Even before Covid hit, household debt looked grim. In Q3 2019 it stood at 126.8% of household disposable income. The Financial Conduct Authority reported that 12% of UK adults (5.9 million people) had no savings and investments at all, and a further 37% (19.1 million people) had savings or investments of less than ¬£10,000; meaning that almost half of UK adults either had no savings or less than ¬£10,000 saved. In particular, of those in the most vulnerable financial category, 3.7 million said that their household could only continue to cover living expenses for under a week if they lost their main source of income. 2014 research by the Competition and Markets Authority suggested that the average payday loan is for around ¬£260, lent over 30 days. Reasons for these loans fell into three categories. While some were used to finance living costs, they were most often used for emergency expenses including the repair or replacement of cars, boilers, and white goods. The other major category was seasonal, particularly the need to buy Christmas presents, or new school uniform and shoes for a new term. Very few were for more frivolous expenditure like holidays or luxury goods. This suggests that a cushion of just ¬£300 savings might enable most households to avoid these kinds of emergency loans. Then Covid hit, catapulting many more of the vulnerable into debt and Foodback usage has skyrocketed. Even Unicef is having to feed our children now. Lockdown also suppressed high-street spending and the incomes on which charities rely to raise funds to help out the vulnerable and those affected by misfortune. Many in the performing arts have also lost their ability to earn money through lockdown. Is there a way to address all of these problems in one simple policy move?
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