Four in 10 households that have lost income because of the coronavirus outbreak say they will not benefit from the Government’s financial support measures, a survey has found.
This means almost three million families have fallen through the cracks in the welfare safety net, which have excluded from state aid people who have recently changed jobs or started working for themselves.
A quarter of British households, or seven million families, have experienced a significant drop in income since the beginning of the coronavirus pandemic, as pressure builds on Boris Johnson to lift lockdown and end the economic freeze.
Single parents, renters, freelancers and disabled people are more likely to be among the worst affected and precarious situations are expected to deteriorate over the next three months, according to a report from Standard Life Foundation, a charity tracking the impact of Covid-19 on people’s finances.
More than three million households were found to be in “deep financial difficulty” and struggling to pay for everyday items including food having lost their job or taken a large pay cut from an already below-average salary.
The report said almost five million households were struggling to make ends meet – getting by but unable to keep up with their typical outgoings and falling behind on paying bills, having taken a pay cut or been placed on furlough.
More than 10 million people were found to be at high risk of slipping into deep financial difficulties over the coming months if state support currently on offer was withdrawn or their employer was no longer able to keep them on.
Around one in seven households have claimed a payment holiday from their lender and the Government is currently paying the incomes of around four million people via the emergency Coronavirus Job Retention Scheme. This allows employers to claim state grants that will pay 80pc of an employee’s salary, up to £2,500 a month, and is scheduled to run until the end of June.
A similar scheme for self-employed people who have lost income due to coronavirus will soon be up and running, offering the same monthly payment based on average earnings over the past three years for an initial three months.
Households whose main income is from the “gig economy” are three times more likely to be in serious financial difficulty, the report found.
Elain Kempson, who authored the report, said further protections needed to be put in place to avoid widespread suffering.
“The pandemic is hitting people’s finances harder and faster than the last economic downturn. Like never before it is affecting people in all parts of the country equally. The scale of it will be unprecedented and will affect groups who have not been hit by previous recessions,” she said.
The Prime Minister is weighing up the health risks of ending the lockdown against the economic impact of keeping the present measures in place. He is expected to announce further guidance on how the country might transition back to a state of normality as early as this week.