- The percentage of people receiving DWP payments has increased from 5% to 27% since March 2020.
- The average sum of money awarded by the DWP has increased by 80% since March 2020.
- The average monthly spending has increased by over 55% since March 2020, despite a rise in unemployment rates.
(22 April 2021, Cheshire, UK) As the rates of infection are beginning to drop in the UK, alternative banking solution, Suits Me, look at how unemployment levels have impacted spending during the pandemic.
The impact of the COVID-19 pandemic can be seen across economies around the world, including the UK, with a 22% increase in the number of people claiming benefits through the Department of Work and Pensions (DWP).
Before the pandemic, the average number of people receiving DWP payments stood between 3% and 5%. However, by April 2020, one month after the lockdown was introduced, the number of people claiming benefits sharply rose to 9%. This percentage has seen steady growth and now stands at 27%.
Despite the government’s efforts to support businesses across the UK through job retention schemes, the increase in the number of people receiving payments through the DWP is likely due to businesses being required to close their doors. The financial impact of no income on businesses around the UK meant cost-cutting measures had to be introduced, including making staff redundant.
Additionally, the data also revealed that the average amount of money being paid into accounts by the DWP increased by around 80%. There could be several reasons for this, including the freeze on budgeting loans and advance repayments. Plus, in April 2020, the government increased the standard living allowance by £20 per week in a bid to support families and individuals with their living expenses during the pandemic.
This boost in income provided by the DWP is reflected by the average amount of money spent by consumers, which has seen a significant increase of 55% since the first lockdown in March 2020. This additional spend could be due to payment holidays offered by various companies that provide credit-based products and services. Plus, the extra £20 a week from the DWP.
Before the pandemic, around 23% of all transactions were conducted online compared to in-store. However, the closure of shops and the introduction of lockdown has dramatically shifted the way transactions are conducted – with 41% now taking place online. However, the data revealed no real change in the types of payments conducted – including card purchases, ATM withdrawals, and bank transfers – before and during COVID-19.
Richard Lynch, Managing Director at Suits Me, commented: “It’s clear that there’s been an increase in the number of individuals relying on support from the DWP since COVID-19 hit the UK. However, we were shocked to see that there was such a large increase of 80% in monthly consumer spending since March 2020. We believe that this is down to individuals being awarded more by the DWP to cover housing and living expenses and payment breaks being offered to borrowers on credit products.”
Notes to the Editor:
*Data comparisons take place between March 2019 and March 2021. Unemployment levels measured by the increase in DWP payments.
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About Suits Me:
Suits Me are a hassle-free alternative to traditional banking, offering an account with access to online banking, a mobile banking app and a contactless debit card. Suits Me was founded in 2015 to provide an account to customers who may have poor or no credit history, no proof of address, or struggle to open an account with a traditional bank.
Currently operating in Cheshire, UK, Suits Me gives people an alternative solution to a high street bank. Suits Me do not perform credit checks and provides all their account holders with access to their exclusive cashback reward programme.