Citizens Advice Cymru submission to the Equality and Social Justice Committee: Levels of indebtedness during the pandemic

Whilst Covid-19 has caused huge disruption to the work and lives of everyone in Wales,  it has had a highly unequal impact on household finances. Though many have seen improvements in their financial situation during the pandemic, some groups have seen a much higher likelihood of being pulled into debt. Research from Citizens Advice and others has found that low-income households and people who experienced negative changes in their employment are most likely to have faced financial difficulties during the crisis, alongside young people, families with children, and disabled people or people with health conditions.

We know that keeping up with living costs is a common problem for households on low incomes and those who have faced income shocks. They have a higher likelihood of falling into multiple different debts, particularly arrears on household bills like rent, Council Tax and energy costs. This can leave people with little room in their budget to make repayments or to pay enforcement costs or bankruptcy fees, making it more difficult to find a route out of debt. With little or no free income, they are also more at risk of severe hardship. 

Minimising the harm for people who have been pulled into debt as a result of the pandemic should be a priority for the Welsh Government and local authorities in Wales over the coming year. The Welsh Government must act to maximise the impact that its existing programmes and services have on people in financial difficulty, whilst also recognising and addressing where its policies are exacerbating debt problems for people in Wales. 

Read our full response and recommendations here [ 150 kb].