Rohan Martyres, Portfolio Manager, Guy's and St Thomas' Charity
Aug 20, 2020
Whilst the impact of COVID-19 has been huge, it clearly has not been experienced equally. People, particularly 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. This combined health and economic crisis will be particularly severe for people who both have long-term health conditions and who live on low incomes.
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 about an estimated ‘£6bn personal debt tsunami’ affecting up to 4.6 million people nationally. 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.
The financial distress of millions of people in the coming months will add further pressure to the NHS, which is bracing itself for a predicted second national spike of COVID-19 cases. This is for two reasons. First, because there is ample evidence of debt and money worries leading to food insecurity and poor diets, as well as 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 their financial difficulties force them to return to work despite the health risks. This could mean more people’s progressing from one long-term condition to many, with substantial negative impacts on their lives and the health system that cares for them.
Many places are not prepared for this ‘debt tsunami’, partly because local creditors and other institutions are not coordinating their response. As a general rule, when someone hits financial difficulties, their landlord, local council tax department, utility company and other 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, meaning this case-by-case approach is wholly inadequate during arguably the greatest combined health and economic crisis in more than a century.
If we don’t act now, the result will likely be ‘tragedy of the creditor commons’ where one creditor who shout early and loud will get paid at the expense of the others. But most importantly, the cocktail of ill health and mounting debts will spell disaster for many vulnerable people.
In order to prevent individual financial crises and 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. A number of partners have already signed up to support the scheme, including 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, where 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, and 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 – by 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, with a 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, 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.
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.
It’s clear that 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.
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Portfolio Manager: Rohan Martyres
23 April, 2020
As a funder, our priority is to support our partners and the communities most affected by COVID-19. Our Portfolio Director, Louise Mousseau, sets out the actions we've taken to date and how we're adapting our work in response to a changing environment.
25 February, 2020
Our Programme Director for multiple long-term conditions, Barbara Reichwein, reflects on persisting health inequalities ten years on from the Marmot Review.