Facing the cliff edge: Protecting people in Wales from the financial consequences of Covid-19
The Coronavirus pandemic is having an unprecedented impact on household finances. Interventions from both UK and Welsh Governments have gone a long way to protect people’s incomes and give them options to reduce their costs during the pandemic. Despite this, Citizens Advice Cymru is already seeing people affected by the crisis who are struggling to make ends meet.
We estimate that:
Nearly 300,000 people have fallen behind on one or more household bills - such as gas and electric, broadband, or council tax - as a result of the outbreak.
A third (34%) of renters report that they have fallen behind or expect to fall behind on their rent.
People in shielded groups, young people, and people in insecure work are likely to be worst affected.
Continued restrictions will make it hard for families who have suffered a major loss of income to take steps to reduce their spending or find new or different employment to increase their earnings. Many will therefore find it impossible to avoid building up debts.
Policy-makers in Wales need to take steps to prevent people falling into crisis as we move into the next phase of the Coronavirus crisis. Currently, those in financial difficulty are protected from the worst impacts of debt by emergency measures such as the pause on evictions, and the temporary halt to some forms of debt enforcement (e.g. bailiff visits, issuing of liability orders). But people in Wales face a cliff-edge when these protections come to an end.
The Welsh Government must be proactive in encouraging people to check what benefits or support they are entitled to. It should consider a universal intervention such as writing to all households in Wales to ask people to check what benefits they might be entitled to if their income has been or will be affected by the Coronavirus outbreak. This should include benefits and support schemes administered in Wales, such as the Council Tax Reduction Scheme and the Discretionary Assistance Fund. At a minimum, it should ensure targeted information is available to those most at risk of financial difficulties during the crisis, particularly renters, people in the shielded group, and people with no recourse to public funds or irregular migration status.
The Welsh Government should prioritise fulfilling its commitment to provide greater security for tenants in the private sector. In the short-term, it must provide reassurance to renters in Wales by using its existing powers to extend the notice period to 6 months as soon as possible.Following this, it should accelerate plans to implement the Renting Homes (Wales) Act, and to pass the amending bill to permanently extend the minimum notice period required under a section 173 notice from 2 to 6 months and restrict the issue of such a notice until 6 months after the date of issue of a contract.
The Welsh Government should ask Local Authorities to pause enforcement of council tax bills missed during the crisis for 6-12 months, and offer a 3 month council tax holiday for those who cannot afford to make payments. It must be prepared to offer additional funding to cover the losses that councils may face as a result. Local Authorities could also consider extending the backdating period for Council Tax Reduction beyond the 3 month minimum.