Politics

Sturgeon warning: Disaster for Scotland as ‘personal debt ‘timebomb’ alert issued

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A Mark Diffley Consultancy and Research survey commissioned by Citizens Advice Scotland (CAS) showed 27 per cent were concerned about making debt repayments during the coronavirus crisis. Meanwhile, a quarter of Scots remain concerned about paying utility bills and paying their rent (24 percent and 26 percent respectively).

As well as this, 20 percent were concerned about paying for food and essentials and 35 percent about their income.

CAS Scotland warned as the furlough scheme is reduced, debt payment holidays end and job losses become more significant, it could cause a large increase in the number of people being unable to manage their debts.

Myles Fitt, CAS financial health spokesman, warned while support schemes during the lockdown have been welcome, managing the situation as these begin to lift will “require thoughtful and significant intervention”.

Following the survey, he added: “The issue is most often a result of insecure or low incomes which are simply not able to keep pace with the cost of living.

“While concerns about unemployment have understandably replaced it for the time being, the issue of personal debt will become a real challenge in the coming months and years.

“An income shock from a job loss or reduced pay, combined with the cost of arrears such as council tax, housing or energy bulls built up due to COVID-19 payment holidays, will put individual and household finances under extreme pressure.

“Our fear is that many households will fall into unmanageable debt, causing financial hardship and pushing more people into poverty, or exacerbate existing poverty.”

Kate Forbes MSP, Scottish Finance Secretary has asked for a National Debt Plan to help support Scotland’s response to the coronavirus pandemic.

READ MORE: Scotland TERRIFIED: Fears of Brexit economic chaos

In a letter to Chancellor Rishi Sunak, Ms Forbes said the debt proposals would help households “experiencing financial hardship”.

In the letter, Ms Forbes, said: “It is clear that there has already been a significant and widespread increase in debt as a result of COVID-19.

“This affects all parts of society, not just government.

“We need a National Debt Plan to deal with this in a way that promotes fairness as well as economic recovery.

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“For households, this means working with lenders to ensure that loan, mortgage and rent holidays can be extended to those experiencing financial hardship as a result of COVID-19 and that alternative payment plans are put in place to help prevent people losing their homes.”

Ms Forbes also wrote to the Treasury to ask to borrow up to £500million more to deal with the impact of coronavirus, as well as having greater flexibility over its capital budget as Holyrood suffers a funding shortfall.

The calls come after figures show that Scottish GDP fell by 18.9 percent in April, the highest drop on record.

Political poll expert Mark Diffley, who undertook the survey, added: “Of additional concern is the finding that, once again, it is apparent that the highest levels of concern are recorded from those in the poorest socio-economic groups who are least likely be able to bear the financial burdens which they are facing as a result of the virus.”

In a recent report, the Scottish Government also said that growing numbers of people were seeking advice.

The Tackling Problem Debt Advice report recommended the setting up of a national debt service which is focused on the users.

The survey ran between 24th and 29th June 2020 and received 1135 responses from Scots.

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