Britains poorest families facing tidal wave of debt due to lockdowns

Nicola Sturgeon grilled over SNP’s poverty figures

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The Centre for Social Justice (CSJ) thinktank, founded by former cabinet minister Sir Iain Duncan Smith, will this week publish a shocking report detailing how the wealth divide in Britain has been made worse by the measures taken to fight the pandemic. It comes as the CSJ has engineered a groundbreaking deal between organisations representing enforcement firms and charities devoted to helping hard-up families to ensure people caught in a Covid debt crisis do not face unfair treatment at the hands of bailiffs. The move comes against the background of dire warnings by experts about the scale of the debt mountain racked up by the poorest as the country has battled Covid. 

While wealthier families made record savings from reduced household spending, the charity StepChange reports the number of Brits in ‘severe’ debt rose by over 600,000 to 2.4 million in the first year of the pandemic alone.

 CSJ analysis of new official data shows the amount of outstanding council tax grew by a record 24 per cent between March 2020 and March 2021, reaching £4.4 billion.

 New research by the Money Advice Trust shows more than seven million people in Britain (14 per cent) are worried about being able to afford their council tax bills over the next year.*

 More than a quarter of clients supported by debt charity Christians Against Poverty attempt or consider suicide as a way out of their debts before seeking help.

In the new report, Taking Control for Good, the CSJ warned: “What looms ominously on the horizon is no less than a tidal wave of debt.

“As payment deferrals and the furlough scheme end, the Money and Pensions Service anticipate a 60 per cent rise in the demand for urgent debt advice . . . [and] councils will undoubtedly be ramping up efforts to recover the £4.4 billion of arrears sitting on their balance sheets. 

“What this means in practice is that, in the months and indeed years ahead, tens of thousands more people are expected to receive a call or knock at the door from a bailiff.”

Against this grim background, the CSJ has warned that it is critical that enforcement is carried out fairly, effectively, and in a way that helps people bounce back from the travails of the pandemic.

In the report, the CSJ applauds moves by the debt advice and enforcement sectors – often at loggerheads in the past – to work together to raise standards, protect vulnerable people, and ensure the industry is fit to meet the challenges of the coming decade.

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