Martin Lewis warns MPs of 'catastrophic' effect on workers' finances without coronavirus support
MoneySavingExpert.com founder and chair Martin Lewis has warned MPs that workers' finances could be permanently damaged without short-term support during the coronavirus crisis, as part of a Treasury Committee evidence session on the economic impact of the pandemic.
Martin cautioned that it would be "short-sighted" of the Government not to help those who had previously been able to support themselves but now risked being left with long-term financial struggles.
This includes up to three million people excluded by cracks in the furlough and self-employment income support scheme (SEISS) systems - though Martin also praised the overall "remarkable achievement" of the rapidly-designed schemes.
You can watch a snippet of what Martin told the Treasury Committee on 9 December 2020 below (and you can also watch the full session on the Parliament website):
In a wide-ranging evidence session, Martin also:
- Reiterated his call for the Government to act to free mortgage prisoners
- And urged for regulation of buy now, pay later products
Martin also shared his insight on other coronavirus-related consumer issues, including credit repayment holidays and bounce back loans - we've full info on these topics below.
See our Coronavirus Employees' Help, Coronavirus Self-Employed & Small Limited Company Help and Coronavirus Finance & Bills Help guides for more info on the support available if your finances have been affected by the pandemic.
On those excluded from coronavirus support: 'We may catastrophise people's finances if we don't give them support in the short term'
In the evidence session Martin highlighted the plight of the estimated 3 million people who have been excluded from Government coronavirus support schemes - an issue he has campaigned on throughout the crisis.
He discussed the fact that directors of limited companies whose income is largely paid in dividends have been excluded, along with PAYE freelancers and those who have recently become self-employed - as well as employees whose employers have refused to furlough them.
Martin put forward the case for giving short-term help to those excluded from support to prevent them from sliding into long-term financial difficulty, arguing that not to do so would be would be more costly in the long run.
Martin also urged the Government to accept 2019/20 tax returns when calculating the fourth installment of SEISS; allowing people who have become self-employed more recently to benefit from the grant. For more on how this could work in practice, see Martin's A glimmer of hope for excluded new-starter self-employed blog - and you can watch his call to the Treasury Committee here:
On bounce back loans: 'Sole traders and those without business bank accounts most likely to struggle to get bounce back loans'
Martin was asked about MoneySavingExpert's bounce back loan survey, which showed a substantial number of people applying for bounce back loans faced delays and rejections.
Sole traders and those who didn't have a business bank account before the pandemic are particularly affected - and Martin pointed out that for some people who were excluded from other forms of help, such as SEISS and universal credit, bounce back loans were their only option to get financial support.
On payment holidays: 'Quick to respond but overdraft help hasn't been extended'
Martin said financial regulator, the Financial Conduct Authority, had responded quickly to introduce payment holidays for those struggling to repay mortgages, loans, and other debts - and payment holidays and other help for these products has been extended until 31 March 2021.
But Martin pointed out that blanket help for those struggling to repay overdrafts - where people were offered a £500 interest-free buffer - hasn't been extended until spring. Instead, people must apply for targeted overdraft help from their bank if they still need support, which means you could be treated differently depending on who you bank with. Martin cautioned there must be transparency in this process to ensure there isn't a "lottery of treatment".
Here's what he told the Committee: