HOUSEHOLD FINANCIAL CRUNCH CONTINUES
The Money Charity
Stakeholders | 21/07/21
Evidence continues to emerge demonstrating the scale of the crunch on household finances and its likely consequences.
The March Budget brought welcome news of extended supports and measures, now lasting until September 2021, which will assist household’s finances as the UK moves onwards from a deeply challenging year. However, the picture of the sheer depth of issues which are forthcoming remains a concerning one.
Since March 2020, 11.1 million households have accumulated £25 billion in debt and arrears due to the pandemic, an average of £2,300 per affected household. 460,000 private sector renters were behind on their rent in January 2021, while 2.3 million people have fallen behind on their broadband bills, with internet connectivity having progressed from its previous perceived status as a luxury to an essential utility.
As in previous months, these numbers showing hardship, stand alongside those indicators which show financial improvement for the households where members have stayed employed and saved money during the pandemic.
The average household savings rate was 16.5% in Q3 2020. Meanwhile outstanding credit card balances fell by 22.4% in the year to January 2021 and the average first-time buyer house price rose by 6.8% in the same period.
Michelle Highman, Chief Executive of The Money Charity says:
“While the extended support measures announced in the Budget are very welcome, increased debt levels and evidence of financial hardship suggest that new forms of creative support will be sorely needed in the year ahead.
“The numbers of those in difficulty are alarmingly large, in the hundreds of thousands if not millions, meaning that maintaining ‘business as usual’ support just won’t be sufficient. For the UK to continue developing its Financial Wellbeing, it is imperative that we avoid a household insolvency and eviction crisis, by ensuring that people are supported to keep their homes and incomes until the economy has had time to fully recover.”
Other striking numbers from the March Money Statistics:
Net lending to individuals and housing associations in the UK grew by £76.8 million a day in January 2021
• in Q4 2020 lenders wrote off £960 million (of which £292 million was credit card debt, amounting to a daily write-off of £3.2 million)
• at the end of January 2021, outstanding consumer credit lending was £199.4 billion, falling by £2.8 billion on the revised total for the previous month
• £2,300 average increase in debt and arrears since March 2020 among those who have fallen behind on bills or borrowed for essentials
• £3,763 total unsecured debt per UK adult in January 2021
• -22.4% change in outstanding credit card balances in year to January 2021
• 360,000 increase in unemployment in the year to January 2021
• citizens advice bureaux in England and wales dealt with 1,616 debt issues every day in the year to February 2021
• Borrowers paid £122 million a day in interest in January 2021
• Government debt increased by £789 million a day in the year to February 2021.
Get the full picture and many more fascinating facts about money in the UK www.themoneycharity.org.uk