Almost half of all workers in Scotland had their pay cut as coronavirus hit the country, a new report has found.
The IPPR Scotland think tank spoke about the impact of Covid-19 on people’s finances – but also warned the pandemic would still pose a “significant threat to lives and livelihoods across Scotland for some time to come”.
The new Weathering the Winter Storm report told how coronavirus had “exacerbated financial insecurity for families across Scotland”, adding many more people were now affected by this.
It called for urgent action from the Scottish and UK governments to tackle the problem, urging Westminster to make the temporary increase in benefits permanent and also consider how it can provide “additional support for families with children”.
The Scottish Government is being challenged to invest a further £40 million to help low-income families with children this winter, with measures such as a new winter school clothing grant suggested.
The think tank also wants Holyrood ministers to work with lenders, energy providers, councils and housing associations to establish a Covid-19 arrears package – which could combine debt writes-offs and interest-free loans to help those who have built up arrears and debts in household bills during the pandemic.
The report found that just before the pandemic hit 220,000 households in Scotland – one in 10 – were behind on bills, with this rising to one in four among the poorest households.
Prior to the pandemic, 1.1 million people in Scotland (one in four) could cope for just one month or less if they lost their main source of income.
“From this starting point, the Covid-19 crisis has exacerbated financial insecurity for families across Scotland and drawn many more people into a state of insecurity,” the report said.
By May, IPPR Scotland said one in five people were concerned about their ability to meet their financial commitments in the coming months.
Just under half (45%) of workers in Scotland reported experiencing a drop in pay at some point between April and June.
It said: “The Covid-19 crisis began as a public health emergency. As the crisis has unfolded, however, its economic impact and its effect on household finances have become clearer.
“Covid-19 is a disease that has claimed thousands of lives in Scotland but it will see many other victims from its economic effects. Already, we have seen an economic contraction like nothing seen before in this country and across the world.
“As we look ahead to the rest of this year and the prospect of unprecedented levels of unemployment, it is clear that this pandemic will continue to pose a significant threat to lives and livelihoods across Scotland for some time to come.”
Rachel Statham, IPPR Scotland senior research fellow and one of the authors of the report, said: “Now that we can see the ongoing five-tier restrictions many will face through a Covid-19 winter in Scotland, further support is required to keep families afloat.
“Over a million people in Scotland went into this pandemic with only very limited financial reserves and this crisis has already tested families’ finances to – and beyond – breaking point.
“With likely further peaks of the virus and significant job losses across Scotland and the rest of the UK, there is now an urgent need to repair household finances across the country before winter hits.
“Without urgent action we could see families’ finances tip over, damaging the health and wellbeing of hundreds of thousands of people now, and damaging Scotland’s economic recovery over the long-term.
“We need to see urgent action from the UK and Scottish governments to go beyond the support already offered through the first phase of the crisis.”
A Scottish Government spokeswoman said: “We are aware of the financial impact the coronavirus crisis has had on many families, and are working hard to provide support for those who need it most over the winter.”
She said there had been an “unprecedented level of support during the pandemic”, adding: “We’ve created a £100 million support package to help people looking for work or those at risk of redundancy.
“This includes a job guarantee for young people, a new national retraining scheme which will support up to 10,000 people over the remaining months of this financial year, and more funding for immediate assistance and advice if people are made redundant.
“To help parents access jobs and increase their earnings we are making over £7 million available for our Parental Employability Support Fund in 2020-21, and have extended Fair Start Scotland for a further two years to March 2023.
“We have continually called on the UK Government to reverse welfare cuts which are hitting harder than ever, and to make fundamental alterations to Universal Credit, and urged them to maintain the recent £20 increase which is imperative if we are to stop more people being pushed into poverty.”