Single parents struggled financially the most during lockdown
In November 2020, the extra debt taken on by single parents amounted to 44% of their monthly household income. The number of single parents who saw their debts go up is almost three times higher than households without children (4%).
The figures have been revealed in a report by Compare the Market titled The Uneven Impacts of the Covid-19 Crisis, in collaboration with the Centre for Economics and Business Research (CEBR).
The report reveals the stark difference in the way various groups and regions have experienced the pandemic in relation to wealth and financial security.
According to Bank of England data, outstanding consumer credit fell significantly during 2020 but the research shows that this decline was mainly driven by households without children. Those who could pay back money reduced their debt by an average of £712 – more than three times the amount that single parents were able to pay back (£219) – during the first national lockdown.
This gap narrowed slightly during the second lockdown in November when households without children paid back an average of £448 compared to £290 amongst single parent households – a difference of £158.
According to the report, less than a third (31%) of single parent households were able to save any of their income during July 2020, dropping to 29% during the second national lockdown in November 2020.
By contrast, nearly half (49%) of households without children were able to save some of their income in both July and November 2020.
Amongst those who could put money aside, single parent households were able to save £68 a month on average, significantly less than those in two-parent households (£235) and in households without children (£239) during November 2020.
More than a third (39%) of single parent households were deemed financially insecure during November 2020, meaning they estimated that there was at least a 20% chance they would face difficulties paying their bills over the next three months.
This compares to 22% of two-parent households deemed financially insecure and 18% of working-age households without children in the same period.
Ursula Gibbs, director at Compare the Market, said: “Although lockdown is slowly lifting, it doesn’t mean that the financial impacts of the pandemic are coming to an end. This research shows just how wide the gulf has become between those with and those without childcare responsibilities when it comes to managing finances. This gap needs to be recognised and addressed if we are to ensure that the pandemic does not further exacerbate existing inequalities.
“While most households were able to pay down their debts during the pandemic, there is a significant minority who were forced to borrow more money just to stay afloat. Single parents especially are facing higher costs, higher debt and are less able to save, and this will continue to place a considerable financial burden on these families for some time.
“There are steps individuals can take to keep on top of their household finances and manage any extra debt they may have taken on. Charities like Citizen’s Advice and the Money Advice Service can also offer free and confidential support.”