Coronavirus: 80% of low-income families financially worse off since pandemic, new report finds

The coronavirus pandemic has left 80 per cent of low-income families in a worse financial position than before the crisis, a new report has found.

Child Poverty Action Group, which conducted the research alongside the Church of England, said that parents “have been living under a cloud of anxiety in lockdown” and warned of greater hardships to come if the government failed to take immediate action.

The report was based on a survey of 285 low-income families with children who are eligible for free school meals, and supplemented by 21 in-depth interviews.

Eight in 10 of respondents said they were worse off than before the pandemic because their income had fallen, or been lost due to job losses, while general living costs have risen. Half said they were “much worse off”.

More than three-quarters of families said the Covid-19 crisis has affected their ability to pay for food (83 per cent) and utilities (76 per cent), while around half said it has affected their ability to pay for housing (47 per cent) and child-related costs.

Even among those families whose employment had not been affected – including those who were not working prior to the pandemic – around two-thirds reported a significant worsening in their financial situation.

Although some respondents were positive about changes made to the benefit-claiming system, such as the temporary £20 uplift in universal credit, many reported that they did not feel better off as the new measures did not take into account the additional needs of children and was offset by increased living costs.

The Institute for Fiscal Studies has shown that grocery prices rose by 2.4 per cent in the first month of lockdown (over 10 times the rate in preceding months), though more recent analysis, based on data from the Office for National Statistics, suggests that the average price of all food and household items had fallen back to normal by early July.

Outside of matters of finance, almost half (48 per cent) of respondents said they had experienced physical or mental health problems during the pandemic, often because of money worries. Almost a quarter (23 per cent) had experienced relationship issues at home.