With royal involvement towards a debt carefree Netherlands

Background debt problems

More than a million households experience a harsh reality every day. They are struggling with debt and this keeps them awake at night. Debts lead to personal suffering, both financially and mentally, and lead to huge social costs: an estimated EUR 11 billion a year.

Due to Covid-19 and the measures resulting from the first and second wave, the number of households with debt is expected to increase from 1.9 to 2.6 million by 2021, 41 percent of these debts are problematic.

Read more about how Deloitte is helping to tackle the bow wave of debt problems.

Involvement Deloitte

Before the Covid-19 crisis started, Deloitte was already involved in SchuldenLabNL by providing advice on strengthening the organization and mapping the ecosystem in order to stimulate a joint debt approach. Because of Covid-19, Deloitte has intensified its provision of service and is working with SchuldenLabNL, public partners (including municipalities and administrative agencies) and private partners (such as banks, insurance companies, energy suppliers and housing associations) to take targeted action towards a debt carefree Netherlands.

1. COVID-19 Action plan households, the Netherlands

In the Action plan, Deloitte identified the urgency of the situation, the numbers involved and which groups are most vulnerable. More than ever before, this group is heterogeneously composed in terms of sector, age and region. Among them are many young people, self-employed and/or flex workers. A large part of the risk group has no ability to reduce expenditure and does not have a financial buffer. It is also clear that the majority of the vulnerable group is not yet "in the picture" of the authorities. Municipalities and aid organisations have to take into account a huge inflow of people with financial hardship and (problematic) debts. The fragmentation of the aid chain, limited data availability and high working stockpiles (already there before the crisis) make this an even greater challenge.

The Action plan proposes 16 solutions to the outlined challenges to tackle the so called ‘bow wave’ of debt problems. If public and private parties work together, the looming bow wave of an increase of hundreds of thousands of households in debt could be reduced to prevent worse. Download the entire Covid-19 Action Plan (Dutch only).

2. COVID-19 Action plan SME, the Netherlands

Following the COVID-19 Action plan, which highlighted the impact of the crisis on household debt, Deloitte also carried out an analysis on the impact of COVID-19 on the economy, Dutch companies and SMEs. SMEs have an urgent need for liquidity and the number of bankruptcies has doubled in hospitality and culture, sport & recreation. In the current system, financial problems are often identified too late and there is no central assistance point for entrepeneurs. The support measures of the government and the banks are currently keeping Dutch SMEs afloat. 

The priority is to develop and implement an aid map for companies through which problems are identified early and companies are led to the most appropriate solutions. 

3. COVID-19 Action plan household municipalities

"Netherlands debt-free, step by step, city by city" is the slogan of the ‘pact to the Netherlands debt carefree' to highlight the crucial role municipalities play in addressing debt problems. After all, they are close to their inhabitants and are best placed to assess the local situation.

Deloitte is helping to translate the national Action plan to a local level. The nature and extent of the ‘bow wave’ for The Hague and Alphen aan den Rijn have been mapped already. In addition, appropriate solutions have been identified and prioritized for these municipalities. Local initiatives are used to complement national initiatives to ensure that municipality can use proven methods. In many places, methods that appear to be successful in practice are already put to use, such as the five methodologies (collective debt regulations, breakthrough method, Youth Perspective Fund , the Dutch debt relief route and the provisions guide) that were central to the signing of the pact at Noordeinde Palace, see also this magazine and this video of the meeting (Dutch only). By successfully sharing and scaling up these methods, it is possible to help more people in an efficient, quick and better way. Leading to the ultimate goal: a debt carefree Netherlands. 

4. National fund for household debt

One of the 16 proposed solutions in the Covid-19 Action plan is to set up a revolving fund for buying household debts, as an additional instrument in the Netherlands. Deloitte and SchuldenlabNL together investigated the feasibility for such a fund in an exploratory study. The proposed fund would use data analysis to buy targeted parts of a company’ debt portfolio, identify and buy remaining debts of households at other companies, and combine this to a single loan with social terms per household. The aim is to prevent tens of thousands of households each year to slip from a liquidity problem to a problematic debt as a result of accumulating fines and costs. The fund's main challenge is to be able to provide tailed loans on a large scale and in collaboration with local government and aid organizations. Various financial-, organizational- and digital competences are required to make this happen. Deloitte and SchuldenlabNL can play a key role in bringing together the right knowledge and parties.

Read the article in AD (Dutch only) with Gerrit Zalm, chairman of SchuldenlabNL, in which the household debt fund is discussed as a solution.

Next steps

In the coming period, Deloitte, together with SchuldenLabNL and other parties such as VNG and NVB, will contribute to making the Netherlands step by step and city by city debt carefree. We can make a difference by connecting public and private organizations throughout the chain of debt aid and by stimulating innovation.

Deloitte projectteam: Mohamed Bouker, Menno ter Wal, Eva den Hartog, Jelle Joustra, Marijke Hennink, Anique Huizinga, Kelvin van Ham, Daan Broekhuijsen, James Ransome, Nadia Vriend, Pleun Beentjes, Derk Kamermans, Paulien Zhu, Arzu Çankaya, Rogier van de Klauw, Vivianne Smiggels, Naser Bakshi