Evidence continues to emerge demonstrating the scale of the crunch on household finances and its likely consequences as the UK emerges from the pandemic, according to the March 2021 Money Statistics, produced by The Money Charity.
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 that 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.
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 well-being, 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.
Michelle Highman, Chief Executive at The Money Charity