Credit, collections & insolvency news
Over one in ten (13%) (equating to 377,000 people nationwide) single-parent household saw their debt increase in lockdown, almost three times as many as those in households without children (5%) according to new research by comparethemarket.com.
The research showed that during the second national lockdown, 39% of single parents were concerned over their ability to pay bills compared to 18% of households without children. Households without children were able to pay back three times more debt than single parents at the start of the pandemic. Whilst the number of single parents who saw their debts go up is almost three times higher than households without children (5%).
The report titled ‘The Uneven Impacts of the Covid-19 Crisis’, in collaboration with Cebr (Centre for Economics and Business Research) revealed the stark difference in the way various groups and regions have experienced the pandemic in relation to wealth and financial security– many of which are starkly felt by single-parent households.
According to Bank of England data, outstanding consumer credit fell significantly over 2020 but the research shows that this decline was mainly driven by households without children. Those who could pay back money reduced their debt by an average of £712 – more than three times the amount that single parents were able to pay back (£219) – during the first lockdown in July 2020.
This gap narrowed slightly during the second national lockdown in November when households without children paid back an average of £448 compared to £290 amongst single parent households – a difference of £158.
Less than a third (31%) of single parent households were able to save any of their income during July 2020, dropping to 29% during the second national lockdown in November 2020. By contrast, nearly half (49%) of households without children were able to save some of their income in both July and November 2020.
Amongst those who could put money aside, single parent households were able to save £68 a month on average, significantly less than those in two-parent households (£235) and in households without children (£239) during November 2020.
Over a third (39%) of single parent households were deemed financially insecure during November 2020, meaning they estimated that there was at least a 20% chance they would face difficulties paying their bills over the next three months. This compares to 22% of two-parent households deemed financially insecure and 18% of working-age households without children in the same period.
Ursula Gibbs, director at comparethemarket.com, said “Although lockdown is slowly lifting, it doesn’t mean that the financial impacts of the pandemic are coming to an end. This research shows just how wide the gulf has become between those with and those without childcare responsibilities when it comes to managing finances. This gap needs to be recognised and addressed if we are to ensure that the pandemic does not further exacerbate existing inequalities.”
“While most households were able to pay down their debts during the pandemic, there is a significant minority who were forced to borrow more money just to stay afloat. Single parents especially are facing higher costs, higher debt and are less able to save, and this will continue to place a considerable financial burden on these families for some time.”
“There are steps individuals can take to keep on top of their household finances and manage any extra debt they may have taken on. Charities like Citizen’s Advice and the Money Advice Service can also offer free and confidential support.”