UK debt crisis hits millions as woman who lost job in Covid pandemic speaks about £12,000 debt

An emotional Love Stewart describes the impact £12,000 of debt has had on her

Love Stewart found herself £12,000 in debt after she was forced her to quit her job during the Covid pandemic due to a chronic health condition.

Bills and final demands have piled up for her as the costs of living, including energy, rise.

Ms Stewart is just one of an estimated 3.8 million households struggling with debt with household bills.

The debt crisis has been compounded by redundancies and job losses due to the pandemic, the ending of the temporary uplift of Universal Credit, and rising costs of energy and food.

Ms Stewart told ITV News: "You didn't know where to turn to. I don't think I'll be the only one."

Fighting back tears, she said: "There are some people like us that if they see the letter they panic. I know two people that killed themselves because of debt and it wasn't even very much, all because they were getting letters coming through."

Bills and final demands piled up for Love Stewart as the costs of living, including energy, rise. Credit: ITV News

She added she felt "a bit embarrassed" at first to approach a charity.

But since she has been put on a debt repayment programme by charity Christians Against Poverty, she has been slowly getting her finances back on track.

Ms Stewart said: "I don't know what our lives would've been like if we didn't get the help. I don't even want to think about it."

According to the Joseph Rowntree Foundation, of the estimated 3.8 million households in debt:

  • 950,000 are thought to be in rent arrears,

  • 1.4 million are behind on council tax bills

  • and 1.4 million are behind on electricity and gas bills.

The foundation looked at households in the bottom 40% of incomes in the UK, with a household income of £24,752 or less. This represents around 11.6 million households.

The findings suggest that a third of low-income households are now in arrears – triple the 11% estimated by a similar study before the coronavirus pandemic, the JRF said.

Working age households on low incomes, including those aged 18 to 64, were found to have been particularly hard hit, with 44% thought to be in arrears.

For households with people aged 18 to 24 this rises to almost three-quarters (71%) of people in arrears.

The Joseph Rowntree Foundation said the findings show clear signs that the pandemic has dragged families who were previously just about managing into arrears on essential bills.

It said families with children, households in London, households where the person surveyed was aged under 45, and black, Asian and minority ethnic households were particularly likely to have been pulled into arrears.

A large majority of households (87%) who are behind on their household bills said that they were always or often able to pay all their bills in full and on time before the pandemic hit.

Even before recent energy price rises began to bite, six in 10 households on low incomes (62%) reported that their costs increased during the pandemic, the report said.

Many families on low incomes are still reeling from a £20-per-week cut to Universal Credit, the JRF said.

Many families on low incomes are still reeling from a £20-per-week cut to Universal Credit Credit: PA

Among households surveyed who receive Universal Credit, 40% are not confident they will be able to pay their bills in full and on time, while 35% do not think they will be able to avoid taking on more debt.

Half (50%) of these households say they do not feel confident they can find a job or work more hours.

The Joseph Rowntree Foundation is urging the Government to reinstate the £20 in Universal Credit and recommended that the Government provides at least £500 million in additional grant funding via the Household Support Fund for targeted debt relief.

Katie Schmuecker, deputy director for policy and partnerships at the Joseph Rowntree Foundation, 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.”

She added: “Real investment in children and their families will also require restoring the value of children’s benefits, more help with childcare costs and an expansion of extended schools.”

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 multibillion-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.”