A report from the financial reporter has suggested that 60% of people will struggling to repay after payment holidays end in the UK following the Coronavirus Pandemic.
Of the 3.7 million households in the UK granted a bill ‘payment holiday’, over 6 in 10 are already facing financial difficulties and will struggle to repay their debts when these arrangements end, according to research from Standard Life Foundation.
The report warns of a further financial storm for millions as many payment holidays end on the 31st October – the same date the government’s job retention schemes end, leaving many facing job losses.
Researchers questioned nearly 6,000 householders and found only a quarter of those who had a bill payment holiday had sought debt advice. The report also found that although government has allocated funding for more debt advice, this would not be in place by the end of October when many are likely to need it.
At the end of July, one in six households (17%) had their earnings supported by one of the governments’ job retention schemes. These schemes are also due to end on 31 October 2020, leaving around 3 million households expecting a drop in income. The researchers found that around a third of households currently supported by the schemes (31%) were experiencing financial difficulties at the end of July – between four and five times the level among working households whose earnings had been unaffected by the pandemic. With this in mind, the report authors also recommend extending government support for workers in the hardest hit sectors, including those who have fallen through the safety net provisions.
The CEO of the Standard Life Foundation said “Regulators and lenders need to rapidly consider how they will manage the situation from the end of October 2020 to avoid large numbers of households facing enforcement action, including families losing their homes. In addition, capacity on debt advice needs to be increased quickly; more debt advisors are needed but they will not be in place within the next few months, so interim measures should be put in place swiftly.”
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