‘Rescue package’ needed to help household finances cope with COVID-19

Direct cash support for affected households, a pause on debt enforcement, and urgent support for those who fall behind on their rent and council tax are among the immediate measures needed from Government to support households through the COVID-19 crisis.

We, along with the Money Advice Trust, the charity that runs National Debtline, are calling on the Chancellor of the Exchequer to introduce immediate financial help for households to avoid them being dragged into problem debt.

The measures proposed to help households on a temporary basis through the financial impact of the COVID-19 outbreak include:

• The Government should get direct support to households as quickly as possible, to replace the income lost as a result of the COVID-19 crisis. This could be through direct cash grant payments to affected households, ensuring that Universal Credit advances are made available as grants and expansions of available hardship funds
• Government, regulators and providers should be ready to pause all debt collection, including benefit deductions and bailiff visits to those who cannot afford payments as a result of the COVID-19 crisis. This will ensure that people who fall behind on essential bills and credit commitments as a result of the financial impact of COVID-19 are protected
• Councils, housing associations and private landlords should be supported to offer payment holidays – including on rent and council tax – for those who need it. This should be funded by central government

Other proposed measures include immediate temporary changes to Universal Credit advances and deductions and Council Tax regulations, increasing the value of Statutory Sick Pay and extending its eligibility criteria, and setting up a new dedicated hardship fund for sole traders and other self-employed people.

Debt problems are expected to surge in the wake of widespread economic and social disruption caused by COVID-19. We, along with Money Advice Trust are also calling for additional funding to support the UK’s debt advice agencies to cover the cost of adapting their services in the short-term, to continue services during this period, and to serve increased demand in the longer term.

Joanna Elson OBE, chief executive of the Money Advice Trust, the charity that runs National Debtline and Business Debtline, said:

“Coronavirus is crippling the UK’s household finances – and the Government needs to do even more to help households financially through the coming weeks and months. Direct cash support to affected households, an immediate suspension of debt collection and bailiff visits, and widespread payment holidays sound like drastic measures – and they are, but they are needed right now.

“In the meantime debt charities are doing everything we can to help people through this extraordinarily difficult time. We hope that further government action to support households and the self-employed in particular will be forthcoming very soon.”

Phil Andrew, chief executive officer here at StepChange Debt Charity, said:

“We know that people are worried – the web traffic to our information hub on what to do if you’re worried about coronavirus has soared in the last few days. The fact that government and creditors have been quick off the mark to offer support is commendable, but we need them to go further – and quickly.

“Suspending enforcement action and offering forbearance for those who need it needs to be just the start. While cash injections to households sounds like a huge policy ask, it’s perhaps the most direct and speedy way of reducing the wider financial impacts of this unprecedented situation. We stand ready to help policymakers develop workable support proposals at speed.”