This is the third blog in our series looking at the State of Hunger (2021), diving into key themes arising from the landmark study, and looking at their impact in focus.
As our previous blogs have shown (here and here), people need to turn to food banks when they are forced to live on extremely low incomes. One of the many consequences of this, is the very high level of debt among people needing to turn to food banks. This creates a vicious circle for those individuals and families living on very low incomes who are forced to take on debt to pay for the essentials, with that debt in turn keeping them locked them in poverty.
It is hard to find someone needing a food bank who is not living in some form of debt.
On the eve of the pandemic, 90% of households surveyed at food banks were in debt, and a clear majority (60%) of households had both unpaid bills (e.g. electricity or rent) and owed money on loans (e.g. a bank loan, or a loan from friends or family). This puts debt problems well above those for working age adults in the general population (6%) and working age adults in relative poverty (15%).
The fact that many more people at food banks are in debt compared to people in relative poverty highlights the particularly deep form of poverty which people at food banks are experiencing; almost all people referred to food banks are destitute, meaning they are unable to afford the basics. For certain groups these problems are even more acute. For example, households affected by disability are more likely than other households arriving at food banks to be in debt, to have accrued multiple debts, and for a higher proportion of their income to be swallowed up repaying these debts. This isn’t right.
During the pandemic, many people have found themselves needing to take on extra debt – this risks a ticking time bomb, particularly since England’s evictions ban ended.
State of Hunger has shown how the economic impact of Covid-19 has compounded the severity of debt people referred to food banks are facing across the board. In early 2020, a fifth (21%) of people needing to turn to a food bank were in arrears on three or more bills, but this rose to a third (33%) in mid-2020.
During this time period, rent arrears have remained the most common type of arrears households at food banks have found themselves in, at around four in ten of those surveyed across the last two years. Food banks are likely to increasingly support people with rent arrears, with the Resolution Foundation estimating that the current rates of rent arrears are at least double the pre-Covid-19 ‘norm’.
This makes the ending of the eviction ban in England in June, particularly troubling, and without further financial support this risks pushing many into homelessness and in turn makes them more likely to need to turn to a food bank to get by.
The most striking change since the pandemic hit has been the dramatic increase in the burden of government debt on people at food banks.
One particularly shocking finding from State of Hunger, was the sharp increase in the share of people at food banks owing money to the Department of Work and Pensions, from 26% in late 2018 to 38% in early 2020 and 47% in mid-2020.
This debt has been driven by design features of the social security system, particularly the five week wait for a first Universal Credit payment, and the debt generated by taking on an advance payment to cover the wait. With record numbers of people moving onto Universal Credit, there has been a record number of people hit by this form of debt.
The result is that it is now more common for people arriving at food banks to owe debt to the government than to private lenders or family and friends. This should be raising alarm bells across government and civil society, and prompt a rethink of the five week wait and the approach taken to the repayment of advances in particular.
The UK Government has the power to lift the burden of debt facing people at food banks. It requires targeted efforts to minimise debts people are forced to take on as part of their benefit claim, and ensuring that people facing destitution are not forced to repay debts they simply cannot afford.
This is crucial to ensuring we all have a strong enough lifeline when we face hard times, and to move a step closer to ending the need for food banks in the UK.