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Citizens Advice warns of great financial uncertainty for millions due to COVID-19

Millions of households in the UK have either missed or are anticipated to miss a minimum of one bill due to the coronavirus pandemic. Citizens Advice, a leading independent charity, has said that this will have a negative impact on people’s lives in the near future.

Since the lockdown began on 23 March 2020, employers have furloughed around 7.5 million workers. While the financial package announced by Chancellor Rishi Sunak has been relatively generous, many employees will still feel the reduced wages as a result.

Some organisations and companies have put forward changes in the form of ‘payment holidays’ to support families. However, the charity states that once these changes are reversed, millions will experience a ‘financial cliff edge’. This is where gradual changes over a set period of time could help ease things. Changes made include things like mortgage and rent holidays, reduced fees on overdrafts and greater understanding from firms that people may be late paying utility bills such as gas and electricity. Some car insurance providers have even offered drivers a discount on their policy.

In a recent survey conducted by the charity, nearly 25% of respondents had already missed, or are expecting to miss a payment. Furthermore, 20% stated they had already missed payments on council tax, rent or a telephone bill. The survey was completed by 2,016 people, although there isn’t any data surrounding the demographic of responders.

Unfortunately, falling behind on outgoings such as council tax and rent can often have the most severe consequences in comparison to other missed payments. This is because these arrears can result in enforcement action and/or eviction.

Although property and contents repossession through bailiff enforcement action has been put on hold for now, these measures are due to be lifted in the coming months. The longer it takes to restart the economy, the greater the financial impact.

The survey also identified that those facing the greatest health risk from COVID-19 were three times more likely to have missed paying a recent bill. This figure also remains the same for those in uncertain work conditions, for example, agency employees, those on a zero-hour contract and the self-employed.

Citizens Advice wants the government to speed up the abolition of no-fault evictions and also take the appropriate measures to allow tenants to make up missed payments resulting from the pandemic. Additionally, it also wants local authorities to receive further financial support to allow for payment holiday provisions, assisting those who are unable to pay their council tax.

Lucretia Thomas, a project adviser at Citizens Advice Enfield, said that people are “telling us that their household expenses have increased as they stay at home to reduce the spread of Covid-19 during this challenging time and beyond.”

The evolving situation will continue to be a challenge as furloughed workers take a 20% pay cut. Although the scheme is due to be extended, millions still face the uncertainty of if they will even have a job to return to.

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Chris Richards

Chris is a personal finance specialist who founded Council Tax Advisors in 2012, assisting over 250,000 people with their Council Tax debt. Observing that many clients overpaid on utilities, he launched Utility Saving Expert in 2014, an energy price comparison site. In 2016, the platform expanded its services to include consumer and business insurance comparisons. Utility Saving Expert stands out with its commitment to social responsibility, donating 10% of net profits to fuel poverty charities, underscoring its dedication to both client value and community support.

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