Covid: 'Debt time-bomb' awaiting thousands of households

Mental health charity Hafal said it was being "swamped" by people needing help with their finances

The pandemic is creating a "debt time-bomb" according to charities concerned about the impact it is having on people's mental health.

More than 280,000 people in Wales have fallen behind on payments since the start of the Covid pandemic, according to research by Citizens Advice Cymru.

The charity estimates households in Wales are £73m in arrears on the likes of rent, energy bills and council tax.

Mental health charity Hafal said it was being "swamped" by people needing help.

Wales' minister for mental health said 115,000 people had accessed the £10m made available for problems involving debt and employment.

• How much will coronavirus cost the UK?

• What help is available to pay my bills?

Adrian Nicholas, from Hafal said there was an "inevitable link" between debt and mental health, which can cause a "vicious cycle".

He said: "It's going to be a very rough and bumpy few months. Obviously, we've still got the pandemic going on, but unfortunately the debt incurred during this period isn't going to go away overnight.

"The sooner people can start to obtain help with the money worries they have, the better it'll be for their financial health and their mental health."

'I tried to grieve but Covid made it harder'

Rose, not her real name, is a mother of two from Caerphilly county.

Citizens Advice Cymru estimates households in Wales are £73m in arrears

She has struggled financially for a number of years, but said her debt spiralled out of control since losing her mother to Covid-19 last April.

Rose said: "I struggled to come to terms with losing her. It was hard enough dealing with home-schooling my 15-year-old and 12-year-old while she was ill in hospital, but since we lost her, my mental health has really suffered.

"As I tried to grieve, Covid kept making things harder. My bills were going up because there was extra food to buy as the children were not eating in school. The heating and electricity costs went up and everything just got on top of me.

"The worry about the effect it is having on my children's education because they don't have a laptop each to do their schooling has made me so low. Being stuck at home because of Covid has made me and the children feel isolated. I had nobody to talk to and I couldn't face my debts."

'Debt time-bomb'

Rhiannon Evans, head of policy and campaigns at Citizens Advice Cymru, said: "We're really concerned that we're building up a debt time-bomb for people.

"There are various schemes in place to help people but as the pandemic progresses and we move out of those schemes, people will find themselves with a lot of debt they can't pay off.

"We've also seen worrying reports that some councils have started debt collection practises for council taxes again, even during lockdown."

There is an "inevitable link" between debt and mental health, Hafal says

A recent report by UK debt advice charity Stepchange said a "personal debt crisis" was emerging as a result of the pandemic.

Director Richard Lane said: "In Wales, much like the rest of the UK, we're seeing worrying levels of financial vulnerability concentrated among those hardest hit by the pandemic.

"In total £10.3bn of debt and arrears attributable to Covid has been built up across the UK, most often by those who were already struggling before the pandemic, such as renters, young people, single parents and low earners."

Earlier this week the Welsh Government minister for mental health and wellbeing, Eluned Morgan, said more than £10million had been made available through the Single Advice Fund to help resolve problems, which include debt and employment. Ms Morgan said more than 115,000 have already benefitted from the fund.

The Welsh Government is also piloting a scheme to refer people to Citizens Advice if they are in extreme need of help due to debt problems.

HM Treasury said it had invested more than £280bn throughout the crisis to protect jobs and businesses and provided the Welsh Government with an additional £5.2bn to respond the pandemic.

A spokesperson said: "As the Chancellor has set out, the Budget will be the moment to take decisions in the round and outline the next stages of our plan for jobs to support businesses and families.

"That has been our priority throughout the past year and it will be the priority for the year to come."

You can find information on organisations that may be able to help with debt problems on the BBC Action Line