In accordance with the recent COVID_19 pandemic, British charities have called for the chancellor to write off debt equating to £10bn. This “debt freeze” will include what people owe in regards to council tax and social security. This “debt freeze” will help low-income families struggling to support themselves as the economy takes a huge hit due to the deadly virus.

A total of 80 charities, trade unions and campaign groups have signed a letter addressed to Rishi Sunak urging the fact that low-income families will not be able to survive in the current economic climate. This union of people worry that people without savings and living on the bread line may face a “deepening debt trap” if the government do not intervene to help.

They said the following in the letter:

“Families on low incomes are facing additional costs because of the pandemic – they urgently need some breathing space.”

“Those facing redundancy, loss of wages or other payment difficulties because of COVID-19 must be entitled to an immediate freeze on unsecured debt payments, similar to the mortgage holiday extended to homeowners, with no interest accumulated during the repayment holiday,” they said. 

Before COVID-19 hit Britain, it is estimated that around 3 million households in the UK spent more than a quarter of their yearly income on paying off debt repayments. Just under half of the households in question did have incomes of less than £15,000 per year. This, therefore, confirms the fact that low-income households will take a massive hit in regards to their loan repayments when left without income due to the current health disaster.

Ms Clifton stated “Many on low incomes were already struggling to repay debts, yet face having to take on even more debt to cope with the current crisis. This is causing untold anxiety and hardship for millions of families”.

In response, a Treasury spokesperson said “The chancellor has announced an unprecedented package of support for workers and businesses”

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Scott Nelson

Scott Nelson is a financial services expert, with over 10 years’ experience in the industry, including 6 years in FCA regulated companies. Read more