Financial resilience highlighted as pressing challenge for UK

9th February 2022
Arrears and Recoveries
#financial resilience
The All-Party Parliamentary Group (APPG) for Financial Resilience, has found a quarter (24%) of working-age adults (18-64 years old) didn’t save any money during the pandemic sparking major concerns about financial insecurity. The revelations have led to Co-Chairs of the APPG, Shaun Bailey MP and Tonia Antoniazzi MP, to issue a call for evidence to help further understand the impact Covid-19 has had on people’s finances.

Financial resilience is the ability to withstand life events that impact your income. People’s financial vulnerabilities are further exposed when considering housing and day-to-day costs if they are no longer able to work. When asked how long they would be able to manage financially, 1 in 5 working-age adults would not have enough money to pay their bills at the end of a month. While a quarter would only manage financially for between one and three months.

The APPG on Financial Resilience’s inquiry will look to understand the impact Covid-19 has had on people’s financial resilience, looking at whether the pandemic has changed people’s habits and whether it has made people more aware of the risks they face, both now and in the future, and what action has been taken to better prepare. The findings will be used to develop policy proposals to ensure people are better prepared and have financial safety nets in place to cope with a financially stressful event such as unemployment, divorce, and long-term health problems.

Shaun Bailey MP, APPG on Financial Resilience Co-Chair said “The findings from our poll are shocking and highlight just how vulnerable working-age adults’ financial security is. Covid-19 and other recent events has brought financial security into sharp focus. It is important that we understand why people struggle to have financial safety nets in place so we can find solutions to encourage people to be more financially equipped for a rainy day.”

Tonia Antoniazzi MP, APPG on Financial Resilience Co-Chair said”It is alarming how few people will be able to pay their bills beyond a month if they are unable to work. The launch of the APPG could not be timelier. Now more than ever it is important to focus on individuals’ financial resilience so we can understand what barriers are in the way to being more financially secure. We hope organisations from across the spectrum provide evidence to the enquiry so we can build a clearer picture of the nations’ financial resilience.”

Commenting on the All Party Parliamentary Group’s call for evidence  Sarah Pennells, Royal London’s consumer finance specialist, said “Financial resilience is one of the most pressing challenges as the UK emerges from the pandemic. The cost of living increases are a major source of financial anxiety for a significant number of people and the pandemic has served to exacerbate these concerns.”

“The financial pressures facing individuals are, rightly, the main focus for policymakers at present. However, it is also the case that many people – in particular women and the self-employed – are still not saving enough to achieve an adequate level of income in retirement. As such, is important that we don’t neglect the issue of helping people to build greater financial resilience over the longer-term.”

“Given the challenging economic circumstances, it would not be appropriate to increase mandatory automatic enrolment contributions in the immediate aftermath of the pandemic. Instead, we would urge the Government to focus on implementing the Department for Work and Pension’s proposed changes to the eligibility criteria for automatic enrolment, so that more lower income workers are enrolled into workplace pensions and develop the habit of saving for retirement.”

“It is also important to ensure the swift implementation of the Net Pay tax anomaly solution by HMRC, to address the issue of workers – mainly women – who earn less than the personal tax threshold missing out on tax relief on pension contributions. The proposed solution, whilst welcome in principle, means that in practice impacted customers will not be able to claim top ups until the 2025/26 tax year. This prolonged implementation timetable seems unnecessary and will disproportionately impact women.”

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