Context
The economic impact of Covid-19 has affected thousands of people across Wales. Its full extent was set out in Bevan Foundation’s A Snapshot of Poverty in Spring 2021 report. It revealed that over 110,000 households, struggle to cover the cost of everyday essentials, whilst thousands more have seen their incomes fall and their living costs increase over the course of the pandemic. Among the findings set out in that report was that personal and household debt is a major problem in Wales. It revealed that between January and May 2021, 10 per cent of Welsh households had fallen behind on a bill whilst 17 per cent had borrowed money to pay a bill. The evidence of a growing debt problem is reflected in the experiences of people living on low incomes.
This report explores the impact of the pandemic on problem debt and also explores possible solutions to problem debt in the context of the pandemic and beyond.
The study
This report explores the impact of the pandemic on problem debt in three parts, each based on three key findings:
- Problem debt has become a greater issue for those who were already at a heightened risk of being in problem debt pre-pandemic.
- Problem debt has not become as significant a problem for the population as a whole as many may have feared at the outbreak of the pandemic.
- We are yet to see the full impact of the pandemic on problem debt and the situation may deteriorate further this autumn.
The findings set out in this report are based on a mixed methods approach, including both qualitative and quantitative approaches, and a literature review.
The primary quantitative method was two polls that were conducted by YouGov on behalf of the Bevan Foundation.
- The fieldwork for the first of these was undertaken between 7th and 11th December 2020, with a total sample size of 1,031 adults.
- The fieldwork for the second poll was undertaken between 20th and 24th May 2021, with a total sample size of 1,035 adults.
Both surveys were carried out online and all figures quoted have been weighted (unless specified otherwise) and are representative of all Welsh adults (the first survey aged 18+ and the second aged 16+). In addition, the Bevan Foundation has undertaken quantitative analysis of a range of official statistics accessible via Nomis and Stat Xplore.
The qualitative methods used in the formation of this report can be split in two approaches.
- The first approach involved interviews with key stakeholders working on issues related to debt, undertaken over summer 2021. These were supplemented by a stakeholder roundtable discussion on 26th August 2021.
- The second approach involved workshops or group discussions with people with lived experience of poverty, in partnership with Trefnu Cymunedol Cymru/ Together Creating Communities (TCC) and Action in Caerau and Ely (ACE). Additional discussions were organised with South Riverside Community Development Centre (SRCDC) to ensure the input of migrants’ and BAME people’s views.
Key findings
- Thousands of people across Wales were living in problem debt long before the pandemic. The economic impact of Covid-19 has seen the financial position of many Welsh families deteriorate, pushing some into problem debt for the first time and deepening the amount of debt owed by some of those already struggling.
- Across Wales 130,000 households (10% of all households) had fallen behind on a bill between January and May 2021. Over the same period 230,000 households (17% of all households) had borrowed money.
- The impact of the pandemic on debt has been very uneven. Home working and reduced opportunities to spend due to Covid-19 restrictions have enabled some households to pay down debt. The actions of both the UK and Welsh Governments has also provided some protection, preventing the escalation of over-indebtedness amongst many households.
- Some households have seen their economic position worsen as a result of the pandemic, however. Low-income households, renters, disabled people, 25 to 49-year-olds, lone parents and BAME households were all at a heightened risk of being in problem debt prior to the pandemic. The evidence suggests that the situation for these at-risk groups has deteriorated over the course of the pandemic.
- At time of publication (September 2021), many of the support schemes that have protected households have either recently come to an end or are due to come to an end soon. Living costs are set to increase further whilst there are still concerns about the health of the economy.
- This report argues that the time is right for the Welsh Government to adopt a new approach to personal and household debt with a clearer focus on debt prevention and relief.
Points to consider
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Methodological strengths/weaknesses: The methodology used appears sound (incorporating both qualitative and quantitative research methods with large sample sizes). All figures quoted have been weighted (unless specified otherwise) and are representative of all Welsh adults.
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Generalisability/ transferability: This report is specific to problem debt and the ongoing financial effects of the coronavirus pandemic on the Welsh population.
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Relevance: The research findings will be of use to stakeholder and policymakers exploring the impact of the pandemic on household debt and possible solutions to problem debt in the context of the pandemic and beyond.
