29 March, 2021 Open access
29 March, 2021 Open access
Money Advice Trust calls for action as polling also finds that more than 6 million people have had to use credit to pay for essential costs such as groceries, utility bills, and council tax
The Money Advice Trust (MAT) has called for the government, firms and regulators to work together to create a ‘roadmap out of debt’ for the one in three adults reporting that they are financially worse off as a direct result of Covid-19.
In a new report, The Cost of Covid, the MAT sets out findings from a poll of more than 2,000 adults conducted online by YouGov and insight from the charity’s National Debtline and Business Debtline services.
However, the charity highlights that while some people have seen their finances improve over the past year, for others the burden of debt continues to increase as they struggle to make ends meet. For example, despite a recent focus on some growth in savings and evidence of higher-income households paying down debts through the pandemic, the MAT says that these changes mask a worrying increase in borrowing, most notably among lower-income households -
In addition, the MAT says that one in five adults (an estimated 10.2 million people) are worried their finances will never fully recover from the pandemic, and that almost one in four (37 per cent) of the self-employed and small business owners expect it to be more than a year before their business income returns to pre-Covid levels.
As a result, the MAT calls for coordinated action by the government, regulators and the credit industry to help people get out of debt safely. Among the charity’s key recommendations are that -
In addition, the charity makes specific recommendations to help the self-employed out of debt, including creating a dedicated Covid-19 Self-employment Recovery Strategy to identify and deliver longer-term measures such as training and advice needed to secure the financial and economic recovery of the sector as a whole; introducing a discretionary grant scheme specifically to support those still excluded from the Self-employment Income Support Scheme; and ensuring there is a fair and affordable approach to recovering government-backed coronavirus business loans and outstanding tax debts.
Chief executive of the Money Advice Trust Joanna Elson said today -
‘A year on from when the Covid-19 outbreak began, the finances of millions of households have been turned upside down, with the effects not felt equally. While some people have found themselves able to save more, others have fallen into financial difficulty - with many struggling to cover food and energy costs.
It is clear that this is not just a health crisis but a financial one, too. Our findings suggest more than 10 million people are worried their finances will not recover, with more than 5 million already behind on bills - and this is only likely to increase. Without coordinated action now to help people get back on a stable financial footing, there is a danger of problem debt becoming one of the pandemic’s many lasting legacies.
Support measures put in place by government, regulators and creditors have undoubtedly helped ease the financial pressures on many households, however, without a clear roadmap out of debt, for millions of people these challenges are set to continue long after lockdown measures ease.’
For more information, see Britons worry finances will not recover as households count cost of Covid one year on.