Two Million Parents Couldn't Work While Schools Were Closed
Over two million parents fell into debt during the pandemic as they couldn’t work while schools were closed.i
New research from TransUnion – one of the UK’s leading credit reference agencies – reveals how parents were forced to stop working when schools shut their doors, racking up £840 million of debt in the process.ii
It would seem that the divide between rich and poor is widening, as many UK adults have grown their savings during the COVID-19 pandemic, while others are struggling to keep on top of their finances. Parents have been hard hit, with 2.1 million saying they have been unable to work due to childcare, and 1.6 millioniii getting into debt supplementing their child’s education with tutors.
Altogether, 27% of UK consumers have accumulated an average debt of nearly £400 each, totalling £5.7 billion debt since the first lockdown.iv
And the findings show one in four adults (25%) feel uncomfortable with their current amount of debt – which has almost doubled as a result of the ongoing health crisisv – whilst one in 10 say their finances won’t recover until at least 2022.
Meanwhile, one in three UK consumers (35%) have increased their savings during lockdown. This is likely down to them being more frugal when it comes to spending (26%) and limiting bigger purchases (16%).
Kelli Fielding, TransUnion’s managing director of consumer interactive in the UK said: “Our researchvi tracking the ongoing financial impact of the COVID-19 pandemic on UK consumers – including 37% who are financially responsible for children – gives a polarised view. On the one hand, over half those surveyed are feeling positive about the future (54%), but at the same time, four in 10 say their household income is currently being negatively impacted (38%). Parents and families have had particular challenges as a result of childcare needs and school closures, which have proved costly as these figures show.
There is evidence, however, of better financial understanding – with one in three UK consumers saying the pandemic has made them more aware of their spending (33%) – and half (50%) monitoring their credit score at least monthly, up from a third (33%)vii at the start of May 2020.
Kelli Fielding adds: “It’s great to see that over half of consumers (51%) think their credit score has either stayed the same or improved over the course of the pandemic but it’s a concern that a quarter have never checked it. Being familiar with your credit profile is essential when it comes to managing your financial standing and understanding what your options are in terms of accessing finance and managing your debt.”
i 4% of UK consumers have gotten into debt because they haven’t been able to work due to childcare. According to latest ONS Figures, the current UK adult population is 52,673,433, which means 2,106,937 have been affected
ii 2,106,937 consumers have collectively accumulated a sum of £841,089.250, based on average debt of £399.20
iii 3% of UK consumers have got into debt due to supplementing their child’s education with tutors. Based on current ONS adult population figure of 52,673,433 this would equate to 1,580,203
iv 27% of UK consumers have accumulated some level of debt in the past 12 months, at an average of £399.20. According to ONS, the current UK adult population is 52,673,433, meaning 14,221,827 consumers have collectively accumulated a sum of £5,677,353,338
v According to the research, UK consumers had a total of £841.70 of debt on average, which had increased by £399.20 in the past 12 months
vi TransUnion’s Consumer Pulse research (formerly the Financial Hardship Study) commenced in March 2020. Based on data collected 5 - 9 March 2021 from 1,100 UK consumers on behalf of TransUnion
vii Based on a survey of 1,007 adults in the UK, conducted 4 – 5 May 2020 on behalf of TransUnion