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Councils 'need extra funding to offer payment holidays'

The government should provide extra funding to enable all local authorities to offer payment holidays on council tax, for those struggling to pay due to Covid-19, says the Money Advice Trust (MAT).

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The debt advice charity today (April 21) urged the government to take extra steps to close the remaining gaps in financial support for consumers impacted by Covid-19, including making new funding available for councils.


The charity is also supporting growing calls for the government to end the five-week wait for Universal Credit payments, which millions of households are now falling back on to get through the crisis.


On other measures, the MAT is calling for the government to:

• Instruct councils to pause arrears collection and enforcement action, for residents struggling due to Covid-19;

• Set up a dedicated hardship fund for self-employed people facing immediate financial difficulty, and extend income support to owner-directors who receive most of their income in the form of dividends;

• Take bolder action to help private tenants to meet their rent payments, by increasing the local housing allowance rate to cover 50 percent of average rents in each local area.


These demands emerged on the same day that a study, from Kantar, showed nearly four in 10 people who have been financially impacted by coronavirus have seen half their income or more wiped out. Other stats showed that nearly 140,000 firms, employing almost a million people, have applied for the Treasury’s furlough scheme, while John Lewis announced today that it was standing 14,000 staff down, amid fears sales will fall by a third.


The MAT, which runs National Debtline and Business Debtline, said that one month on from the chancellor’s unveiling of emergency measures to support incomes through the Covid-19 outbreak, debt advisers are increasingly hearing from people falling through the gaps of existing policies.


There have been no steps so far to deliver payment holidays for council tax bills or rent payments on any consistent basis – two bills that account for a significant proportion of outgoings for many households.


An analysis of calls to National Debtline and Business Debtline in the month since the chancellor’s announcement showed the impact of Covid-19 on household finances is already being felt, but the full effects are still to come – with debt charities expecting an unprecedented surge in debt problems in the coming months.


The MAT added that many people who work for themselves are facing immediate financial hardship, due to gaps in eligibility for the Self-employment Income Support Scheme and a delay in payments until June.


Joanna Elson, chief executive of the Money Advice Trust, said: “Debt advisers are hearing from people whose incomes have collapsed, who are worrying about paying the bills and in many cases simply cannot wait for support from government schemes to come through, even where they are eligible for help.


“People struggling with council tax bills, self-employed people facing immediate hardship and private renters are particularly at risk of falling into serious financial difficulty.”


Other debt advice organisations, including PayPlan, have also warned of the need for support when these temporary relief measures end.

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