Households’ route out of coronavirus-related debt problems ‘is not yet clear’ warns charity as temporary support ends
Many households do not yet have a clear route out of debt problems triggered by the coronavirus pandemic, a charity has warned.
With temporary support available, many people adopted a "wait and hope" strategy to financial difficulties last year, according to Stepchange Debt Charity.
It said the impact of coronavirus was the fifth most common reason for debt in 2020.
Emergency support measures such as loan payment holidays and the furlough scheme have provided a cushion for households against the financial impacts of the pandemic.
But Stepchange, which released the findings in its 2020 statistics yearbook, warned that significant pentup demand for debt advice will be unleashed as the temporary support unwinds.
Stepchange also noted a significant shift last year in the backgrounds of clients seeking help.
The proportion who were single without children rose from 36 per cent in 2019 to 44 per cent in 2020.
Women and single parents remained over-represented, in line with previous years - 60 per cent of clients were women, and while just 6 per cent of the UK population were single parents, they made up 22 per cent of Stepchange clients.
For the first time since 2016, the average non-mortgage debt per client fell in 2020, with a typical figure of £12,644, down from £14,129 in 2019. Stepchange said the reduction is likely to be a reflection of the different backgrounds of clients coming forward.
An increased proportion of clients made contact by phone last year, at 49 per cent. These clients tend to have lower incomes, lower outgoings and lower overall debt levels than those who get advice online,
Stepchange said. Around 200,000 clients went through full debt advice with Stepchange in 2020, compared with more than 300,000 in 2019.
The charity described the fall as temporary and said emergency support measures mean millions of households have had their debt problems "kicked down the road".
Stepchange Debt Charity chief executive Phil Andrew said: "Looking ahead, the route out of Covid-induced debt for many households is not yet clear. We are seeking to work to chart a safe passage."