How Covid-19 plunged millions into poverty and widened wealth inequalities – and what you can do about it

When the Covid-19 pandemic started, a huge financial shock was created for many as they were put on furlough or lost a fifth of their income.  In response, the demand for Turn2us’ benefit calculator and grants skyrocketed, and Turn2us had to respond by purchasing extra server space and making £500 Covid grants into peoples’ bank accounts.

Thomas Lawson is the Chief Executive of Turn2us.  Having worked in the social sector since the 90s, he has had experience with UNICEF, Terrence Higgins Trust and Leap Confronting Conflict, amongst others.  He has served on the boards of the charities  Centre for Youth Impact, Heart ‘n Soul and the National Peace Council, and advocates for the success of black, Asian and other minority ethnic groups in the sector. Turn2us is a national charity assisting those who are in financial crises, offering support through providing high quality information on benefits and grants, and providing their own grants for families in need.

There are several reasons why some households took a harder blow to their finances than others during Covid-19.  One was the fact that those who still kept their job were able to save a lot more, while those who were furloughed ran into debt.  Another was that those who have wealth have seen its value grow dramatically in the previous decade, while those who relied on income saw a decline in their standard of living since wage levels have been stagnating.

For Turn2us, the need to solve this problem is clear – consistently facing the immediate and pressing problem of finances causes a prolonged period of stress and impacts physical and mental health.  Those in hardship should be helped, not judged for being lazy; as evidenced by the disproportionate number of minority ethnic groups being placed in that situation.  

Fortunately, Thomas feels the judgemental attitude is starting to change as communities become more local and helpful, and more people are using the benefit system as well, realising that anyone could go through financial shock.  He hopes it will translate into a more inclusive economic system where everyone is able to contribute.

• You can listen to Covid Matters on Spotify, Apple Podcasts, YouTube, Acast, and wherever you listen to your favourite podcasts.

• Find Turn2us at turn2us.org.uk

Takeaway quotes from the episode

1. On the spike in demand for their services since Covid-19: “We went from 5000 to 250,000 benefit calculations a day [on our benefit calculator]; we had to buy extra service space… to manage the traffic.” 

2. On the unequal distribution of the economic impacts of Covid-19: “We’ve had… 190 billion pounds worth of additional savings compared to the previous time last year, but also a huge increase in people running into debt… and 44% of people experiencing very severe distress as a result of that as well”

3. On the problem with wealth disparity: “We must be deeply concerned that as the fifth wealthiest country in the world, 14.5 million — 20% — of us don’t have enough money to get by, and view huge increases in people going to food banks as unacceptable.”

4. On pride in the benefits system: “If I broke my ankle… I would be relieved that the A&E department can help me.  Why are we not equally proud that [if] I lose my job… there is a brilliant benefits system that stops me from falling into deep poverty?”

5. On hope for a more inclusive economy: “I hope that we listen to people who have experienced financial hardship instead of judging them… wouldn’t it be amazing if we were all able to [contribute] as much as someone who went to Eton and Oxford?”

Episode transcription

This is an automated transcription which will contain imperfections. We’re looking for volunteer transcribers to brush these up, so if interested please get in touch!

Michael MacLennan  

It would be great to start to know a bit more about your role – how it was going before the pandemic, and how it then changed.

Thomas Lawson  

Thanks, Michael. So I've been the chief executive Turn2us for coming up for two and a half years, being the chief exec for a year. And as many people will tell you, the first year of a new chief exec job can be pretty intense. And we were kind of refining the purpose of the organisation. So we've concluded that actually, what we really want to do is to support people by offering really high quality information and direct support in the form of individual grants to people when they face a life changing event that's got a financial shock. Now, that was pretty prescient, because COVID ended up being a huge financial shock for millions of people across the UK. As you know, a lot of people went on furlough and lost a fifth of their income. And for people on lower incomes, that was the fifth, it might be able to buy a Christmas present, or even a meal out. So we've seen lots of people experience pretty sudden experiences of very severe financial shocks. And so the last year and a half has been very intense. And we offer benefit calculations on our benefit calculator. And we supported something like 250,000 people last year, to claim an additional 1.2 billion pounds worth of benefits that they would not have claimed otherwise, we made about 4 million pounds worth of grants directly to families and individuals who would experience shocks as a result of COVID. And we also have another few tools. One is a search tool to help people find the grants that other grant individual grant makers make. And we have a lot of very high quality information on our website that 8.8 million people used in the last year as well, that we saw very quickly, at the beginning of the first lockdown, a very, very steep increase. In uses of our of our information, we went from 5000 normal benefit calculations a day, 250000 a day, we had to buy extra service space to be able to manage the traffic. And we saw a pretty significant increase in requests for the grants that we make. And so we launched a new COVID grant of getting five pounds into people's bank accounts really quickly. I think the quickest we managed was a three hour gap between the application and making the ground, but normally within about 10 days. So it was a very, very intense period. And I have to be deeply grateful to not only the staff with whom I get to have the pleasure of being a colleague, but also the people who were experiencing those financial hardships helped us to dramatically improve the design, the delivery, and indeed the evaluation of our work so that we know that we can improve the impact of our work. So we work with a lot of people with lived experience of financial hardship, who we call co production partners, in redesigning our work to achieve better impact.

Michael MacLennan  

What are the types of hardships that people are experiencing? And did you notice a shift in that as pandemic first hit, and then as it evolved over the coming months?

Thomas Lawson  

There's a couple of ways of talking about that. Normally, a financial shock tends to have one or both of two kind of experiences. One is a sudden decrease in income or a sudden increase in cost. So if you imagine the disablement of the main breadwinner in a house, for example, suddenly you've got a lot more costs in order to make their house more navigable and accessible. But you've also probably received a significant decrease in income. So that those are the those are things that could be the birth of a third child. It could be redundancy, it could be bereavement, it could be serious illness. So so many things create so many life changing events create those financial shocks. I think what we saw during COVID, and this is a slightly different answer to your question was that there were a lot of people who were experiencing the storm in a much more severe way. So we were all in the same storm, but we were in different boats. Right. So we noticed that a little over 50% of kind of white families that have experienced a drop in income, but that compared to 88% of Bangladeshi families, and that's probably because of the way in which the economy works. So I work in charity as a full time employee and when I'm sick that charity will pay my sick leave and gives me holiday leave. But people who are on Zero Hour contracts who are Uber drivers who cannot run Lie on their employer for paying that. And so we are thinking about them being in the secondary economy. And so a lot of people who experienced very severe social barriers in life, whether it be racism, or sexism or disablism, often experience concomitant kind of economic barriers alongside that. So we saw a really, no, I know, there are a lot of research that showed the very disproportionate unfairness the veil of respectability was ripped hard away during COVID. So we saw that a lot more. But there's been a kind of really striking kind of disparity around wealth as well. So this is this isn't so much about income. So a lot of people who haven't been going on holidays, you haven't been at a restaurant or theatres or union camps have ended up securing quite a lot more savings. So we've seen a had something like 190 billion pounds worth of additional savings, compared to the previous time last year, but we've also seen a huge increase in people running into debt. And our own research shows that a huge number of people are running out of money every month now, because furlough kind of a four fifths of income doesn't cover it. And associated with that, we've seen nearly half 44% of people experiencing very severe distress and anxiety as a result of that as well. So it's a very, it's a very unequal distribution of the impacts are COVID. So it's really helpful to kind of think about, yeah, we're all at the same storm, that some of us are not the same lunch tool. Yeah, I

Michael MacLennan  

I saw you speak at an event and I think you said – I've written this down to try and get it right – that more than one in five of us are running out of money, always or most of the time. That is around 11 million people in the UK, and then an additional 4 million people in the past year – which is shocking to think about that, really, in terms of the effect that has had.

Thomas Lawson  

Yes, and it's also compounded that since the 2008 crash. What we've seen is that wages have stagnated. And so people who relied on income, rather than wealth, have had a material kind of deterioration in terms of their standard of living, but people who have property, you know, I own my own house, well, actually, the mortgage company has a good chunk of it, but I've got a bit of it. And people who have kind of shares and things have seen their wealth grow dramatically in the last 10 years. So whilst benefits payments have been suppressed, wages have been suppressed, and people who rely on that kind of income and sooner deterioration in their lives. So and then on top of that, you know, there's an additional 4 million people running into debt as a result for the last year. So you can really see the kind of the divergence of, of quality of life in the UK.

Michael MacLennan  

And then, in terms of I think you spoke about the fact that in terms of going into poverty, that if you are if you have a disability if you're a female, if you're from a black Asian minority communities, and you're much more likely to be affected as well. That's right.

Thomas Lawson  

Yeah. So if you're already minoritized, by the kind of the majority of society, you are going to experience a higher incidence of financial exclusion. And there's just data to support that very, very robustly, as we've seen over the last you know, the last year it's been covered very well. 

Thomas Lawson  

The people that we have seen most affected are black and Asian and other minoritised communities, basically, on the colour of their skin. Certainly disabled people have had a much You know, people who identify as disabled have got a had a much more severe impact on COVID. And, and then women, that's the other striking thing is, you know, particularly single mums more than single dads, so, you know, had to try and navigate flexible working whilst caring, and so are more likely to be on flexible contracts. And those flexible contracts have been easiest to kind of pull out for the pullout for from under your feet by by employers, and the The other group that we've seen, but very much more recently, and there was a very good bit of information from the resolution foundation is that as people are being brought off furlough quite quickly at the moment, that's going well, but people who have been left on furlough and therefore are more likely to be made redundant at the end of furlough, are the those at the ends of their careers, so tend to be older people. And there has been helpfully an encouraging pickup in the employment of younger people who were very badly affected during the original lockdown. But there are some concerns about people towards the end of their career. Yeah.

Michael MacLennan  

In terms of with the support from government and other types of authorities, how do you think their response has been in terms of financial support – and what more could be done?

Thomas Lawson  

I think the speed with which our government responded, in terms of providing the furlough scheme and the self employment support scheme was good. But the complexity of our labour market made it next to impossible for any anyone, our government or other people to design the perfect system. And of course, a lot of people fell through the net, people who had, for example, only set up their self employment in the previous year didn't get any self employment scheme, any support. So that, so I think, generally a really great start, the 20 pound up lift to the universe credit was really, really badly needed. Because as I described earlier, that the benefits have not increased with inflation over the last 10 years. And people on legacy benefits, the benefits that aren't Universal Credit that have been around a lot longer. And lots of people are moving on to Universal Credit did not get that 20 pound up lift. And so those people on legacy benefits did not experience that. We are very concerned about the potential energy to that 20 pound uplift, particularly what we know about what's happened to you know, two incomes over the last 10 years. And we're expecting something like an extra 250,000 children to end up in severe financial hardship as a result at the end of that 20 pounds, pretty bad and may not seem like a lot to many people. But if it's, if it's, if it's that top bit of money, that it means that you can go to the supermarket, instead of the food bank, you can begin to see how 20 pounds in one week makes a huge amount of difference. And we must be deeply concerned that as as a fifth wealthiest country in the world, that 14 and a half million of us 20% of us don't have enough money to get by on am viewing huge increases of numbers of people going to food banks for food from basic requirements is unacceptable and this and that it profoundly erodes people's dignity. And that is not acceptable, really, in our society. And the challenge for particularly parents for anyone experiencing financial hardship, is it it is exhausting. Okay, so trying to work out how do I get food on the table tonight, that's all you're going to be thinking about, you're not going to be able to be thinking about while as well as kind of trying to work out this immediate and very pressing problem. I'm also going to work out how I can apply for that job and also sort out How can I get a better deal on my utilities. You know, if that we know that I don't know if anyone you know, if you're if you've been given a deadline for work, you just stopped looking at your emails, you've put your phone aside, all you're doing is doing that one thing, because you've got to deliver that by a certain point. And that's the same kind of stress. It's called tunnelling that we that we go into when we need to do something as pressing as get food on the table tonight. And we also know that when we're under that level of stress, we have got less kind of self control. And that's true for everyone. And when we're under stress at work, for example, faced with chocolate and Apple, we're likely to go for chocolate. Because that is you know that I'm not thinking about my health right now I just need this. And so we can see people lose kind of self control or executive control. And that people tunnel when they're under stress and and if you're under that prolonged stress for a very long time. It has a very bad effect on our cortisol levels in our bodies. And that can affect the physical and mental health too. So it's not surprising for us when there are so many people going into debt, but we've seen 44% of those people experiencing severe anxiety.

Michael MacLennan  

And in terms of people here for people who have family members or friends or loved ones, who they think may be struggling, what is the best way for them to be able to provide support?

Thomas Lawson  

Talk about it. There's this discourse – Not so badly in Scotland, I have to say Scotland does a bit better – but a lot of UK does this discourse that if you're poor, it's your fault. It's because you're lazy and you don't know how to manage budgets. It's just not true. It's not true. And we know that because if it was just about people being lazy, then it wouldn't be a disproportionate number of people who were black or minorities, ethnic communities, it wouldn't be a disproportionate number of women, it wouldn't be a disproportionate number of disabled people, and it wouldn't be 20% of us. So clearly, it's systemic. And so we should stop a feeling like it's our fault that we haven't got enough money, and we should stop judging other people for it. So talk about it, because that will immediately make it easier. And secondly, recommend people come to turn2us.org.uk. And look at our benefits calculator. And you may well be eligible for more benefits than you're getting. And the moment that you lose your employment, start claiming benefits, there's a five week delay until you get your first benefits payment, don't think I'm not going to apply, I'm going to get another job. Apply today. Apply straight and go use our benefits calculator to work out how much you can get. So that we should be proud of our benefits system. If I if I broke my ankle, and I'd go to a&e, I would be you know, bloody relieved that the a&e department can help me with my broke my my broken ankle. But also be proud that I'm part of a country that has, you know, free at the point of access health care, why are we not equally proud that when I lose my job, that there was also, you know, a brilliant benefits system that stops me from falling into deep poverty and penury as you'll be proud to live in a country that cares about people's ability to buy food. And so we should be proud of our benefit system instead of ashamed of it.

Michael MacLennan  

And in terms of looking at the past 16 months, has there been anything that's surprise you in a positive way and how people have supported each other during the pandemic?

Thomas Lawson  

I think a couple of things. One is, you know, we have most of us had have suddenly become much more local, right? We're staying on our streets or in our local areas, and we've become, we've come to know our neighbours in a better way. It's a good thing. It's nice to know that and and we certainly have been more helpful to one another and less judgmental, I think that is good. I think the other thing is that so many people have has suddenly had to use our benefit system, but they are beginning to change that perception that people who claim benefits are lazy. And this can happen to most of us actually, you know, so financial shock can happen to all of us. And so we should stop judging one another and instead be supporting each other to thrive and have wonderful lives in one of the richest countries in the world.

Michael MacLennan  

From this point onwards, what are your main hopes and concerns?

Thomas Lawson  

I so one hope is that we listen to people who have experienced financial hardship instead of judging them, and that we redesign redesign our Social Security system. And we build a more inclusive economy so that we haven't got to kind of primary and a secondary economy. And that we really, you know, I often think that this is, you know, there are so many people who have been prevented from being able to contribute their insight, talent and potential to our society and to our economy. Wouldn't it be amazing if we were all being able to do that with as much as someone who went to Eton and Oxford? That would be great. And then we'd have quite an amazing country, I think, so even more amazing than it is now. So I hope that we have a more inclusive economy, and that we have a benefit system that is easier to use and less judgmental.

Michael MacLennan  

Finally, for those who are wanting to support Turn2us, what can they do?

Thomas Lawson  

Please come to our website and make a donation. We make donations and grants to families. And we've got really strong evidence that that takes that family out of a financial crisis really swiftly. So even three months later, they're no longer in a financial crisis compared to those to whom we don't offer support. So please do come and support our work. 

Michael MacLennan  

Thank you very much for your time.