Debts: Coronavirus

Treasury written question – answered on 11th December 2020.

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Photo of Stuart Anderson Stuart Anderson Conservative, Wolverhampton South West

To ask the Chancellor of the Exchequer, what steps he is taking to tackle the effect of covid-19 outbreak on levels of household debt in (a) Wolverhampton South West constituency and (b) the UK.

Photo of John Glen John Glen Minister of State (Treasury) (City), The Economic Secretary to the Treasury

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.

The Government has extended the Coronavirus Jobs Retention Scheme until 31 March 2021. Eligible employees will continue to receive 80% of their usual salary for hours not worked, up to a maximum of £2,500 per month. The Government has increased the overall level of the third grant under the Self-Employment Income Support Scheme to 80 per cent of average trading profits, meaning that the maximum grant available has now increased to £7,500.

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.

These measures are in addition to the changes this Government has made to make the welfare system more generous, worth over £7 billion according to recent OBR estimates. This includes a £20 per week increase to the Universal Credit standard allowance and Working Tax Credit basic element, and a nearly £1 billion increase in support for renters through increases to Local Housing Allowance rates.

We have also worked with mortgage lenders, credit providers and the Financial Conduct Authority to ensure the financial sector provides support for people across the UK to manage their finances by providing payment holidays on mortgages and consumer credit products.

The Government has also provided unprecedented support for businesses impacted by the COVID-19 pandemic. This support includes the Coronavirus Business Interruption Scheme, Coronavirus Large Business Interruption Scheme, Bounce Back Loan Scheme and the Future Fund which, as of 15 November, have collectively supported over 1.4 million businesses with facilities worth in excess of £65bn. The Chancellor has announced that the Government has extended the application deadline for these schemes to a single date, 31 January 2020, meaning that even more businesses will have access to financial support.

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.

Data on levels of over-indebtedness in Wolverhampton South West was last published in 2018 by the Money and Pensions Service (MaPS), who continue to fund local delivery of debt advice through Wolverhampton Citizens Advice. MaPS will be publishing updated figures in 2021.

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