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COVID-19 Multiple long-term conditions

Financial shields during COVID-19 to protect health

20 August 2020
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3 min read

COVID-19 has had a disproportionate effect on the most vulnerable in our society. In this piece, Portfolio Manager Rohan Martyres sets out the need to protect people from financial insecurity to protect their 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.

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.

Rohan Martyres Portfolio Manager

A new approach in Lambeth and Southwark

To protect the health of people at risk of developing multiple long term conditions, we are supporting the Centre for Responsible Credit to trial a COVID Financial Shield scheme. 

Several partners have already signed up to support the scheme. This includes three NHS Primary Care Networks, Southwark Council, Lambeth Council, and three housing associations: Metropolitan Thames Valley, Hyde Housing and Optivo Housing.

The first stage will support approximately 1,000 people in Stockwell, Peckham and South Bermondsey. In these areas, many people live on low incomes and have long-term health conditions.

Local GP practices in these neighbourhoods will identify and contact people at risk. Those in financial difficulty will receive ‘breathing space’ from debt enforcement by their housing association landlord or the local authority. 

Finally, regulated debt advisors will support people to get back on their feet financially. This help will include maximising incomes, devising sustainable repayment plans and offering wider support.

The Centre for Responsible Credit and partners are now planning the scheme’s second stage. This will focus on how they can offer longer-term support for people across Lambeth and Southwark.

We hope this project will help to inform the national roll-out of 60-day ‘breathing space’ legislation from May 2021. We want to help develop the business case for creditors to support the health of people in financial difficulty and generate wider insight to help local commissioners and creditors to work more effectively together to support people in their communities.

 

Beyond our place

This scheme is currently focused on two boroughs in south London. But the challenges facing people on low incomes with health conditions are regional and nationwide. We, therefore, want to hear from regional and national creditors, commissioners and policy makers to co-create a wider, collective response.

Creditors, health agencies, public commissioners and other funders have an urgent incentive to act. By working in coordination we can, and must, do more to help people living on low incomes with health conditions as the current health and economic crisis unfolds.