Question to the HM Treasury:

To ask Her Majesty's Government how they intend to respond to reports of a low-income debt crisis emerging in the UK as a result of redundancies and income loss during the COVID-19 pandemic.

The Government has delivered unprecedented support for living standards during this challenging time, protecting livelihoods with the Self-Employment Income Support Scheme, the Coronavirus Job Retention Scheme, and temporary welfare measures amongst other support.

With the resurgence of COVID-19, the Government has announced further targeted support via the Winter Economy Plan, including the Job Support Scheme, which will provide employees who work at least 33% of their normal hours with at least 77% of their salary.

The Government has provided Local Authorities with £500 million to support people who may struggle to meet their council tax payments this year. The Government expects that this will provide all recipients of working age local council tax support with a further reduction in their annual council tax bill of £150 this financial year.

The Government recognises that some people are struggling with their finances at this challenging time. To help people in problem debt get their finances back on track, an extra £37.8 million support package is being made available to debt advice providers this financial year, bringing this year’s budget for free debt advice in England to over £100 million.

In May, the Government also announced the immediate release of £65 million dormant assets funding to Fair4All Finance, an independent organisation that has been founded to support the financial wellbeing of people in vulnerable circumstances. The funding is used to increase access to fair, affordable and appropriate financial products and services for those in financial difficulties.

From May 2021 the Breathing Space scheme will offer people in problem debt a pause of up to 60 days on most enforcement action, interest, fees and charges, and will encourage them to seek professional debt advice.

In addition, at the Budget in 2018, the Government announced that it would undertake a feasibility study into a no-interest loans scheme in the UK. The Government has been examining the possibility of a no-interest loans scheme to help some of the most financially vulnerable access credit when they need it and welcomed the feasibility study conducted by London Economics which was published in March this year.