The Government must urgently ‘close the gaps’ in measures to support household finances through the Covid-19 outbreak, according to a new report from the Money Advice Trust. The charity, which runs the free National Debtline and Business Debtline advice services, says that those struggling with council tax bills, self-employed people and private renters need ‘urgent help’ to get through the crisis.
One month on from the Chancellor’s unveiling of emergency measures to support incomes through the Covid-19 outbreak, debt advisers are increasingly hearing from people who are falling through the gaps of policies announced so far.
An analysis of calls to National Debtline and Business Debtline in the month since the Chancellor’s announcement shows that the impact of Covid-19 on household finances is already being felt, but the full effects are still to come – with debt charities expecting an unprecedented surge in debt problems in the coming months. Worries about keeping up with council tax bills, rent payments and ‘getting by’ until support from new government schemes arrives are dominating calls to debt advisers, with some callers having experienced a total drop in income.
The Money Advice Trust says that the Government and regulators “should be congratulated for acting swiftly” to support household finances, including setting up new schemes to replace lost incomes, increasing the generosity of the welfare system and introducing payment holidays on mortgages and consumer credit.
There have been no steps taken, however, to deliver payment holidays for council tax bills or rent payments on any consistent basis – two bills that account for a significant proportions of outgoings for many households. Many people who work for themselves are also facing immediate financial hardship, due to gaps in eligibility for the Self-employment Income Support Scheme and a delay in payments until June.
The charity is calling for the Government to:
- Provide additional funding to enable all local authorities to offer payment holidays on council tax bills for those struggling to pay due to Covid-19, and instruct councils to pause arrears collection and enforcement action
- Set up a dedicated hardship fund for self-employed people facing immediate financial difficulty, and extend income support to owner-directors who receive most of their income in the form of dividends
- Take bolder action to help private tenants to meet their rent payments by increasing the Local Housing Allowance rate to cover 50% of average rents in each local area
In addition to closing these gaps in measures announced so far, the Money Advice Trust is supporting growing calls for the Government to end the five-week wait for Universal Credit payments, which millions of households are now falling back on to get through the crisis.
Joanna Elson OBE, chief executive of the Money Advice Trust, said:
“The Government and regulators should be congratulated for acting swiftly to support household finances from the devastating impact of the Covid-19 outbreak – but there remain significant gaps in the measures announced so far.
“Debt advisers are hearing from people whose incomes have collapsed, who are worrying about paying the bills and in many cases simply cannot wait for support from government schemes to come through, even where they are eligible for help.
”People struggling with council tax bills, self-employed people facing immediate hardship and private renters are particularly at risk of falling into serious financial difficulty. The Government must take urgent action to close the gaps in its Covid-19 financial support package, or many more households will fall into problem debt.
“At the same time, we know millions more are turning to Universal Credit – and we need the Government to listen to the growing calls to put an end to the five-week wait for payments, so that people get the immediate help they need.
“In the meantime, debt advice services like National Debtline and Business Debtline are working hard to help as many people as we can through the financial impact of Covid-19 – and to prepare for what we expect to be an unprecedented surge in demand for debt advice in the months ahead.”