Counting the cost of COVID as Universal Credit claimants in Leeds increases by 98 per cent since start of lockdown

The number of people claiming Universal Credit in the city has almost doubled since the start of the first lockdown while a Leeds based debt charity says 1.2m people are in a "severe" debt situation.
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There are around 70,000 people in Leeds now claiming Universal Credit - which is an increase of 98 per cent since the beginning of March and there are also 42,000 unemployed people in Leeds accessing the benefit which is a standard allowance to help with living costs if you are on a low income, out of work or cannot work.

The figures were revealed at a meeting of Leeds City Council and comes as a Leeds based debt charity warned that an estimated 1.2m people affected by the coronavirus pandemic are in severe problem debt as a result of falling behind on essential bills or using credit to make debt repayments.

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StepChange debt charity says a bold longer-term strategy is needed from the Government to help households exit coronavirus-related debts safely.

The number of Universal Credit claimants in Leeds is now 70,000 as debt levels in the UK soar due to COVID.The number of Universal Credit claimants in Leeds is now 70,000 as debt levels in the UK soar due to COVID.
The number of Universal Credit claimants in Leeds is now 70,000 as debt levels in the UK soar due to COVID.

The chief executive, Phil Andrew, told the Yorkshire Evening Post, the effect on Leeds and Yorkshire was "incredibly worrying".

He said: “As a charity that’s proud to call Leeds home, it’s incredibly worrying that we are seeing financial problems take root across Yorkshire and the Humber. Our research shows more than 1.2m people have been negatively affected by coronavirus - that’s 28 per cent of the adult Yorkshire population who’ve lost their jobs, had hours reduced, been furloughed or had to take time off work.

“Across the region, the number of people in severe problem debt has doubled since the start of the pandemic to nearly 175,000. That means more and more people throughout Yorkshire using credit to make it through to payday, falling behind on essential household bills, or borrowing from friends and family to make ends meet. That’s why we need to see the Government move from the current crisis management response to a long-term recovery plan to help those in the region get back on their feet.”

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The charity also believes that 2.87m people across the UK who have been impacted by coronavirus are now at high risk of long-term debt problems.

The Tackling the Coronavirus Personal Debt Crisis report found nearly 29 per cent of adults have experienced a negative change of circumstance due to Covid-19, such as unemployment or redundancy, or furlough with a salary reduction and that twice as many people with an income between £10,000 and £20,000 have fallen behind or borrowed to make ends meet as those with an income between £50,000 and £60,000, the charity said.

StepChange said support measures need to go beyond the immediate crisis and has called for targeted Government funding for struggling households to pay for interest-free loans, with repayments depending on income. Increases to Universal Credit and other benefits should also be extended, it said.

A raft of financial support measures has been introduced by the Government and regulators, including the extended furlough scheme and payment deferrals on loans, but there are concerns that some people may be simply pushing debt problems further into the future.

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Some people have also had problems accessing coronavirus support from their lender with the Financial Ombudsman Service (FOS) reporting this week that it had received more than 10,000 Covid-19-related complaints.

Mr Andrew added: "Despite a bold initial reaction to the pandemic, the Government and financial services sector's toolkit of responses has not evolved, and the result is a spiralling number of people being plunged into debt due to Covid-19. And the worst is yet to come.

"Without a bold, long-term vision for those financially affected by the pandemic there is a real danger of lasting economic and social damage that will deepen inequality, jeopardise the Government's levelling-up ambitions and act as a drag on economic recovery.

"Strengthening short-term protections like furlough will buy time for those experiencing temporary financial difficulty. Now we need to see the Government provide targeted funding that can enable households to exit safely from coronavirus debt."

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