Unforeseen life events plunge over 15 million Brits into financial insecurity

A new report from national poverty charity, Turn2us, reveals how over 15 million people (one in four) in the UK have experienced at least one life event in the past two years that has left them struggling to cope financially.

The research* shows that women, disabled people, certain minoritised ethnic groups and young people, are the worst affected by the financial impact of life events, such as bereavement, illness, a relationship breakdown, or unemployment:

• 64% of women have experienced financial insecurity following a life event, compared to just over half of men (55%).
• White Gypsy or Irish Travellers (84%) and White Irish (80%) respondents were most likely to report that at least one life event left them worse off. Similarly high rates were found among respondents who were White and Black African Mixed (76%); Black Caribbean (71%); any other respondents of mixed descent (71%).
• Just over seven in 10 disabled people (72%) suffered a life event in the last two years that contributed to them being financially worse off; compared to 56% of respondents with no disabilities.
• Younger people (under the age of 35) in the UK are the most likely to suffer a life event that left them financially worse off. In all, 75% of people in the UK aged 25 to 34 had experienced at least one life event in the past two years which left them financially worse off. In contrast, respondents aged 55 and older were the age group least likely to report that at least one life event had caused them to be financially worse off (46%).

The publication of the charity’s report comes just weeks after the Covid-19 furlough scheme ended, and the £20 Universal Credit uplift was cut. Its findings show how life events can plunge people into financial insecurity, particularly those who are already struggling to make ends meet, and that there are barriers to people accessing the support they need.

Thomas Lawson, Turn2us Chief Executive comments: “Our research tells us that the UK has a big problem with financial insecurity that effectively puts 15 million people on a cliff edge. The report clearly shows that failure to reach people at the point of crisis means many find themselves trapped in a cycle of repaying high interest on borrowed money, plunging them into debt.

“In the absence of long-term solutions that prevent people being plunged into financial insecurity, we urge the government to mandate Local Welfare Assistance schemes, with an additional £250m of ringfenced funding each year. This will enable councils to step in and help prevent families from having to make difficult choices between putting food on the table and paying their bills, because of life events that are beyond their control.”  

Karen Isaacs, a Turn2us co-production partner with lived experience of financial insecurity, comments: “After a car crash left me unable to work, I had to give up my job and quickly find ways to support myself financially. My initial claim for Universal Credit was not straightforward and caused a lot of stress at a time when I was under so much pressure from all sides. With no job and no money to support myself, while also being in a lot of pain, my mental health was absolutely at breaking point. I felt completely without any dignity, especially at my age – in my 60s - when I should have been receiving my pension.

“Now over three years later, I am still struggling and still trying to get a job as I cannot go back to retail due to my health. Recent cuts to Universal Credit have made matters worse and it is almost impossible to get help from anywhere for people in my position. This means yet another winter and Christmas struggling for money and worrying constantly.”

The survey findings also suggest that shame and stigma are a barrier to seeking support from local councils (42%) and charities (27%) while only half of people would feel comfortable asking for financial support from the government. 35% of those surveyed agreed with the statement that they would be too stressed to ask for help if they experienced a life event. Furthermore, even among people who found it difficult or not possible to cover the costs of at least one life event, just under six in ten (59%) looked for help to cover the financial cost.  It also reveals the coping behaviours people use to get by:

• Almost 50% of those surveyed who had been through a life event relied on a credit card to cover day-to day-spending after the financial impact.
• 23% took out a payday loan.
• More than one third (36%) missed bills or debt repayments.
• 14% reported missing bill or debt repayments more than twice; and 9% had used a payday loan or another form of high-cost credit more than twice. 

• Over half of us (51%) don’t seek financial support after a life event, even when that event makes us worse off.
• 44% of the people who found it difficult or impossible to cover the costs of the life event did not seek support at all.

The life events research was undertaken by Turn2us to understand better the impact of live events on people’s finances, how they cope, and what measures they need to support them. The survey and interviews explored a broad range of events that have an impact on people’s finances in the areas of health, work, family, housing and legal circumstances. It was undertaken by independent research agency Censuswide and surveyed 6,000 people over the age of 18 across the UK.