Credit, Collections & Insolvency News
The ongoing disruption to the school year is set to have a dramatic impact on household finances, with a third (33%) of families with children at home admitting that they will experience a negative impact on their finances if schools don’t open in the near future according to Comparethemarket.com research.
Family anxiety around employment and pay is mirrored in the concerns about their ability to pay their bills. The past week saw a sharp rise in the proportion of families with children at home who struggled to meet financial obligations, rising from 22% to 27% during the last seven days. Equally, 30% believe they will struggle in the coming weeks, up from 24% a week before. This compares to 18% amongst those households without children at home.
The research shows that families with children at home during the pandemic are asking their employers for pay cuts and reduced hours in order to cope with increasing demands of childcare. The Household Financial Confidence Tracker shows that a quarter (25%) of families with children at home have voluntarily reduced the number of hours they work and their salary, so they can better balance their job with looking after their children and homeschooling. Over one in ten (13%) of these families say the cuts have been “significant”.
Additionally, nearly a fifth (17%) say that they or their partner might have to stop working altogether to meet their parental obligations. Ongoing school closures have been a driving factor behind these decisions. Many schools are not scheduled to open until September at the earliest, with some unlikely to open again this year. The ongoing disruption to the school year is set to have a dramatic impact on household finances, with a third (33%) of families with children at home admitting that they will experience a negative impact on their finances if schools don’t open in the near future.
Anna McEntee, Product Director at comparethemarket.com, said “Ongoing school closures mean parents are spending more money on food, clothes and entertainment, but the demands of childcare and homeschooling are also leaving many struggling to balance their professional and home lives. The pandemic has put many people under financial pressure but it is particularly concerning that parents are having to cut their hours and reduce their pay in order to look after their children. The big danger is that households that are forced to make changes to their working arrangements to enable them to meet immediate financial and parenting responsibilities may be unable to switch back to their former job structures once schools return to normal. In other words, some families may be faced with a significant long term financial impact due to the need to address a shorter-term challenge.”
Non-essential shops have now reopened but six in ten (60%) UK households say they are unlikely to visit them. Over a third (35%) are not confident that shops will be able to enforce social distancing so won’t feel comfortable and 16% say they are now prefer shopping online. One in ten (10%) say that they have little or no spare money to buy nonessential items. Londoners are the outlier as the only region where over half of the households (54%) say they are planning to visit non-essential shops in person.
The Chancellor is said to be considering a temporary cut to VAT on items purchased in-store in order to help the high street back on its feet. However, the Household Financial Confidence Tracker suggests that such a tax cut would do little to convince people to get out and spend. While 46% said that slashing VAT would incentivise them to visit shops in person, 52% said it would make no difference. Amongst those who are already unwilling to visit newly opened shops, only a third (33%) thought cutting VAT might change their mind.
This nervousness to shop in person is echoed in the UK’s reluctance to visit restaurants, cafes, pubs and cinemas once they reopen, potentially in a few week’s time. Over half (56%) of UK households would not be comfortable visiting these, with 48% admitting they wouldn’t feel in control of their surroundings and therefore won’t enjoy themselves. Nearly one in ten (8%) would be unwilling as they no longer have the disposable income to spend on these types of leisure activities.
McEntee continues “UK households remain nervous about returning to spending their money on the high street. Despite shops offering deals and discounts, concerns around social distancing and increased comfort with shopping online suggests it will take sometime before footfall picks up again, and for retailers to start to see the benefits of an easing lockdown. The Government’s rallying cry of “get out and shop” looks easier said than done and the journey back to economic normality promises to be long, bumpy and difficult.”