The rich get RICHER during lockdown: Nearly two million UK households are set to emerge from restrictions better off after saving cash by not spending while poorest face ‘tsunami’ of debts
- Those with income less than £30,000 are more likely to have borrowed money
- Combination of rising bills and closure of foodbanks cited as reasons for decline
- 57 per cent of richest households have managed to cut spending in the crisis
- Here’s how to help people impacted by Covid-19
The rich are getting richer during lockdown as nearly two million UK households are set to emerge from the restrictions better off after saving cash by not spending while the poorest face a ‘tsunami’ of debts.
The Resolution Foundation have revealed a study that suggests high-income households are far less likely to have struggled with bills since businesses were forced to close amid the coronavirus pandemic.
Separate research from Stepchange Debt Charity says that those with an income of less than £30,000 are particularly likely to have borrowed money or fallen behind.
Pictured: English terraced housing units in contrast to modern luxury flats in the background in East London
Laura Gardiner, the Resolution Foundation’s research director, told Mirror Online: ‘Many high-income families have reduced their spending in recent months.
‘Those on lower incomes, however, have found it far harder to reduce spending which, when combined with income falls, means many are seeing their ability to manage financially deteriorate.’
Their research claims that 38 per cent of richer families strengthened their bank balances as just 12 per cent of poorer ones did.
The graph shows changes in household spending compared to before the coronavirus outbreak began, by 18-65-year-old family income quintile before coronavirus (excluding the retired and students) surveyed from 6-11 May 2020
Pictured: Luxury residential homes in Belgravia, central London, as it emerges the UK’s rich households are getting richer during lockdown
Households that are less well off are also much more likely to say that their ability to cope financially has worsened, with 37 per cent reporting a decline compared with 10 per cent saying they are better off.
Fifty-seven percent of the richest fifth of families have reduce their spending since the Covid crisis hit.
Of those, one in 10 have slashed their spending by more than a quarter, the report found.
But only 30 per cent of the poorest fifth have cut their spending and people earning less are almost as likely to have increased their spending, with 27 per cent reporting that they had done so.
Households who find themselves in the top 20 per cent are about as likely to report a worsening in their situation as an improvement. A total of 23 per cent reported a worsening, with 22 per cent saying their position had improved.
StepChange Debt Charity says that a ‘personal debt tsunami’ of around £6 billion of additional household debt is directly attributable to the lockdown.
It estimates that 4.6 million people have already accumulated £6.1 billion of arrears and debt.
Chief executive Phil Andrew said: ‘We were already dealing with a debt crisis, but Covid has so far added another four million people and counting to the number who are going to need help finding their way back to financial health.
‘With £6 billion of additional household debt directly attributable to the effects of the pandemic, this is a problem that isn’t going to solve itself.’
Iain Porter, policy and partnerships manager at the Joseph Rowntree Foundation, said that rising costs and increased bills had combined with disruption to food banks and advice teams to inflict the damage.