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Is coronavirus the straw that broke the camel’s back?

calendar26 May 2020

Kiri Saunders's avatar Kiri Saunders

Is coronavirus the straw that broke the camel’s back?

Just as the Chancellor stood in the House of Commons and announced that the UK had ‘turned the page on austerity’ the world was hit with a pandemic. It wasn’t the news anyone was hoping for, especially people already struggling to make ends meet. Our Client report and energy report, A dark place, based on data from 2019, showed that many people helped by CAP had been sacrificing meals (48%), disconnecting themselves from their energy supply (52%) and sleeping without a bed or mattress (11%). 

Already under immense pressure from all angles, can you imagine what a nationwide lockdown, a surge in unemployment, or a sudden increase in household costs would do? 

It might just break the camel’s back. 

 

Suffering in silence
One in three (30%) people who seek CAP’s Debt Help waited for three years before making a call. This is often due to fear, shame or thinking they’d be able to sort the problem out themselves. On this basis, CAP isn’t expecting to see the true impact of COVID-19 for many months. 

Right now, households will be facing tough choices: trying to live off 80% of their wage, claiming Universal Credit for the first time, or reducing their hours to accommodate childcare. Households will be trying to weather the storm, taking advantage of payment holidays, reducing payments for credit card bills, or using savings. But none of us know how long this situation could go on for. 

 

The impact of coronavirus
We have been closely monitoring the impact of COVID-19 on CAP clients and you can read the full briefing paper, Life in lockdown, produced by our External Affairs team here

We’ve found that life in lockdown is disproportionately harder for those living in poverty. For anyone struggling on the brink, even a slight reduction of income is felt. Faced with the constant pressure of rising household costs, prospects of unemployment or juggling health and caring responsibilities. Those classed as being in ‘in-work poverty’ often work in customer-facing roles, such as shop workers, delivery drivers or cleaners, which increases their risk of exposure to others. On top of this, poor health is more prevalent amongst people on low incomes, and therefore the risk of serious illness is higher for those who do catch Covid-19.

Speaking to CAP clients and former CAP clients, has enabled us to engage with people's first-hand experiences. Our clients are experts by experience and can speak into the financial implications of coronavirus, as described below. From our research, we have found that CAP clients are experiencing more income shocks compared to the same period last year. A growing number of clients are unable to progress their CAP Plan because of coronavirus and households are struggling with increased costs.  

 

Homeschooling 
‘I had to buy a printer and paper, which all adds up. That was for my son with his school work. Because I’m working on my laptop for work, I can’t use that for him. I have to print all the work off.’ - Paula, expert by experience.

Increased household costs
‘The electric is horrendous – because you’ve got to do homework online and because they’re on the xbox or gadgets because they're bored – that’s extra money on the electric. For the three kids, I get free school meal vouchers of £180 every two weeks. I can’t divide the voucher – I have to spend it in one place. Morrisons is cheaper, but they don’t accept vouchers of more than £100, I couldn’t go there.’ - Georgia, expert by experience and CAP client

Isolated
‘I won’t be online in two days as my phone is Pay-As-You-Go and it is £15 every 30 days. That’s how I’m online. I don’t have a phone or internet in my house. I can’t afford the phone bill. I won’t be able to phone [my family] as I won’t have any credit. It’s been horrible these last few weeks.’ - Diane, former CAP client and expert by experience.

Priced out
‘Because I live on my own, a lot of people have set up deliveries – but the minimum order is £20 or more. There’s only me and otherwise I would have to throw fruit and veg away.’ - Tina, former CAP client and expert by experience.
 

Standing in the gap
In addition to our life-changing services for those battling poverty, CAP has the privilege of representing what life is like for such people in places where change can happen. Over the last two months we have identified areas where policies are impacting CAP clients and we are calling for change. COVID-19 will not stop us from standing in the gap for those whose voices are not being heard.

If you’re facing a hard time right now, please don’t be afraid to seek help. 

If you’re working in collections or financial services, don’t forget about those who are often overlooked. 

And if you’re a supporter, thank you. Your gifts and prayers mean our work continues to be possible.

The unseen in crisis

calendar22 May 2020

Paul Walmsley's avatar Paul Walmsley

The unseen in crisis

What is an emergency?

The UK is facing an invisible threat. Coronavirus (COVID-19) became a Public Health Emergency of International Concern at the end of January this year and since then it’s been called a crisis by the media on an almost daily basis. 

But it’s not just a public health emergency. COVID-19 is having a devastating effect on many household finances. Income streams are drying up, bills are going unpaid and anxiety is rife. The Government and industry are working tirelessly to roll out support packages for households in need. Yet, many don’t know what help is available and others are struggling to access it. Customers across the board are being told they should, ‘Only call in an emergency.’ But what does that mean? Am I going through an emergency right now?

 

Increased household costs

The regulator for energy, Ofgem, says that since the lockdown began more than half of energy customers (56%) have reported using more energy than normal, a figure that rises to three-quarters (75%) for those with children. With the nation isolating at home and schools closed, families are having to spend more on energy than ever before. The problem is made worse for those families who were already facing debt and financial uncertainty, throwing them into further chaos; families like CAP client Sue’s.

(The cost of) food has increased. The heating did start to increase, but because of the beautiful weather it’s been off quite a lot. My electric is a Direct Debit each month but I’m expecting that to go up. Maybe double?  My son is on his laptop/Xbox all day. We’re on the tablets and the computer and the TV is going all day. There’s more washing. And my water bill will probably increase.’ - Sue, former CAP Debt Help client (Names have been changed)

 

What do the numbers say?

Before the pandemic, we conducted some research into our clients’ experiences of the energy sector, and this was published in our report, A dark place. We found that 87% of CAP clients do not feel confident asking their supplier for help. 

The statistics and responses from our clients show that even before lockdown they were already isolating themselves for very different reasons; shame, fear and guilt were the causes, rather than coronavirus. In fact, one in four (24%) CAP clients did not leave their house for a week or more. And this was before the phrases ‘lockdown’ and ‘social distancing’ were in our daily vocabulary.

Suddenly, a vast number of people are unable to work and are now facing financial uncertainty. But for those already struggling, how much has changed? Are the people who were previously cut off from society going to be lost in the enormous crowd of those isolating for new reasons? Those feelings of fear and shame created by debt will still be there. The way companies interact with their customers once the lockdown ends needs to be effective, or they risk pushing households into further isolation.

Ofgem recently published data looking at energy customers’ responses to the current situation. It showed that just 8% of those who had difficulty topping up their prepayment meter have contacted their supplier for help. In fact, more people (17%) were asking friends and family for help, rather than their energy provider. This number is particularly worrying when you realise it comes from a group of customers engaged enough to respond to an Ofgem survey.

Looking at these new figures with those from before the pandemic, it is distressing to think about how many more households will be struggling to afford energy, but are afraid to ask for help. Families will be sitting at home during this time, unable to afford food and heating, afraid to speak out due to fear and anxiety. Even through this current crisis, they are unable to make themselves heard.

 

Lost, but not forgotten

The good news is that help does exist. Suppliers are doing their best to provide help and assistance through emergency top-ups and significant lenience for their customers. However, far too many people lack confidence in both themselves and their supplier, meaning even in their darkest moments they don’t seek the help they need. We often refer to debt as a burden; one that weighs people down and buries them. With a virus-driven lockdown, we need to find ways to lift this burden from them, before they get lost in the crisis.

Like a virus, debt is often invisible. But people don’t need to suffer in isolation. We all need to make sure nobody is lost in the rush to deal with the crisis. At the beginning of the outbreak, many people reached out to their neighbours to offer a helping hand. Two months on, isolation, financial struggle and anxiety are still on the rise across the nation. If you know someone who is facing a tough situation, why not offer a helping hand again? You never know what could be going on behind closed doors. 

Add your voice to help families living in poverty during coronavirus

calendar14 May 2020

Rachel Gregory's avatar Rachel Gregory

Add your voice to help families living in poverty during coronavirus

Lone parents face the biggest financial shock waves due to coronavirus. In April alone, an additional 216,000 single parent families were found to be living on extremely low incomes, with less than £500 to see them through the month, according to Turn2us. 

In a just and compassionate society, our social security system should anchor people when the financial impacts of coronavirus crash down upon them. Unfortunately for many, the help on offer falls short. 

The benefit cap is a limit on the total amount of benefit you can get each year. It currently affects 79,000 families, and is set to impact many of the 1.8 million new Universal Credit claimants too. This means they will not receive extra money from the Government’s cash injections to Universal Credit that are intended to help people in poverty stay afloat during the outbreak. 

 

The benefit cap

The benefit cap is set at £20,000 for families (with children) living outside of London and £23,000 a year for those in London. 

The families most likely to be affected by the cap live in high-rent areas and typically have two or more children. On average, they lose out on between £48 and £53 a week because of the cap - money they cannot afford to lose. Of those that replied to CAP’s recent Facebook poll, more than half (55%) of people affected by the benefit cap said it meant that their family always went without.* 

 

Lone parents going under

Following a relationship breakdown, Megan**, contacted CAP for help with debt. Now a lone parent to her three children, aged 7, 9 and 17, she relies on Universal Credit to support her family. She is entitled to £1,893 a month, but her payments are reduced by £604 because of the benefit cap and Local Housing Allowance limits.

In April, when the Government increased Universal Credit and Local Housing Allowance limits, it promised an extra £203 a month for the family. Yet the cap means that they see none of this, leaving the family of four (after paying their rent) just £358 a month to live on.

Seven in ten households affected by the benefit cap are headed by lone parents like Megan. 

Last month, one such parent told the cross-party group of MPs who scrutinise the work of the Department of Work and Pensions that the benefit cap meant she struggled to pay basic bills. She said “My children are my priority. If that means I don't eat, I won't.”

 

Breakdown of social security 

Economists refer to social security benefits as ‘automatic stabilisers’ - payments that kick in to steady households and the economy when storms hit. The reality is that the benefit cap stops lone parent families receiving all the vital support they need. 

The cap was brought in to incentivise people to find paid work or move to cheaper housing, yet in a recent blog, the Institute for Fiscal Studies highlighted that there is little evidence that the policy is successful in economically stable times. At a time like we are currently facing, finding work or moving home is even more difficult. 

CAP is calling on the Government to suspend the benefits cap during the outbreak, in order to help households who are already pushed to the brink. We joined with Shelter and other anti-poverty charities to send this message to the Chancellor. The government needs to know that people across the UK want to see more support for families living in poverty during coronavirus.  

Your voice can make a difference, email your MP here.

 

*There were 40 respondents to the poll which ran on CAP’s Facebook page 10 May 2020.
**Name has been changed.

When the poorest cry out, is anyone listening?

calendar07 May 2020

Kiri Saunders's avatar Kiri Saunders

When the poorest cry out, is anyone listening?

Our latest research shows the shocking revelation that one in ten of our clients has no bed or mattress to sleep on. If this is the picture of problem debt now, what does a post pandemic UK look like?

 

This is the question we must ask following on from the Client report we’ve just published exploring the latest debt trends, as well as the difference CAP’s services made in 2019. The report is a cornerstone piece of research that our External Affairs team use to show industry and government the picture of poverty in the UK.

It’s a harsh reminder of the level of debt and poverty many of our clients are facing every day. The average income for new client households in 2019, after housing costs, was £12,579, meaning that  81% of CAP clients have an income lower than the national average, and almost half (48%) are living below the poverty line. 

 

This level of low income meant that two thirds of  CAP clients borrowed money in order to pay another bill or debt, and six in ten borrowed money in order to pay for food, clothes or other essentials.  Living in debt also impacts health. Three in four of the people we help said debt negatively affected their health, with many seeking help from a GP for a debt related illness. 

 

In light of the pandemic

Covid-19 (coronavirus) is being felt by everyone but the poorest are least able to weather the storm As the global economy is set to suffer for years to come,household debts will continue to grow and we’re expecting to get even busier. 

The hard-hitting picture painted by this  report - which uses 2019 data - makes us very concerned for the future.

 

The good news

But let’s talk about some good news in all of this. In 2019, CAP helped 22,778 people to change their story. We celebrated with more than 2,000 households who became debt free, and walked many more along the road to a more hopeful and positive future.

We are so thankful to all of you who donated to our crisis appeal. Your donations mean that we can continue to run our emergency support line, which is providing hundreds of households with  vital emergency food shops, fuel vouchers and phone top-ups. 

 

Sarah Elson, who works in CAP’s Network Management team, is coordinating our response.

 Sarah Elson 

‘CAP has always operated an emergency aid fund for debt clients who are in desperate need of support with food and energy top-ups. However, now due to the coronavirus pandemic we are seeing clients being pushed harder than ever into difficult circumstances. This includes things like changes to employment, reduced working hours, people waiting for benefits or an increase in mental health difficulties.

When lockdown began, CAP decided to offer support to a wider range of people and develop what it was supporting people with. The emergency aid line now helps by providing food shops, fuel vouchers and phone top-ups. By having three different options for aid, we've been able to address material needs for food and power, as well as allowing people to stay connected to family and vital support services.

Our partner churches have stepped up to meet the needs of their communities in so many ways. In the last four weeks, CAP has been able to support them by providing aid for more than 150 CAP clients. This support helps frontline staff to build relationships with their clients and group services members, and provides a lifeline for many during an especially difficult and uncertain time.’ 
 

We cannot take our foot off the pedal right now.

The financial impacts of coronavirus are going to be long lasting and, for thousands, this pandemic will be the tipping point into financial crisis. We need to respond now to make sure CAP can be there for them when they call us.

Will you give today and bring hope to someone plunged into financial darkness by the coronavirus pandemic?

Launching our Church Resources page

calendar06 May 2020

Claire Wong's avatar Claire Wong

Launching our Church Resources page

We’ve been blown away by the UK Church's incredible response to coronavirus (COVID-19). You are showing incredible generosity to the deprived, bringing hope to the desperate and serving the vulnerable with compassion. Many in need are struggling more than ever, but despite the challenges facing us all, the Church is as active and alive as ever.

CAP exists to equip and empower the Church to serve the poorest and most vulnerable in this nation. And at this time of desperate need, we want to share our knowledge and experience to help your church provide crucial support to your community.

CAP’s Church Resources

We’re excited to be launching our Church Resource page. A place where, over the coming days and weeks, we will be adding resources that draw on the experience of hundreds of our partner churches across this nation, as well as CAP's own knowledge and expertise.

It can feel daunting when faced with such a huge need. But we hope these free tools will equip you and your church to effectively serve with confidence and continue to offer the hope of Jesus in your communities during this crisis.

What resources can I expect?

We understand the pressures that church leaders are facing during this time as you seek to guide your congregation through unknown territory, and respond to the need in your local area. So we have gathered resources that we hope provide support to you, your church, and your community. Expect to find:

  • Information on Government and industry support
  • Signposting to organisations providing additional specialist support, for individuals and churches
  • Practical advice on how to serve those in need in your community, starting with our new project: Pathways out of Poverty

We’re committed to supporting you throughout this crisis, and we’ll be working on further content over the next few months. So be sure to check in to the resource page regularly and keep an eye on our social media to be kept up to date with new resources as they’re available.

Thank you for the amazing work you’re doing amongst your congregation and wider community at the moment. God is continuing to use his Church in amazing ways during this time, and we can’t wait to hear of more lives impacted and transformed.

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