The divide between the ‘haves’ and the ‘have nots’ continues to grow starkly as we move towards the end of a year dominated by the Covid-19 pandemic, according to the December 2020 Money Statistics, produced by The Money Charity.
As statistics move into the final months of 2020 and with winter still to come, the divergent impact of Covid-19 on UK household finances continues to be seen. For many households, the pandemic and its effects have meant that their finances have improved. For example, outstanding consumer debt fell by £17.9 billion in the year to October 2020, while outstanding credit card debt fell by 16.4% in the same time period. House prices rose by an average of 7.6% in the year to November 2020, as solvent house buyers bought more space in suburban, town and rural areas.
However, for the 30% of households who have suffered income losses as a result of the pandemic, the picture continues to get ever worse. Unemployment increased by 241,000 in the latest quarter, with redundancies higher even than during the 2009 credit crunch recession, with 4,022 per day in the three months to October 2020.
The self-employed are showing particular signs of severe financial stress, with 29% reported as falling behind on household or business bills along with other credit commitments. 17% do not expect to be able to resume their mortgage at the end of their deferral periods, along with between 32-39% unable to resume other debt servicing obligations at the same point.
Responding to these and similar numbers, charities such as ourselves, along with consumer groups, thinktanks and parliamentary committees continue to call for a bold recovery strategy which includes supportive elements such as keeping the £20 Universal Credit uplift, abolishing the initial five-week wait for Universal Credit and assisting the self-employed and small business sector to keep their businesses and homes during the recovery phase. Other commissions have contributed to the debate by suggesting that a wealth tax levied for five years could cover a large part of the Government’s pandemic-related outlays.
Michelle Highman, Chief Executive of The Money Charity says: “As a charity committed to Financial Wellbeing and Financial Education, we believe that the UK needs to be a country dedicated to giving people of all ages the education, equipping, systems and circumstances they need to cope with life’s unexpected events, even if some events are even more unexpected than any of us could ever have imagined!
“But in a year that has challenged us all to think and adapt our lives in radically different ways, we believe that the policy and decision-making processes of the coming years will need to be similarly agile and innovative. The recovery needs to be strategically mapped out now, finding new and effective ways to be sustainable and with clear goals of eliminating the inequalities that hold so many back. Ultimately, for the UK to increase its Financial Wellbeing, we need to rebuild better.”
Other striking numbers from the December Money Statistics:
- 4 million self-employed and small business owners are not eligible for the SEIS. (P4.1.)
- On average, a UK household spends £4.16 a day on water, electricity and gas. (P14.)
- UK mortgages with arrears over 2.5% of the remaining balance rose by 9 a day. (P13.)