Around 1.2 million Scots say they are struggling to keep up with household bills and credit commitments, an increase of nearly half a million since the start of the Covid-19 pandemic.
The findings — based on Scottish respondents to a UK-wide poll run by YouGov and the charity StepChange in October 2021 — show that 28 per cent of adults in the country are finding it difficult to cover the costs of bills and credit, compared with 16 per cent in March 2020.
This includes 290,000 people who use credit as a safety net to pay essential bills or to make ends meet before payday.
The figures have provoked a concerned response by campaigners at StepChange. They told The Ferret that Scotland is facing “a rapidly escalating debt crisis” and called on policymakers not to end government support provided during the pandemic “too soon”.
Ongoing rises in the cost of living are exacerbating the financial pressures already experienced by many Scots as a result of Covid-19.
Fuel bills for the average Scottish home are expected to increase by £693 from April following a UK Government decision to raise the energy price cap. Meanwhile wages are failing to keep up with inflation across the economy.
Charities have warned that the ongoing cost of living crisis will lead to many Scots struggling to pay for necessities including food and heating their homes.
The financial pressures on people due to the crisis are also expected to take a significant toll on their health and wellbeing.
In January 2022, The Ferret reported that nearly half of Scots between the ages of 16 and 24, and a fifth of over 55s, experienced worsened mental health when thinking about their finances.
The StepChange survey provides more evidence of the link between financial difficulty and health and social problems. It found that 720,000 Scots adults said credit commitments had a negative impact on their health, relationship or ability to work in the twelve months to October 2021.
Sharon Bell, head of StepChange Scotland, said that people’s use of credit to cope with financial difficulty during the cost of living crisis “should not be at the cost of their long-term financial and personal wellbeing”.
Bell said: “The sharp rise in the number of people struggling to meet their financial commitments should raise alarm bells across government, banks and regulators.
“A cost-of-living crisis is not new for our clients – for years we have been seeing a steady rise in the number of households who experience debt simply through a prolonged period of not having enough income to meet their basic needs.
“Those responsible for steering us through these choppy financial waters need to be attuned to these harms and be ready to step in and help those in need. To resist acting is to risk a rapidly escalating debt crisis, particularly among lower income households.”
Bell pointed to the new Consumer Duty as a chance for financial firms to redesign products and change practices “to ensure credit does not exploit financial difficulty”.
She added that StepChange had advised more tenants during the pandemic and warned that the looming ending of the Tenant Support Hardship Grant would “leave a growing number of households facing eviction, or high-cost borrowing”.
A Scottish Government spokesperson said: “We know how difficult the pandemic has been for household finances and we have worked tirelessly to offer support against the rising costs of living and the unnecessary cut to Universal Credit.
“That is why the Scottish Government is providing a £150 payment which will reach 73 per cent of households, as well as a further £10m to continue the Fuel Insecurity Fund.
“In addition, we are doubling the unique Scottish Child Payment from April. We are prioritising investment in frontline advice services, ensuring those most in need, particularly those facing problem debt as a result of the pandemic, are able to access support.
Priced Out is an investigation by The Ferret, co-published with The Herald, exploring the impact of – and reasons that lie behind – the cost of living crisis in Scotland.
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