A new report from debt charity StepChange, Scotland in the Red, reveals that a quarter of Scots were showing at least one sign of financial vulnerability in 2019.
The report also reveals how incomes in Scotland are failing to keep up with necessary expenditure. On average, the charity's clients were already in deficit by £13 after paying for key costs like rent and council tax.
The most common reasons for debt among new clients were a reduction in income or benefits (24 per cent of clients), changes to employment (14 per cent) and disability or illness (14 per cent), all three particularly causes for concern given the threat coronavirus already poses to financially vulnerable households. This must give the Government and creditors pause for thought as they work out how best to support those in need beyond the immediate crisis and into the long term, said the charity.
The current economic crisis also poses a threat to a new wave of previously financial stable households, who may find themselves in growing difficulty in the months ahead. Special support for these groups to allow them to recover will be needed as payment holidays and forbearance come to an end.
StrpChange has set up a hub for those worried about the effect of COVID-19 on their finances and urge anyone who is concerned they may be in difficulty to seek advice as soon as possible.
Sharon Bell, Head of StepChange Scotland said: “These figures show that financial resilience was critically low before the outbreak of COVID-19, despite most of our clients coming from in-work households.
"An extremely concerning proportion of our clients were already struggling with essential bills like rent, mortgage and council tax. As the long-term economic impact of COVID-19 begins to take hold, there is a real danger many households’ finances will be overwhelmed. We need more signposting to free debt advice, as the earlier someone gets help the greater their options may be and the less harm they could experience.
"We welcome the steps the Scottish Government has been taking to date, but we also need policy makers across the UK to provide adequate support frameworks and affordable opportunities to build resilience so that more people can weather life shocks when they do happen."
* Read Scotland in the Red here
* Debt and coronavirus: free advice available here
* StepChange https://www.stepchange.org/
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