ALMOST a third of poorer families who have lost income over the pandemic now cannot afford to heat their homes or buy fresh vegetables.
A new report released today shows the depth of the economic crisis affecting three in 10 people who have seen their wages fall since March.
The report, Caught in a Covid Trap, by think tank the Resolution Foundation, makes the case for a bolstered benefits system in the months ahead as more people are expected to be reliant on schemes such as Universal Credit.
Researchers looked at data for the whole of the UK, mainly surveys conducted in mid-September with more than 6000 working-aged adults.
They found that around a quarter (23 percent) said their incomes had fallen compared to February, pre-pandemic and 70 per cent of people who saw their income decline during the initial lockdown were still reporting an income fall in September.
When he country began to come out of the first lockdown in July, wealthier households saw their budgets rise while poorer families did not, according to the report.
The Foundation says that the contrast in how low- and high-income households have coped financially with the crisis is demonstrated by greater savings among better-off working age adults, with 37 per cent actually saving more – three times the rate of the poorest households, and rising deprivation for poorer individuals.
Poorer families are now struggling to afford basic items such s fresh fruit and vegetables, heating and replacing essential items in heir homes if they needed to such as a fridge.
The same proportion now cannot save even £10 per month.
Karl Handscomb, Senior Economist at the Resolution Foundation said that with the crisis lasting longer and unemployment rising, government support will be as vital in the coming months as it was during the initial lockdown – particularly for the growing number of households who are going to rely on Universal Credit.
He said: “Government support has played a vital role in protecting family incomes during the initial economic shock from lockdown. But as the crisis has persisted, new divides have emerged in how families are coping financially with the crisis.
“For high-income adults, spending reductions have in many cases left family budgets in a better place overall. But that has not been the case for low-income adults, who have instead experienced deteriorating finances. Those that have faced persistent income falls are now facing increasing deprivation.
“With the crisis set to continue for many more months at least, the Government should strengthen the social safety net that more families are coming to rely upon by extending the boost to Universal Credit, rather than withdrawing it before the crisis is over.”
David Finch, Senior Fellow at the Health Foundation, which sponsored some of the research, said: “This year has seen some people’s financial resilience take a hit, as their incomes have been consistently lower than before the pandemic. This in turn risks their mental and physical health. The Government must be ready to provide financial support for as long as needed through the economic crisis to protect people’s health over the long term.”
The report comes as a cross-party group of politicians have written to the Prime Minister urging him to keep the £20 increase to universal credit permanently.
The letter from Westminster leaders of the SNP, Lib Dems, Plaid Cymru, Social Democratic Labour Party, Green Party, and Alliance Party also called for the uplift to be extended to legacy benefits.
The Chancellor is due to make his winter spending review announcements next week, where he will set out financial plans for the next year and his vision for getting the country through the pandemic.
A DWP spokesman said: “We are wholly committed to supporting the lowest paid families, boosting welfare support by £9.3 billion in response to the pandemic as well as introducing the Covid Winter Support Package for those on low incomes, income protection schemes, mortgage holidays and additional support for renters, and constantly keep these measures under review.”
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