OVER a fifth of usual household spending has not been possible during the lockdown, new figures from the Office for National Statistics (ONS) has found. It comes as nearly a quarter of British households say their household finances have been affected by the crisis. The latest figures are based on average household spendings in the […]
OVER a fifth of usual household spending has not been possible during the lockdown, new figures from the Office for National Statistics (ONS) has found.
It comes as nearly a quarter of British households say their household finances have been affected by the crisis.
The latest figures are based on average household spendings in the financial year ending in March 2019.
On average, UK households spent an average of £182 a week on leisure activities, such as holidays, travel and meals out.
But almost all of these activities have been shut down in the first few months of the 2020 financial year due to the government’s lockdown.
The ONS suggests that households could be putting the cash they’ve not spent – equal to 22 per cent of the weekly budget (£831) – into savings or using it to cover any loss of income due to the pandemic.
But it warned that younger households, renters and those living in London are the hardest hit financially by the outbreak.
This is because they typically spend more of their weekly budget on essentials so aren’t saving as much cash in other areas.
It also puts them at risk if their income is cut by either job losses, reduced hours or furlough.
And what’s worse, workers that fall into this category are less likely to benefit from payment freezes, such as on mortgages, credit cards and personal loans, which is saving households around £173 a week.
For example, on average more than half (53 per cent ) of the usual spending covers essentials such as food and housing costs.
Job Retention Scheme
This allows employers to put their workers on furlough, and the Government will subsidise 80 per cent of their pay – up to £2,500 a month.
For those in between jobs, they can be rehired by their old employer and furloughed.
Statutory Sick Pay
Workers not eligible for sick pay – such as casual workers – can claim SSP of £94.25.
Employers will be reimbursed out of the public purse.
Small business loans
Small businesses hit hard by the lockdown can access loans, overdrafts, invoice finance and asset finance of up to £5million for up to six years.
Businesses must have a turnover of up to $45million to qualify.
Rate cuts
All businesses in the retail, hospitality and leisure sectors in England will not have to pay business rates for the 2020/2021 tax year.
Cash grants
Businesses who get the rate relief who have a rateable value of less than £51,000 will be eligible for a cash grants of £10,000 or £25,000 per property.
Businesses in the retail, hospitality and leisure sectors with a property that has a rateable value of up to £15,000 will receive a grant of £10,000.
Delayed VAT payments
If you’re a UK VAT registered business and have a VAT payment due between March 20, 2020 and June 30, 2020, you can defer the payment until March 31, 2021.
Universal Credit
If your circumstances have changed as a result of the coronavirus crisis, for example, you’ve lost your job, you may now be eligible for Universal Credit.
The minimum standard allowance is £342.72 a month.
Council tax discounts and payment holidays
Working age people who get Council Tax Support will be able to get £150 a year off bills.
Some councils are also offering payment holidays – so get in touch with yours if you’re worried about meeting payments.
Rent and mortgage holidays
The Government said landlords in England and Wales can’t evict tenants until September 30, 2020, and it may extend this deadline if need be.
Mortgage lenders have been told by the government to offer a three-month “mortgage holiday” for those in financial difficulty due to the outbreak.
But renters typically spent 61 per cent of the weekly budget on essentials, compared to 52 per cent who own their own home.
Research by the Resolution Foundation found that the youngest and oldest workers have seen their income drop because of the pandemic as they’re more likely to be made redundant or put on furlough.
But younger workers’ finances are suffering more than older members of staff who are going through the same trouble.
This is because households of under 30-years-old spend around 58 per cent of their weekly budget on essentials, compared to those between the ages of 65 and 74 who spend around 43 per cent to cover essential outgoings.
In London where property prices and rents are the most expensive, a typical household spends 58 per cent of its weekly budget on essentials and just 20 per cent of wages on things like holidays and meals out.
This puts them at a disadvantage, leaving them with limited wiggle room if their income was to drop.
“While evidence suggests that both the youngest and oldest workers have been hit by furlough and job losses, younger households are less likely to have enough savings to cover a loss of income and less likely to be able to cut back on spending,” the ONS said.
The damning research is a kick in the teeth for young people who were already struggling with low interest rates on savings and house prices that outstripped wags.
The Office for Budget Responsibility (OBR) previously predicted that unemployment could rocket to 3.4 million following lockdown and the deficit may spiral to £218billion this year.
The figures also estimated the worst GDP slump in a single quarter since records began in 1908.
More to follow…
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