There has been a “real, significant increase” in families experiencing public debt, MSPs have been warned.
Holyrood’s Social Justice and Social Security Committee took evidence from experts on Thursday.
The committee was told of difficulties and challenges faced by families across Scotland as debt is pursued by public bodies such as local authorities, housing associations and the Department for Work and Pensions.
Kirsty McKechnie, from Child Poverty Action Group in Scotland (CPAG), said “more and more” families are in debt over essentials.
She told of the “very aggressive” collection of historic tax credit and social fund debts, which she said can be so old there is very little evidence over whether there is a debt in the first place.
She said that in these cases, it is also often difficult for people to challenge the debt, and said families with older children may find their benefits being deducted due to historic claims.
Ms McKechnie suggested some public debt could be avoided with “better administration”.
She highlighted the fact there is no onus on councils to provide decision letters to individuals when rulings are made on council tax reduction – resulting in a lack of transparency when it comes to changes and alterations to payments.
Ms McKechnie said issuing letters to notify people of the changes could help in avoiding arrears in council tax, and could see people responding in a timely manner to any problems with the payments.
Martin Canavan, head of policy and participation at the charity Aberlour, said there has been a “real, significant increase” in public debt – and the cost-of-living crisis is not something new for those on low incomes.
“They’ve been experiencing a cost-of-living crisis for many, many years, long before the pandemic and the current financial environment,” he told MSPs.
“What we’re seeing through the Urgent Assistance Fund is the symptom of that, the impact of that. We are seeing people who have been accumulating debt or who are in a real, significant problem, because their incomes have simply not been enough to cover the costs of heating their homes, feeding their children, providing the very basics.”
Betty Stone, chair of the Edinburgh Tenants Federation, said the methods used by councils to collect debts are a problem, with issuing letters only being of use if they are received by people who are literate.
“A lot of people don’t even know how to read these letters,” she said. “That worries me, and I’m pushing to get the housing officers back on the ground where they should be, out meeting the people and addressing these issues with people.”
Mr Canavan said concerns are not just down to the immediate financial impact for families, but the long-term cycle of debt that can follow and result in individuals becoming trapped.
He added that although increases to benefits such as Universal Credit or the Scottish Child Payment are helpful “on the face of it”, such uplifts mean money comes from the public sector and goes back out to pay debts to public bodies.