The Joseph Rowntree Foundation is calling on the UK Government to release millions of households from the burden of arrears by reinstating the Universal Credit lifeline.
This follows a report from the foundation which found that 3.8 million low-income households in the UK are in arrears.
The study reveals that:
- The number of low-income households in arrears has tripled since pandemic hit
- 4 in 10 working-age low-income households fell behind on bills during pandemic
- Millions are behind on rent and bills and have had to take on new borrowing
- JRF calls for urgent action to support low-income families through cost-of-living crisis and prevent worsening wealth inequality
The report comes with recommendations for the UK Government.
• To reinstate the £20 lifeline to Universal Credit and Working Tax Credit – and extend it to people on legacy benefits - to help low-income households pay off pandemic arrears and limit the accrual of further unaffordable debt, especially as cost of living pressures increase.
• At least double the recently announced Household Support Fund and give it an explicit focus to enable local councils and debt support organisations to provide targeted relief to low-income households facing unmanageable and unaffordable debts accrued during the pandemic.
• Address the drivers of debt through systemic reforms, through preventing low income households from accruing debt as soon as they claim Universal Credit, and writing off historic tax credit debt.
Katie Schmuecker, Deputy Director for Policy & Partnerships at JRF said: “There is a debt crisis hanging over millions of families on low incomes.
“Behind these figures are parents gripped by anxiety, wondering how they will put food on their children’s plates and pay the gas bill; young people forced to rely on friends to help cover their rent and avoid eviction.
“While many households on higher incomes have enjoyed increased savings and rising house prices during the pandemic, people on low incomes are under serious financial pressure that shows no sign of abating.
“As a society, we believe in protecting one another from harm. As costs pile up and incomes have been cut, we urgently need to rethink the support in place for people at the sharp end of the cost of living crisis.
“The Budget is about priorities. We know the Chancellor is capable of taking bold action to protect people from harm when it is required.
“Reinstating the £20 per week increase to Universal Credit and boosting funding for councils to tackle debt must be priorities in next week’s Budget.
“We must give families the firm foundations they need to flourish and take part in our economic recovery.”
A Department for Work and Pensions spokesperson said: “We know the best route towards financial independence is through well-paid work, which is why our multi-billion pound Plan for Jobs is helping boost skills and opportunity, while Universal Credit continues to provide a vital safety net for millions.
"The Household Support Fund is helping the most vulnerable with essential costs through this winter, and is distributed by councils, who are best placed to ensure those in need in their local areas can be identified and supported as soon as possible.”