Coronavirus has caused severe financial hardship for some people who have been unable to pay for essentials like food, rent, council tax and utilities. As a result, we’ve seen a fast and steep escalation in survival borrowing. The number of people who are in severe problem debt because of coronavirus has almost doubled since the beginning of the outbreak to 1.2 million people. It’s not right for those hardest hit by the pandemic to shoulder the financial burden alone. By helping people to pay off coronavirus debts, we can provide a lifeline to help them stay afloat and avoid being swept into serious hardship.
While some people have been supported financially through the crisis, others have fallen through the cracks and are struggling with mounting arrears. People who could only just make ends meet before the pandemic didn’t have the resources to withstand the financial shock of Coronavirus. Since lockdown, they have struggled to pay for essentials and many have had to resort to borrowing from credit cards or other high-cost credit. The government has taken bold action to support jobs and incomes to counter the effect of government public health restrictions. But many hard-working people have still been left in financial distress and the misery of problem debt. Many households are living in fear of eviction, bailiff visits or insolvency. And many of these struggling households are families, single parents and young people. If we leave people to cope with mounting debts alone, many won’t be able to get back on their feet for years to come, resulting in long-term mental health and social problems. Many will be left with unmanageable debt for years, dragging them down and getting in the way of them keeping or finding a job.
Nobody should be facing bailiffs or eviction because of coronavirus. It’s not fair for people on low incomes to shoulder the burden alone. We need to help vulnerable people get back on their feet, so we can prevent temporary difficulties escalating into long term problems. We commend the action taken by government and regulators to support jobs and give people breaks in payment obligations. Now the challenge is to develop longer-term plans to allow the people hit hardest by this crisis to recover from the financial shock and move forward in a way that is safe and sustainable.