Charities raise concerns around long term debt amid Covid-19 recovery

Concerns have been raised by charities around long term debt problems impacting on young people amid Covid-19 recovery, according to a think tank.

Pro Bono Economics has warned that the pandemic is set to tip between 370,000 and 480,000 households into “problem debt” this year, leaving them unable to pay off credit, rent, utlility and Council Tax bills.

According to the think tank young people are likely to account for half of this increase in problem debt, raising concerns among charities of the long-term impact of debt.

“Charities are particularly concerned about the long-lasting impact of problem debt for young people,” said Pro Bono Economics.

“Younger age groups are more likely to have lost their jobs, to have been furloughed, to have seen their incomes reduce, and to have struggled to find new work.

“The research suggests nearly half of the growth in problem debt is set to be concentrated among 16-24 year olds, resulting in over 100,000 young people unable to pay their household bills and arrears.”

The think tank points to recent research by Citizens Advice suggesting that those in rented housing, young people, parents of young children, those on zero-hour contracts and people from Black, Asian and Minority Ethnic (BAME) backgrounds are the mosrt likely to have at least one household outstanding as a result of the health crisis.

Pro Bono Economics is calling on the government to ensure that the current uplift in Universal Credit is maintained.

“The spike in unemployment and squeeze on incomes that is expected to arrive over the coming months is set to push many households that are already close to the financial edge into an increasingly perilous position,” said Pro Bono Economics chief executive Matt Whittaker.

Earlier this year Pro Bono Economics launches a snapshot survey of charities to find out how they have coped over winter amid falling income and rising demand.