Debt Burdens Dragging Down Low-income Households

Millions of low-income households across the UK are being dragged down by debts they accumulated during the pandemic.

That’s according to a new report from the Joseph Rowntree Foundation (JRF) that highlights the extent to which people on low incomes have borne the brunt of the Covid crisis from a personal finance perspective.

The foundation’s research suggests there are around 3.8 million households currently in arrears on essential bills across the country, with many more having been left with little choice but to add to their debts during the pandemic.

JRF’s report concludes that while some people were able to save more money and saw their assets increase in value during the virus crisis, those on low incomes often saw their finances squeezed further and their debt problems get worse.

An estimated 4.4 million low-income families are believed to have added to their debts through personal loans, credit cards or by lending money from friends or family since the start of the pandemic.

Households that rely on Universal Credit payments are understood to be among those struggling most to keep pace with their essential bills and to avoid falling into problem debt situations.

The JRF has called for the UK government to reinstate the £20 per week uplift to Universal Credit payments that was recently rescinded.

It has also argued for grant funding to be made available to support local councils in helping people who find themselves in unmanageable and unaffordable debt situations.

While the economy has largely been reopened after months of lockdowns, the JRF has said a huge number of low-income households face being left behind and dragged down by the debts they accrued during the pandemic.

In the conclusion to its report, the foundation says its recent research “paints a deeply concerning picture of many low-income households struggling to keep their heads above water, juggling multiple debts and deepening arrears”.

“Now is the time for government to take urgent action to support families at risk of being pulled under by debt,” it says.

If you live in Scotland and you are finding it tough to manage your debts and deal with your creditors then Scotland Debt Solutions can help. Contact us directly to arrange a FREE and confidential consultation.