10 mins
Cash after Coronavirus
IT seems strange to think there was ever a time before Covid-19 and the restrictions it has imposed on all of our lives.
For some people, the shutdown has meant great inconvenience – that special night out cancelled, or a holiday lost.
But for others it’s had a much more drastic effect – lost jobs; lost income and sudden insecurity in their lives.
The Rev Iain May is minister at Edinburgh: South Leith but has significant banking expertise, having been a senior international banker prior to his call to the ministry. He used his expertise to help set up the Castle Community Bank.
“Tens of thousands of people throughout Scotland and the UK, are at risk of losing their jobs when our country lifts itself out of lockdown and the Government’s Job Retention Scheme is ended in October,” he said.
“The government has supported many companies and individuals through these challenging times, but once the support is ended, people in all our communities will face difficult choices. With little or no money coming in, hard choices will need to be made. Not easy choices, ones that unfortunately will hit the lowest paid and people on zero hour or fixed hour contracts the most.
“Therefore, it is crucial that those most affected are supported and given the right advice to ensure they keep a roof over their own and their family’s heads, food on the table, and keep themselves warm and healthy. Not always easy if, at the end of the week or month, you look at the bank balance and see that after doing all the above, there is nothing left to service any debt or pay bills that seemed so essential in normal times.
“Recent research carried out by the Resolution Foundation found that, during the Covid-19 lockdown, lower-income households are using their limited savings and borrowing money to get through and pay the household bills. However, higherincome households are actually increasing their savings and reducing debt, as they are not eating out as much, going on holiday, spending on theatres, cinemas and entertainment. How the other half live!
“For many, losing their main source of income will be devastating, especially when it comes to servicing personal debt. The average person in the UK has around £24,000 of unsecured personal debt. Debt on credit cards, car loans, personal loans and overdrafts. This has increased significantly during the recent crisis. Yet 30% have less than £600 in savings, 1 in 10 have no savings at all!
“What advice and help should be given if you or someone you know finds themselves in such a situation?
“First and foremost, the first step is to put a hand up and say ‘I have a problem’. Speak to lenders, explain the situation. All reputable and responsible lenders want to listen and help, if you are open and honest with them. Most lenders will be sympathetic and will want to work with you, to reschedule your debt, perhaps extend payment holidays, until you are back on your feet.
“What you should not do is take out more debt through loans or maxing out any credit cards. Do not be tempted to take out an expensive payday loan, as doing so will only delay facing up to the problem, increase the amount owed and will add to the stress and worry.
“There is lots of free advice that can help those in a difficult financial situation.
“The government debt advice service, National Debt Line (www.nationaldebtline. org) offers free online advice and has an excellent guide on how to deal with debt: https://www.nationaldebtline.org/ SiteCollectionDocuments/how-to-dealwith-debt.pdf
“Citizens Advice Scotland (www.cas.org. uk) has volunteers who can help people who are struggling with their finances. They will speak with creditors, and give the expert advice required.
“Christians against Poverty -CAP (www. capuk.org) is a Christian debt charity that will work with those in financial difficulties, supporting in a non-judgemental way and helping people get out of debt and rebuild and restore some stability in their lives.”
What can the church, as a caring community, do to help?
“First and foremost we all need to be there for anyone who comes seeking support. Knowing all the answers is less important than having a caring, listening ear. The church and those within it have numerous connections and will be able to signpost to where help is available.
The government has supported many companies and individuals through these challenging times, but once the support is ended, people in all our communities will face difficult choices. With little or no money coming in, hard choices will need to be taken.
Photo: iStock
“Hopefully, many reading this article will not find themselves in such a situation. Unfortunately, in the coming months, this will not be the case for many in our communities. If the church has a voice in all this, which it does, now is the time to use it. Ensure we are there for those who seek help and with a gentle, non-judgmental voice we can walk alongside those crying out, offering a caring hand, the compassion and practical help that is at the heart of what we are and can do.
“Then perhaps the burdens and worries that many will carry, in the weeks and months ahead, will be eased, will be lessened, will be shared, as our Lord has asked us to do, as he has done for us.”
Hilary Sams is CEO of the Churches Mutual Credit Union (CMCU). She concurs with Iain.
“‘We’re all in the same boat’. How many times have you heard that over the last four or so months?
“While this might have started out as the motto of the pandemic, it soon became clear that it was not fit for purpose and was quickly revised by many to ‘we’re all in the same storm but we’re not all in the same boat’.
“Financially, Covid-19 has impacted on us all in a variety of ways. For those who have not experienced furlough or any reduction in income, there may even have been savings through reduced costs and limited opportunities for non-essential shopping. But for many, there has been an increase in day-to-day expenditure, for example in less scope to ‘shop around’, alongside reduced income and more anxiety about long-term financial security.
Photo: iStock
“Undoubtedly, people with savings and free of the burden of high cost credit have fared better during this crisis. While the return on savings has fallen to an all-time low, the safety net of a savings pot, rainy day money as it is sometimes known, has been a real blessing in the coronavirus downpour. Likewise, those who are fortunate enough to have avoided the trap of high cost credit have managed better in accommodating a decrease in household income. Various measures introduced by both the UK and the Scottish governments have helped individuals deal with their credit commitments during the pandemic however in many cases this has merely postponed the time when these debts will need to be addressed.”
Hilary foresees some difficult times ahead.
“Looking forward, what will we have learned about financial resilience as we emerge from lockdown? For employers, it is that whether it is introducing screens and safely visors, facilitating home working or implementing new shift patterns, they are active participants in their employees’ welfare and this no longer ends with paying a living wage or providing favourable working conditions.
“As well as ensuring physical health and safety, employers can be proactive about improving their employees’ financial wellbeing to benefit their physical and mental health.”
Since 2015 CMCU, an ecumenical organisation that has members from five denominational churches in Scotland, has provided ethical savings and affordable credit for ministers, elders, employees and trustees of the Church of Scotland. The Church of Scotland and CrossReach are significant employers, and they have led by example through payroll deduction schemes for their employees.
“Payroll deduction is by far the simplest way to start saving,” says Hilary, “As the funds are deducted and sent to the credit union before it reaches the employee’s bank account. Credit unions such as Churches Mutual are ideally placed to respond to the level of financial anxiety that has occurred during the pandemic and to respond in a people before profit way.
“As one member told us: ‘It can often feel that no one cares if and how you will survive. Sometimes, it can feel so demoralising that you wonder if you shouldn’t just give in and give up. Thank you for coming alongside us, and providing us with crucial support just when we needed it most’.”
Professor Charles Munn OBE FCIBS, is a church elder at Dalgety Parish Church in Fife and was chairman of the Special Commission on the Purposes of Economic Activity which reported to the General Assembly in 2012.
“The economic impact of the coronavirus has been mixed. Many people, such as pensioners, have reasonably secure incomes. So their income has not been affected. What has changed is their ability to spend it,” he says.
“With shops, restaurants and pubs, theatres and cinemas all closed many people have been building up healthy balances on their savings accounts. Online stores have done well as people have resorted to buying goods, even their food, over the internet. And many have used the interruption to their spending habits to pay off their debts and we have witnessed, for example, a large reduction in credit card debt.”
But it’s not all been positive, he says.
“People placed on furlough under the government scheme have been receiving 80% of their normal income and, given the lack of opportunity to spend their money, have probably managed to fare quite well.
“But this is not the whole story. As we know, many people in employment before the virus struck were struggling to make ends meet. We know that lots of people, legally defined as being poor, were actually people who had jobs but whose income was insufficient for them to meet their family’s needs. Losing 20% of their income on the furlough scheme will have hit them hard. The greatly increased demand for the services of foodbanks during lockdown is one measure of this.
“As the lockdown is gradually eased, and the furlough scheme is wound down, there are already signs that many people will lose their jobs. Estimates for the scale of the unemployment to come vary widely but there are fears that it will rival the level of unemployment experienced in the 1980s.
Online stores have done well as people have resorted to buying goods, even their food, over the internet. And many have used the interruption to their spending habits to pay off their debts and we have witnessed, for example, a large reduction in credit card debt.
“The government has already announced plans to pump prime the economy and so address at least part of the problem. The newly announced money for housing insulation is a case in point. Time alone will tell how successful this will be.
“The other hope is that the economy will recover quickly from the current depression. Again opinions vary widely on how likely this is to happen. It is certainly clear that very many businesses are keen to get up and running again. What will help is if a large number of us get out and start spending the money we have saved during lockdown. “It is time to build that conservatory, buy a new suit, have a staycation and go out to celebrate all the birthdays and anniversaries that you have missed during lockdown. Above all, don’t forget to make up for all the Sunday offerings that you have missed.”
And he addresses the big question. The one that’s quietly bothering everyone, from the shop assistant to the Prime Minister.
“What if it happens again?
“There can be no doubt that many people were caught by surprise when lockdown was announced and were financially unprepared for it. The financial culture that we have developed over the past fifty years is to blame. We are no longer a nation of savers. We have become a nation of spenders addicted to credit. The only thing that will help us deal with the problems of another such crisis, or any other set of problems, apart from the welfare state, will be a healthy store of ‘rainy day’ savings.” ¤
For more information about CMCU, visit www.churchesmutual.co.uk
This article appears in the September 2020 Issue of Life and Work
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