020 (S.I. 2020/1311), which have been approved by Parliament and Senedd Cymru and came into force on 4 May 2021.
	The second part of the scheme is the SDRP. The SDRP could be offered to people in problem debt and would provide a revised agreement between the debtor and their creditors as to the amount owed on their debts and the timetable over which they have to be repaid. There is currently only a statutory debt solution focused entirely on repayment in Scotland. There is no similar model for other parts of the United Kingdom. The Government believes that providing a solution with the same legal protections from creditor action as apply in Breathing Space should encourage more people to access debt advice sooner and repay their debts to a manageable timetable.
	The Government issued a call for evidence (HM Treasury, ‘Breathing space: call for evidence, June 2018) on the design of the scheme, and published a response on 18 June 2018. The Government subsequently sought views on a detailed policy proposal published a response (HM Treasury, ‘Breathing space scheme: response to policy proposal), which was accompanied by an oral statement by the Economic Secretary to the Treasury on 19 June 2019. The Government received advice from the Money and Pensions Service on the establishment of the scheme, in accordance with the FGCA, and this advice was published (HM Treasury, Guidance, ‘Breathing Space Scheme – Money and Pensions Service Advice’, September 2019).
	The Act amends the FGCA to ensure that the Government has the appropriate powers to implement the SDRP, in particular so that the SDRP can include debts owed to Government; and in England and Wales can be funded by a charging mechanism; and creditors can be compelled to accept amended repayment terms.