Covid-19
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Living standards

Pandemic Pressures

Why families on a low income are spending more during Covid-19

Mike Brewer
Mike Brewer
Ruth Patrick
Ruth Patrick

This note explores why so many low-income families report spending more, not less, since Covid-19 gripped the nation in spring 2020. It brings together the findings from two online surveys of a representative sample of working-age adults in the UK fielded by the Resolution Foundation in May and September 2020, and a number of vivid accounts from parents and carers themselves, drawn from the ongoing ‘Covid Realities’ participatory research programme.

Families on low incomes are adept at managing on a limited budget, often finding creative, if time-intensive, ways to get by. When the pandemic hit, however, many of these strategies for navigating life on a low income became difficult, if not impossible, to sustain. At the same time, school closures, social distancing and other Covid-related disruptions have led to increased core costs for many families.

The evidence presented in this note shines an unforgiving light on the absence of targeted, adequate support for families on a low income, who today face the combined insecurity of Covid-19 and increased financial pressure. Moreover, it underlines the importance of understanding the differential experiences of the pandemic.

Key findings

  • During the Summer and Autumn 2020, families with children estimated to be in the lowest pre-pandemic income quintile were twice as likely to report an increase in spending (36 per cent) than a decrease (18 per cent). Accounts from parents on a low income identify a number of reasons why this has been the case.

 

  • Having children at home more has meant higher spending on food, energy and ways to entertain or distract children when so many outdoor leisure activities have been curtailed. Remote schooling in particular has proven very expensive, especially for those families that have had to buy a laptop or arrange for broadband access, for example.

 

  • The cost of feeding a family on a low income has risen during the pandemic. A reduction in promotions and difficulties obtaining particular items, and the need to avoid the risk of infection has forced some families to use more expensive food stores that are closer to home or will deliver.

 

  • This helps explain why, in September 2020, half of adults with less than £1,000 in savings report drawing down on them since February, and over half of adults in the lowest-income quintile using borrowing to a greater extent than they did pre-pandemic to cover everyday living costs.

 

  • These pandemic pressures come after several years of weak living standards growth, with real incomes for the lowest-income households no higher in 2018-19 than in 2001-02. With tough new restrictions now in place to contain the spread of the more transmissible Covid-19 variant, parents on a low income face another difficult period without school or childcare, when costs once again look set to increase.

Recommendations

  • Given both the sustained and new pressures on low-income families’ finances as we enter another hard lockdown, the Government should urgently commit to retaining the £1,000 per family UC uplift introduced in April 2020 through the fiscal year 2021-22.

 

  • The Government should also consider whether greater support for families with children is needed to tackle the high and (likely) rising rates of child poverty.

Further reading

Unsung Britain
The changing economic circumstances of the poorer half of Britain
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Mike Brewer, Molly Broome, Nye Cominetti, Adam Corlett, Charlie McCurdy, Louise Murphy, Cara Pacitti, Hannah Slaughter, James Smith, Lalitha Try
Cold comfort
Mitigating the Winter Fuel Payment cut
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Alex Clegg, Jonathan Marshall
The Living Standards Outlook 2024
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Alex Clegg, Adam Corlett
Mike Brewer
Mike Brewer Interim Chief Executive
Ruth Patrick
Ruth Patrick