Advertisement
BUY A WINTER SUPPORT KIT & CHANGE A VENDOR’S LIFE
BUY NOW
Social Justice

Half of people using food banks are stuck in debt to the government

Researchers heard that people using food banks found private lenders easier to repay debt to than the government.

Debt demands from the government are pushing household finances “over the edge” and driving people to food banks, experts have warned.

New research from the Trussell Trust detailed the impact of government debt on people already living below the breadline. Nearly half (47 per cent) of people using the organisation’s food banks in 2020 owed money to the government, up from 28 per cent two years prior.

A mixture of repaying advanced loans given to cover the five-week wait for a first universal credit payment, council tax arrears, and the repayment of tax credits – most commonly overpaid due to government administrative errors – meant central and local governments were the most common creditor reported by people relying on emergency food parcels.

Speaking at a cross-party event examining the relationship between debt and demand for food banks, Jonathan Ashworth – Labour’s shadow work and pensions secretary – said: “It is self-defeating that the system is placing this burden of debt on people. 

“Dealing with the five-week wait [for universal credit] would be an immediate priority.”

Ashworth emphasised that he has a “mission to be the secretary of state who ends the need for food banks”.

Advertisement
Advertisement
Article continues below

Trussell Trust and Humankind Research worked closely with 48 people who have experience of being in debt to the government to identify the impacts and solutions to the problem.

Households making mandatory repayments to the government were often pushed “over the edge into not being able to afford essentials, with no route out,” the researchers heard. People experiencing mental health conditions, facing social isolation or trying to make ends meet while in precarious work were disproportionately harmed by being in debt to government sources, according to the report.

Many said they found private lenders easier to deal with than the government because they were clearer about how much was owed and more flexible in their repayment options.

“With other debts you would have all of this [information] but with government debts you don’t get any of that,” David, a 43-year-old participant, told researchers. “It has an impact not just financially but also on your mental health.”

The study found evidence that debt was having an emotional impact on food bank users, often made worse by the fact that they owed money to the government “which many hope would be a trusted source of support” but which is “failing people so severely”, researchers said.

People facing deductions from their universal credit were around twice as likely to have gone without food, toiletries and utilities in the month leading up to the study compared to other benefit claimants.

Researchers put this down to the rate of working-age benefits, which they said is so low that any deductions at all can push people into destitution.

That included people at food banks who were repaying debts which came about due to DWP error and overpayment rather than their own.

“It’s really bad,” 47-year-old Molly told researchers. “You provide all the correct information. They make the decisions. They make the cock-up. Then you’re penalised for it.” 

Ed McDonagh, senior public policy advocate for debt advice charity StepChange, said the findings reflected what advisers were seeing on the frontline – with over half of clients with benefit overpayment debts unable to cover their essential costs.

Responding to the research, Conservative MP Nigel Mills said there was a case for cancelling debts built up over two years as a result of overpayments, if they were through no fault of the claimant.

He also called for plans to be put in place to help people who couldn’t afford to repay debts to the government as well as a more generous approach to benefits as the UK emerges from the pandemic.

Advertisement

Change a vendor's life this Christmas and beyond

Buy a Big Issue Winter Support Kit for £34.99, you’ll receive four copies of the magazine and vendors could receive immediate tools for survival plus access to vital training and employment pathways to escape poverty for good.

Recommended for you

Read All
DWP faces 'crisis' as staff driven to 'depression' and 'sickness' amid mounting pressure
Department for Work and Pensions

DWP faces 'crisis' as staff driven to 'depression' and 'sickness' amid mounting pressure

Number of homeless refugees in Cardiff doubles amid surge in Home Office asylum evictions
Refugee Homelessness Crisis

Number of homeless refugees in Cardiff doubles amid surge in Home Office asylum evictions

Disabled people are cancelling Christmas because they can’t afford it: 'We can't wait another winter'
Cost of living crisis

Disabled people are cancelling Christmas because they can’t afford it: 'We can't wait another winter'

UK's economic stagnation has left households £4,300 poorer – but there's a plan to fix it
Cost of living

UK's economic stagnation has left households £4,300 poorer – but there's a plan to fix it

Most Popular

Read All
Renters pay their landlords' buy-to-let mortgages, so they should get a share of the profits
1.

Renters pay their landlords' buy-to-let mortgages, so they should get a share of the profits

Exclusive: Disabled people are 'set up to fail' by the DWP in target-driven disability benefits system, whistleblowers reveal
2.

Exclusive: Disabled people are 'set up to fail' by the DWP in target-driven disability benefits system, whistleblowers reveal

Here's when people will get the cost of living payment in 2024
3.

Here's when people will get the cost of living payment in 2024

Citroën Ami: the tiny electric vehicle driving change with The Big Issue
4.

Citroën Ami: the tiny electric vehicle driving change with The Big Issue