Advice NI dealt with arrears of £28m in 2020 and fears worse is to come
Around 60,000 Northern Ireland workers run the risk of redundancy at the end of this month when furlough finishes, it can be revealed.
Advice NI issued the dire warning following the recent and upcoming withdrawal of government Covid-19 support measures, along with rising costs of living, as well as soaring energy costs.
It comes at a time when cuts in the controversial Universal Credit scheme are set to plunge thousands of people into poverty this autumn.
Last year, Advice NI said it dealt with £28m of debt incurred by local people, adding that it expects 2021 will be considerably worse.
The debt advisory service also told the Belfast Telegraph that, in one case, an individual sought help for arrears of over £26,000.
Sinead Campbell, head of the Money, Debt and Quality team at Advice NI, said budgets that were already stretched by the pandemic are being dealt another blow in terms of higher bills and rising costs.
“Households across Northern Ireland are now facing further pressures with the upcoming withdrawal of government Covid support measures,” Ms Campbell said.
“This financial stress is compounded by a rising cost of living, including soaring energy costs.
“In addition to this, proposed Universal Credit cuts could plunge many into poverty this autumn.”
Ms Campbell said existing and future debt problems pose “a very real problem” due to “upcoming job losses coupled with the general increase in our cost of living”.
“As Northern Ireland’s largest advice charity and a leading debt advisory service our members at Advice NI seek to help households across Northern Ireland to navigate their way through debt by seeking advice to help resolve it as quickly as possible,” she added.
“The Furlough scheme is due to conclude at the end of September, placing many of the 60,000 Northern Ireland workers currently on furlough at risk of redundancy.
“Other government Covid support measures, such as mortgage, personal loans and credit card Covid payment holidays, came to an end in recent months and bounce back loans are now due for repayment.”
The cost of living is rising across the board for householders in Northern Ireland, with motorists also reporting a massive dent in their wallets as the price of petrol and diesel climbs ever higher.
Shoppers have also noted a hike in grocery bills as the cost of putting food on the table continues its upwards spiral.
Unprecedented global increases in wholesale energy costs also mean that many providers in Northern Ireland have already witnessed a 10% plus hike in bills, stretching straightened household budgets that may already be finding it hard to make ends meet because of the pandemic.
Others are set to increase prices by 9% from today. Gas bills could increase by more than £100 a year and many households could be at risk of fuel poverty this winter.
“As support measures are withdrawn and households feel the true financial impact of the pandemic, the cost of living is increasing,” Ms Campbell said.
“Unprecedented global increases in wholesale energy costs have prompted many electricity providers in Northern Ireland to increase prices by over 10%, significantly impacting households that may already be struggling.
“Gas providers are expected to announce increased prices in the coming weeks.
“This could mean that the annual electricity bill for a one or two-bedroom house or flat increases by a minimum of approximately £36 and the bill for a three- or four-bedroom house increases by a minimum of around £53,” she added.
Ms Campbell urged anyone who is finding it difficult to manage to seek free and confidential debt advice from expert advisers.
“It’s important that households across Northern Ireland know that they don’t have to face financial strain and debt alone,” she added.
Advice NI shared one scenario with this newspaper by way of explaining how they can help people who are struggling.
In this case, a self-employed business person contacted the service with arrears of more than £26,000.
This individual had a take-home salary of around £2,000 a month in the days before the pandemic. Covid-19 meant a loss of trade and subsequent reduction of more than £550 in monthly income.
The homeowner had accrued the debt in a range of ways — by using credit cards, taking out a personal loan, as well as catalogue spending, and various ‘buy now pay later’ agreements. There was also a business loan totalling almost £6,000 that had to be repaid.
In addition to spending more on day to day essentials, the individual told Advice NI that they had bought household goods and furniture on credit and had been confident of making the repayments comfortably before the pandemic struck.
The client, who had shelved the repayments during lockdown, sought help because they were worried about not being able to resume them in the short term when the repayment holiday ended.
Ms Campbell said that Advice NI’s debt service dealt with over £28m of debt in more than 7,500 agreements in 2020.
“This could become worse as 2021 progresses,” she said.
“Advice NI and its member network can offer free, confidential and local advice to families that may find themselves struggling with debt.”