Damien English (Meath West, Fine Gael)
Link to this: Individually | In context

Question 119: To ask the Minister for Social and Family Affairs her view on the fact that the average debt of people attending the Money Advice and Budgeting Service has increased by 50% in the first eight months of 2008; and if she will make a statement on the matter. [34793/08]

Michael Creed (Cork North West, Fine Gael)
Link to this: Individually | In context

Question 130: To ask the Minister for Social and Family Affairs her views on the recently published Combat Poverty Agency Report aimed at tackling financial exclusion here; and if she will make a statement on the matter. [34781/08]

Mary Hanafin (Dún Laoghaire, Fianna Fail)
Link to this: Individually | In context

I propose to take Questions Nos. 119 and 130 together.

The Money Advice and Budgeting Service (MABS) is the main Government funded service which provides assistance to people who are over-indebted and need help and advice in coping with debt problems. There are 53 independent companies nationwide with over 240 money advice staff operating the service. Almost €18 million has been provided in 2008 to assist the MABS in dealing with its workload.

Last year, MABS provided services to over 12,400 new clients throughout the country. To date this year almost 12,400 new clients have approached the service. The MABS National Telephone Helpline which was launched in October 2007 has dealt to date with approximately 9,000 calls. The statistics for 2008 indicate that the average debt owed by new clients when they first approached MABS was €11,600. In 2007 the average debt was €7,600.

The reasons for the debt difficulties that people encounter are complicated. The statistical information from MABSIS and research studies are key to understanding the nature and cause of over-indebtedness and in formulating appropriate policy responses.

People approach MABS with debt owed to a range of creditors. For example of the total debt owed by the 12,393 new clients that approached MABS to end of September 2008, 63% was owed to banks and financial institutions, 17 % to Credit Unions, 3 % to Utilities, and 2% to Moneylenders. The issues that give rise to over indebtedness for people are highly complex. Research such as the policy statement 'Tackling Financial Exclusion in Ireland' published by the Combat Poverty Agency has an important contribution to make to increasing knowledge and understanding of the causes of debt and the meaning of financial exclusion for people on low incomes. The research shows that lack of information about money management can be a contributory factor in many cases. The cost and availability of credit for people on low incomes and the barriers they face in accessing mainstream and cheap forms of credit add to the difficulties people encounter in managing their finances.

My view is that MABS has a unique and expert contribution to make in meeting the needs of people with debt difficulties in today's society. This includes promoting greater awareness about household budgeting and shaping strategies, especially those of services providers, such as the banks and the credit unions, to ensure greater financial inclusion in Ireland. The MABS continues to work closely with the Financial Regulator in developing initiatives in this regard. For example, recently I launched an education programme on money management for Transition Year students which was developed by MABS and the Financial Regulator and will be rolled out to schools this autumn.