A new IPPR Scotland report published today, ‘Weathering the Winter Storm‘, paints a bleak picture of the financial hit people have taken from the pandemic crisis.
Almost half of all workers in Scotland (45 per cent) have suffered a fall in income since April, while the number of households behind on bills has risen from one in ten to one in four. The think-tank finds that 1.1 million people (25 per cent) have reported that they could only cope for a month or less if they lost their main source of income, with that figure higher among the working age population (one in three).
It’s important to understand the financial hit of moving from employed to unemployed compared to employed to furloughed is significantly different. On average furlough has generated a 9 per cent fall in income, whereas moving to Universal Credit generates a 47 per cent income drop for the average worker. So the end of furlough next week will see many of the financial pressures we have so far seen ramp up significantly.
The IPPR report identifies £4 billion in Scottish Government spending dedicated specifically to the covid-19 response so far, with £2.2 billion of that money “directed to grants and tax holidays for businesses in Scotland through Scotland’s business rates system”. £350 million has went to “welfare and wellbeing”. Thus, the Scottish Government’s spending response so far has been targeted at business support, rather than households.
And of course the households struggling most are those who already face the brunt end of inequality: renters are more than three times as likely to be struggling with their finances as those with mortgages and owner-occupiers, and significantly more likely to have been furloughed during the crisis.
The IPPR call on the Scottish Government to look at both short and long-term measures to address financial insecurity, including investing £40 million immediately to help low-income families with children this winter. The think-tank also proposes that business support should be contingent on companies undergoing equality-impact assessments on any decisions on redundancy or hours’ reduction, and that a new covid-19 arrears scheme should be set-up to financially support people who have accumulated unsustainable debts during the crisis. On rents, they propose that the Scottish Government work with housing associations to deliver write-off’s on rent arrears accumulated, and stop a cliff-edge of evictions in March 2021 when the eviction ban ends.
Increasingly, you can count those struggling in Scotland not in the hundreds of thousands, but in the millions. Just over one million people are now in poverty, and just over one million are one lost pay cheque away from their own financial crisis. The Scottish Government can’t address that alone, but it has to make every penny count: there is no plan to address the personal finances’ crisis facing a large chunk of the country. They need to come up with one, quickly.
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