New report: The Single Parent Debt Trap

Posted 8 February 2021

New report shows single parents more likely to experience problem debt and to live in persistent poverty. Many forced to go without food to make repayments.

Gingerbread, the charity for single parent families, and StepChange, the UK’s leading debt charity, are today publishing a new report which shows the UK’s 2 million single parents are more likely than any other sector of society to be living with problem debt.

82% of single parents said not having enough income to meet living costs meant they were forced to borrow money and ended up in debt.

The research also showed single parents were unable to work their way out of debt.

Counter-intuitively, those who worked full-time hours were more likely to be in problem debt, with increased childcare costs being the main reason for this. Single parents were more likely to use credit to pay for childcare the more hours they worked: 25% of those working full-time (35 hours or more) paid for childcare by using credit, compared to 17% of those working part-time (16-24 hours).

Victoria Benson, Chief Executive of Gingerbread said:

“Before the pandemic around 70% of single parents were in work but this didn’t protect them or their children from poverty. It’s shocking that in 2021 so many are forced to go hungry in order to repay debts built up as their income doesn’t even cover basic living costs.

“It’s crucial that the Government protects low-income families from further poverty by maintaining the £20 uplift to Universal Credit beyond April 2021 and removes the benefit cap. Government also must review the childcare offering – it cannot be right that single parents actually work their way into debt rather than out of it. Without these crucial changes, single parents and their children will continue to experience poverty and to suffer the disadvantage this brings.”

The COVID-19 pandemic has acted as an accelerant for problem debt, exposing more single parent families to poverty.

Single parents are more likely to have lost their jobs or to have been furloughed due to working in ‘locked down sectors’ such as hospitality and retail.

In addition, home-schooling is more costly for single parents – they are twice as likely as couple parents to have no ICT equipment at home and twice as likely to have a child on free school meals.

As a consequence:

  • 49% of single parents reported taking on more debt since COVID-19
  • The average amount of debt held by single parents increased by around 15% during the pandemic (an average of more than £600 more debt per household)
  • One in five (22%) said that a temporary increase in the cost of living had negatively impacted their finances since the beginning of COVID-19.

Alongside poverty and high fixed costs, almost half (48%) of single parents who had experienced problem debt had been affected by economic abuse. Those who have suffered economic abuse were more likely to have higher levels of debt, to be forced to make greater sacrifices to meet debt repayments and to be at a greater risk of struggling with their mental health. Many single parents have a child with their former abuser, meaning the abuse may well continue post-separation.

For example, just 24% of those who had experienced economic abuse received maintenance payments in full on a regular basis.

Being in debt pushed single parents into further poverty – and, in some cases, destitution. This has a detrimental impact on both living standards and mental health for single parents and their children. Single parents typically seek to protect their children as much as possible from the negative impacts of poverty but, as a result, often experience greater hardship themselves. The report shows that in order to make their debt repayments, 66% of single parents have gone without food and 20% have been forced to cut back on food for their children.

In addition:
• 51% had fallen behind on making rent or mortgage payments as a result of making debt repayments
• 19% of single parents had to use a food bank as a result of making debt repayments
• 69% of single parents who were in debt reported struggling with their mental health and 68% of indebted single parents suffered with depression specifically.

Phil Andrew, CEO of StepChange, said:

“Year after year, we’ve seen disproportionate numbers of single parents coming to StepChange for support and, particularly in light of the pandemic’s damaging effect on people’s finances, it’s never been more crucial to understand why. The findings of this report make for sobering reading, revealing that even before the pandemic, squeezed incomes, rising childcare costs and a lack of benefit protection were routinely sweeping single parents into hardship, even among those in work.

“COVID-19 has poured fuel on this fire, with alarming numbers of single parents using food banks and even skipping meals in order to feed their children.

“If we’re to end the debt trap facing so many single parents, the safety net around them must be strengthened, something the Government can do in the short term by committing to maintain the £20 uplift in Universal Credit, as well as by extending it to those on legacy benefits.”

Following publication of this report, StepChange and Gingerbread are calling on the Government to:

  • Maintain the £20 per week uplift to Universal Credit payments
  • Extend the £20 uplift to legacy benefits
  • Remove the benefit cap
  • Increase the amount of child support payments that are collected through debt collection and effective enforcement mechanisms to tackle parents who attempt to avoid or minimise agreed child support payments
  • Develop a Minimum Income Commission, as recommended by the Institute for Public Policy Research, similar to the Minimum Wage Commission, with a statutory remit of linking state support to actual living costs
  • Better support low-income families looking to save, including by linking the Help to Save Scheme with UC, and considering how voluntary savings may be prioritised over non-priority Government debt
  • Effectively implement the Financial Conduct Authority’s vulnerability guidance to better support those affected by economic abuse by regulated financial services.
Read the full report