Séamus Brennan (Dublin South, Fianna Fail)

I propose to take Questions Nos. 86 and 88 together.

The money advice and budgeting service, MABS, provides assistance to people who are overly indebted and need help and advice to cope with debt problems. It is a countrywide service, delivered through 52 independent companies, and in 2006 had a total budget of more than €16 million. The number of clients seeking the assistance of the service has grown year on year. Last year, 27,000 people availed of the service compared to 18,000 in 2001. The growth in demand for the service can be attributed to the increase in the availability of credit generally in the economy and to the quality of the service provided by MABS advisers.

Since 1997, the Government has made significant inroads in tackling poverty and social exclusion. Overall expenditure on social welfare has increased from the equivalent of €5.7 billion in 1997 to a projected figure of €13.5 billion in 2006. The number of people on the live register has fallen by more than 100,000 and investment in social welfare and other social services has brought about real and lasting improvement in the living standards of the most vulnerable people in society. It is estimated that approximately 250,000 people have been lifted out of consistent poverty during the past decade. In 2004, the EU-SILC survey showed a significant reduction in the consistent poverty rate from 8.8% in 2003 to 6.8% in 2004, thus continuing a downward trend over the period since 1997. This shows that Government anti-poverty policies are working.

MABS was set up specifically to assist people who are on low incomes by providing debt and money management advice. The evidence from the new MABS information system, which has been rolled out to all MABS offices in the past year, is that the service has been particularly successful in reaching this group. To date in 2006, more than 10,000 new clients have approached the service. While approximately 52% of clients were on social welfare, a significant number of people, that is, 30%, were in employment. Most people approached MABS on their own initiative as they were aware of the service and the assistance it offered. MABS has proved successful in meeting the needs of such clients and is very well regarded by people who seek advice in managing their finances.

The issues that give rise to problems of over-indebtedness for people are highly complex. The cost and availability of credit for people on low incomes is a significant aspect of the problem. I am particularly concerned about the difficulties many people on low incomes face in accessing mainstream and cheap forms of credit.

I have announced my intention to bring proposals for legislation to provide a statutory basis for MABS before the Government shortly. The objective of this legislation will be to put in place a modern and streamlined structure that will be geared to meet the changing nature of the problems debt poses, particularly for people on low incomes. The research findings will be considered specifically in this context. Furthermore, my Department will continue its consultations with the Financial Regulator and other key interests in regard to the options available to strengthen the role of MABS in tackling the problems that arise for people on low incomes in getting access to the full range of mainstream financial services.

Last year, I met the Financial Regulator and the Combat Poverty Agency and initiated research to find out more about the nature and extent of this debt and the report will be available to the Financial Regulator shortly. I refer to the report being undertaken together by the Financial Regulator and the Combat Poverty Agency.

Additional information not given on the floor of the House.

The regulation of money lending comes under the Consumer Credit Act 1995. The Financial Regulator has significant powers to grant or refuse licences to money lenders and a strict regime is in place to ensure compliance with the regulatory code for moneylenders. I have had discussions with the Financial Regulator about our shared concern in respect of these issues.

Following our meeting, the Financial Regulator, together with the Combat Poverty Agency, initiated research to find out more about the nature and extent of financial exclusion in Ireland, as well as the barriers faced by people on low incomes in accessing a wide range of financial services. The report will be available to the Financial Regulator shortly.

The findings of the research, together with the comprehensive statistical data now emerging from the new MABS information system, will make a significant contribution to our knowledge about the problems of debt in Ireland and the situations that leave people on low incomes vulnerable to high cost credit services.

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