Juliette Flach, CAP’s Policy and Public Affairs Manager, discusses how unexpected expenses can push people into debt and what is needed to help people weather the storms.
As I sit about to write, in the midst of a thus far hot, dry May day, I hear thunder rumble in the distance and the sky suddenly turns from a glorious blue with sun rays shining through the white clouds, to an almost tropical thunderstorm. Within minutes, the pavements are being pelted with raindrops and the cracked soil becomes oversaturated by the influx of unexpected water. But more stark than that is the shift from people lying in the nearby park basking in the sun, to frantically dashing for cover. Some, after a momentary dig in their bag pop up an umbrella and will arrive home safe and dry; but for others, life threw something unexpected their way, which will mean their carefree afternoon has left them wet and cold.
This visual representation of ‘saving for a rainy day’ was a reminder that life really can throw unexpected things your way, and for many of CAP’s clients, unexpected events have contributed to their spiralling financial situations.
For CAP clients, their thunderstorm could come in the form of a relationship breakdown, redundancy, sudden ill health or a household appliance breaking down or many other life challenges. From a time when they had been just about managing, an unexpected turn of events can derail their lives. Without the protection of an ‘umbrella’ in the form of a financial buffer of savings, people can be forced to turn to unaffordable credit, borrowing from friends and family, or be pulled into debt.
For someone with money stashed away for ‘a rainy day’, unexpected expenses can be covered and won’t disrupt someone’s life, but not everyone has this luxury.
Imagine being a single mother who works as a community carer. Your income is not high, so every day involves calculating how to buy enough food for the kids and pay the rent. Then your car breaks down. You need the car to get to work, if you can’t get to work, you don’t get paid. You don’t have money in the bank to pay for the repairs, as you were only just scraping by as is. What do you do? What choices do you have? Do you go without food, and you and your children go hungry? Miss a payment on your rent and risk becoming homeless? Borrow money you can’t afford to pay back when the bailiffs come knocking?
It is not only CAP clients who face the reality of spiralling financial issues. Polling commissioned by CAP and conducted by Opinium in December 2024 found that:
21%
of UK adults say they have a deficit budget.
A deficit budget means that their income is not high enough to cover the costs of essentials, so without enough to cover the basics, it may be impossible to put money aside in savings.
To add to this challenging landscape, there are some groups in society who are more at risk of being pulled into financial difficulty when unexpected issues occur.
Ethnicity, age, gender, social grade, and disabilities are just some of the factors that can put some people at higher risk of financial difficulty, which you can read about in our policy briefing ‘The inequalities of poverty’ here.
With over 9.8 million UK adults reporting that they have debt that they are struggling to repay (CAP polling conducted by Opinium in December 2024), as a country, we need to face up to the concerning reality of problem debt. Charities such as CAP are doing all they can to support people through free face-to-face FCA authorised debt advice. But as we help some out of their storm, if people don’t have enough income from wages and/or social security to cover the costs of essentials, the threat of problem debt remains.
We need systemic change to ensure that everyone has a liveable income to afford what they need to survive.
But to reach a society where everyone has an umbrella to weather the storm, the government should also consider the Minimum Income Standard (MIS) as a framework for setting social security and wage rates — you can read a blog about the Minimum Income standards here and find our research around debt and the Minimum Income Standard here.
Here at CAP, we will continue to practically support people who face problem debt, but we are committed to do this alongside working to bring an end to UK poverty for all.
