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Credit cards. Photo: Public Domain

Credit cards. Photo: Public Domain

From sick pay you can't live on to bad credit scores, the government is pushing working people further into financial difficulty, writes Laura Smith

This week I joined millions of other people who through no fault of their own have been thrown into financial uncertainty. We are all waiting on the Chancellor’s announcements with bated breath hoping that we will hear that the support to get us and our families and friends through this is coming our way. Of course, there is always a hidden ‘but’ coming after every announcement. When you look at the small print things are never quite as they seem, and whilst I agree that we need to have full lockdown in this country, the government must accept that to do that we need people to feel that they are going to be able to survive financially. Statutory Sick Pay set at only £94.25 per week will not encourage all workers with a temperature and/or a cough to stay at home. Of course, workers with such medical symptoms should stay at home, but they should not be financially penalised for doing so.

Many are telling me not to bring politics into it at the moment. I hazard a guess that most of those people saying it are not the ones struggling to figure out how they will meet rent commitments or avoid being penalised due to arrears on payments. Some others are more hopeful the government will indeed be there for them in the end and don’t want us to be divided during this crisis. This response is understandable, as no one wants to think that their situation is being made worse by the government during such a crisis. I’m more sceptical. Sunak’s goal is to save the market and the public side of capitalism only appears in times of need. What we are seeing is the capitalists turning to the state to convert private losses into public ones, thus pushing the mantra ‘we’re all in it together’. The trouble is we have all seen and felt the aftermath of the public bailing out the markets after the financial crash and as socialists we need to make sure ordinary working people are not punished for at least another decade to come.

There are some straightforward things the government could do immediately to support the public. Firstly, self-employed people should not have to wait until June to receive the 80% of earnings. This delay will see many small businesses sink as cash flow is already a challenge for many month to month. Helping with rent relief for businesses and private renters is also crucial at this time. Secondly, benefit payments are so measly in this country that surviving off it is something even the Health Secretary agreed was impossible. Child Benefit should also be extended for bigger families. This is particularly important during the duration of the crisis as children will not be at school and school meals will not be provided. Understandably those who have struggled on UC and other terribly inadequate benefits are upset - after all, they have been telling the public the problems for years to no avail. Sadly, it has taken those who thought they were ok to have the rug pulled from under them to realise something many of us knew. That the system is not fit for purpose.

Thirdly, we need guarantees that by taking the relief in bills, mortgages and loans we will not end up with our credit scores being hit and penalised in the future. It is this last point that I am going to focus on for the purpose of this article as it is something that has not received the attention that it deserves.

Like many others up and down the country, I have been searching for full-time work in a job market with more precarious and low paid jobs than ever before. Recruitment has all but stopped and I now have 2 kids and 2 pensioners in lockdown. Personally, I was chuffed after tons of job rejections that I had a final interview to attend the Friday this really ramped up - however it was understandably postponed and nothing can be done about it. That’s just the way it is and let’s face it I might not have got the job anyway. The fact is those from working class backgrounds without the safety net of family wealth, savings or full-time secure employment are not only now trying to dodge the killer virus but also escape financial ruin.

So, we can apply for Universal Credit and join the huge queue. Something that I have indeed done. The problem is the system is so overrun and under-resourced because of a decade of cuts, it is creaking under the massive increase in demand. I still have no idea what I will receive when it arrives but I’m glad I have at least registered, something that many are finding a complete nightmare to do.

Last week I did as I had been advised and contacted Natwest to defer a loan repayment. I went through the process to then receive a message saying that although I could take payments down to as little as £1, I would then face arrears that would have a negative impact on my credit score. Now it has taken me 10 years to get through having a terrible credit score due to missed payments on a credit card when I was a student working three jobs, as well as training to become a teacher. That card was for food and bills before anyone starts with ideas of ‘living beyond her means’. This has hindered me in the past from getting a property, credit cards and cars. I’ve had to grovel for guarantors and take out high-interest credit. The idea that my score that I’ve just got looking healthy could once again be shattered, ruining my chances of obtaining low-interest credit or a mortgage in the future, makes me feel truly heartbroken. So, I clicked no I wouldn’t take the help and instead I will have to go further into an overdraft to pay for my loan this month.

Other residents in the ward I represent as a Cheshire East Councillor have contacted me saying they are being penalised on credit scores for deferring utility payments and mortgages. Not all lenders are saying the same thing - but of course it is more likely to be those already with bad credit using high-interest lenders who will be punished further if they defer a payment.

After a conversation with a friend of mine in Parliament Labour’s Bambos Charalambous MP for Enfield and Southgate, he agreed to write to the Chancellor with some key demands that we need to see to help those who could be penalised on their credit score. We are awaiting the response, but I’m pleased he is pushing this in Parliament. We need to

  1. Ensure that financial institutions and credit companies ignore any default to payments to utility, loan and credit card payments and mortgage holidays for the purposes of assessing someone’s suitability for credit.
  2. Persuade the credit and loan providers to cap their interest at Bank of England base rate for the duration of the pandemic
  3. Suspend all enforcement action for defaulted payments which occur during the Coronavirus pandemic period.

I am pushing the campaign on twitter with #StopBadCreditScores that you can help to support. We urgently need answers and guarantees as quickly as possible. Most people don’t have a parent they can lend off, or a rainy-day account that they can dip into. 
So now is the time to make demands. If we don’t do that, we will allow the people who have done so much damage to working class people in the past to get away with it in the future.

Laura Smith

Laura Smith

Laura Smith is a Councillor for Cheshire East and is the former Labour MP for Crewe and Nantwich

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