Yvonne MacDermid on the big debate to be had over our personal debt, now at its highest level in a decade

Figures released in the past month by the Bank of England show that total outstanding consumer credit hit £198.4bn – the highest level since December 2008 and the depths of the financial crisis.

It was in this backdrop that Money Advice Scotland returned to Crieff Hydro in Perthshire this past week to host Scotland’s leading conference on credit, debt and personal finance.

Entitled Financial Fitness: how fit are the nation’s personal finances, the conference brought together a vast spectrum of delegates including representatives from across the third sector in Scotland as well as the Scottish Government, the Financial Conduct Authority, and many more.

Our conference also marked a noteworthy anniversary – taking place exactly 12 months from the vote to leave the EU.

The implications of Brexit are already clear for consumers in Scotland as inflation rises to a four-year high.

Rising prices alongside stagnating income growth and the falling value of benefits threatens to stretch household budgets to breaking point and this has clear implications for the advice sector.

More and more people within the money advice sector already attest to the growing prevalence of debts that are closely linked to living costs – people on low incomes who are falling behind on essential bills such as council tax or gas and electricity.

In the context of a growing debt bubble and the prolonged squeeze on living standards, the need for advice has rarely been more acute. A recurring theme throughout conference was the need for adequate funding of these vital services.

Without question, a highlight was our big discussion session on the new Standard Financial Statement (effectively an income and expenditure tool that calculates a person’s contribution towards their debts).

Following an excellent keynote speech from Dr Jim McCormick of the Joseph Rowntree Foundation, the Money Advice Service committed to meeting with the organisation to determine how the spending guidelines within the Standard Financial Statement compare with what is considered as an acceptable standard of living.

This was one of several recommendations set out within our Manifesto 2017 and it is encouraging to see progress at such an early stage.

All too often, people get into debt because their level of income is insufficient to sustain a socially acceptable living standard. When a person in these circumstances seeks advice, it is imperative that the outcome does not leave them in further financial difficulty.

Financial education is also at the heart of our work and this was the subject of our big debate. In Scotland, financial education has been a mandatory part of the curriculum since 2008, although it is applied inconsistently in practice.

Delegates agreed that financial education has an important part to play towards financial wellbeing, albeit with the overarching caveat that this is not a substitute for a level of income that is socially acceptable in the first instance.

Perhaps above all else, our annual conference was successful in bringing together a broad coalition of voices from all across the sector, including creditors, regulators, advisers and insolvency practitioners.

Working together, we are well equipped to take on these difficult challenges and that should fill us with encouragement rather than apprehension.

Yvonne MacDermid is chief executive at Money Advice Scotland