Why are church groups calling for a £5bn Covid-19 debt-cancelling fund?

We must make sure everyone can play a part in our society after the pandemic. We must ensure everyone can help to rebuild the economy and ensure everyone has access to the resources they need. Yet six million people in the UK have been swept into debt as a result of Covid-19, with the biggest increase in debt among the poorest households.

It is imperative to reduce the burden of debt that has been inflicted on people who are now struggling to make ends meet as a direct result of the Covid-19 crisis. Our Reset The Debt proposals would do that, providing vital support for millions of people like Leonie and Andrzej. They have been receiving advice from a money advice centre connected to the church and agreed to share their stories with their first name.

Leonie had been doing shift work through an agency for several years, but her work ended when lockdown began. She has no recourse to public funds and is now behind on her rent, water bills and council tax. Every day, she receives letters asking for repayment.

Andrzej was working as an Uber driver, but that work suddenly dried up in lockdown too, and his debts became unmanageable. He approached a church-based advice centre after he ended up sleeping on the streets.

People like Leonie and Andrzej have been hardest hit by the economic tsunami cause by the pandemic. People already on the lowest incomes have seen their incomes fall the furthest. At the same time, costs have risen due to having children at home during lockdown and having to pay more for basic groceries and services, when prices rose and supplies ran low.

Half of low-income families with children are behind on bills as a result of the pandemic, and six in ten have borrowed money, often just to pay for basics such as food. The past few months have been hard enough for all of us, but for those families who have lost income, and been saddled with unpayable debts and possible eviction, the pressure is unbearable.

To enable these families to get through the hard months ahead, and to prevent a tidal wave of families being made homeless in the spring, it is essential that the burden of unpayable Covid-19 debt is lifted. Our Reset The Debt campaign calls on the Chancellor to create a Jubilee Fund, to pay off unavoidable debt accrued by households during the pandemic, releasing them to face and help shape the future.

It quickly became clear that we are not all in the same boat in this pandemic – but what we can do is make sure everyone’s vessel is watertight, so we all stay afloat. We should all pull together to navigate a way through the Covid storm. That is the litmus test for a just and compassionate society. The Government has come up with many new approaches and solutions. Nobody would have imagined it would pay the wages of more than nine million people, but it did. Nobody would have believed it would fund accommodation for rough sleepers in the spring, but it did.

The emergency response remains incomplete, however, and if we do nothing to address the millstone of household debt, which risks overwhelming millions of people on low incomes.

The Reset The Debt campaign is inspired by the biblical principle of Jubilee – an ancient practice of debt relief so that nobody was forever bound by an unshakeable burden of debt. This year has brought immense suffering and hardship for many, so we too must act to ensure the debts unavoidably incurred by low-income families this year do not weigh them down for years to come.

The Government has spent more than £240 billion supporting employers, employees, jobs and services, but the return on that will only be maximised if all of us are able to participate in the economy. A £5 billion Jubilee Debt fund would be a sound investment in protecting the lives and boosting the economic power of low-income households. More importantly, we would be making a fresh start possible for millions of families swept into debt by Covid-19.

The Big Issue is fighting the unemployment crisis through the Ride Out Recession Alliance, bringing together the most innovative ideas and experts to help keep people in work and in their homes during the recession. Get in touch with what you think can be done to support those in need by emailing rora@bigissue.com.

Niall Cooper is the director of Church Action on Poverty