Financial shields during COVID-19 to protect health

Whilst the impact of COVID-19 has been huge, it has not been experienced equally. 

In particular, adults with long-term health conditions such as heart disease, diabetes and respiratory diseases are at higher risk of experiencing severe symptoms. 

Alongside this, the economic downturn as a result of the pandemic is especially harmful to people living on low incomes. And people at the crossroads of both ill health and low incomes feel the effects even more so.

‘A tsunami of personal debt’

There are credible signs that the financial pressures on millions of UK households will come to a head by November. Back in June, the national debt charity StepChange published research on a ‘£6bn personal debt tsunami’ affecting up to 4.6 million people. 

And by early August, the consumer group Which? found that people on furlough, enforced leave or reduced hours due to COVID-19 are approximately three times more likely than others to default on at least one loan payment.

What will happen in September and October as temporary government support winds down? As the furlough scheme tapers off, evictions are allowed again, and mortgage and loan repayment holidays end, the number of people defaulting on their debts and rents will undoubtedly spike.

Financial insecurity and health

The financial distress of millions of people in the coming months will add further pressure to the NHS. An NHS which is already preparing for a second wave of COVID-19 this winter.

This is for two reasons. First, because there is ample evidence of debt and money worries leading to food insecurity and poor diets. They can also lead to higher stress levels and deteriorating mental health.

Secondly, many people on low incomes with long-term health conditions are trying to reduce their exposure to COVID-19. But unlike their more affluent counterparts, financial difficulties force them to return to work despite the health risks. 

This could mean more people progressing from one long-term condition to many. If that’s the case, there will be substantial negative impacts on their lives and the health system that cares for them.

A coordinated local response is urgently needed

Many places are not prepared for this ‘debt tsunami’. In part, this is because local creditors and other institutions are not coordinating their response. 

As a general rule, when someone hits financial difficulties, creditors each begin enforcing debt collection in isolation. They rarely coordinate unless a regulated debt advisor is advocating on behalf of a client to negotiate a sustainable debt repayment plan. 

Most people in financial difficulty today do not have such support. This means a case-by-case approach is wholly inadequate during arguably the greatest combined health and economic crisis in more than a century. The cocktail of ill health and mounting debts will spell disaster for many vulnerable people.