According to the trade union, Unite, the debt advice charity StepChange has announced plans to make up to 170 workers redundant, reducing its workforce by 10 per cent, with the Leeds and Newcastle offices bearing the brunt in the reduction in staff.
This is in response to a funding crisis at the company, caused by the decrease in demand for its services during the Covid 19 pandemic. The Unite union predicts the move will be "devastating" as the need for debt advice is expected to surge, once the Government's funded furlough scheme comes to an end in September.
The funding model for the charity is a voluntary 13% commission from lenders for helping clients manage their debt. However during the pandemic people have been better off, so the charity has had less business. This is because employees have received increased financial support from the Government during the pandemic, via the furlough scheme and £20 Universal Credit uplift. This has meant that demand for the charity StepChange's advice fell from more than 300,000 people in 2019 to 200,000 people in 2020.
Phil Andrew, chief executive of StepChange, said the planned redundancies are a "difficult and painful decision" but is "the right thing" to protect the charity's long-term future." he added "The inescapable reality is that our funding structure depends upon advice volume, which is why we are sadly having to introduce cost-cutting measures that include, but are not limited to, redundancies."
A worker from StepChange commented about the plans to replace workers with an online debt advice tool, saying "Our clients want a supportive, caring person to talk to, not a machine. Our advisers are our strongest asset."
