Trapped in debt

Many working mums are finding themselves in thousands of pounds of debt at a time of rising living costs. How can we address this?

Child hold woman's hand at a table. She has her head in her hands and there is an open purse on the table with just a few pence spilling out of it.


A survey last week highlighted the vulnerability of women to the cost of living crisis. Legal & General’s analysis shows that, if they lose their job, working women are only 14 days away from the breadline, compared to 28 days for men, even though they have comparable debts to men. The reason is that they have less money in savings and investments – on average £1,801 to men’s £3,214. Unsurprisingly, women are considerably more anxious about the cost of living crisis than men and much more likely to be cutting back on luxuries and reducing essential spending where possible.

This fits with our own annual survey which shows high levels of anxiety and fear and escalating debts for working mums. The survey found nearly half [49%] of mums have debts from one to 20 thousand pounds, with one in 10 shouldering debts of over 20 thousand pounds. Of course, some of this is shared household debt.

What is causing this level of debt? One clear issue is women’s lower earnings, meaning they have less capacity to save – something that has a lifetime penalty, with the gender pension gap standing at 37.9%, although this is a loose figure.

20th November is Equal Pay Day, the day at which women stop earning in relation to men because of the gender pay gap. The causes of the gender pay gap are complex and include discrimination and bias, but there are also broader structural reasons. Often it is due to the lack of women in senior leadership roles and the preponderance of them in lower earning roles. Another factor is the kind of jobs women do and the value attributed to these.

Many of these issues are made worse or are rooted in parenthood. Women still take far longer off work than men [who often don’t take any leave] and often return on reduced hours or end up twisting and turning their work to work around their children and childcare costs and availability. Some take career breaks – in part due to childcare costs – and face challenges getting back into work on anything near their previous salary level.

Maternity pay is extremely low – significantly below the minimum wage – and there are all sorts of inconsistencies for those who do more than one job. That draws on any savings a family might have even before they return to work and face high childcare bills.

Moreover, a significant number of mums end up as single parents, with 90% of single parents being mums. They come up against even greater challenges around finding work that is flexible enough to fit around their childcare, but well enough paid to cover basic costs.

Women are also more likely to be unpaid carers for older relatives or their partners and to have to find work that flexes around those responsibilities.

We also know from countless research reports that these problems are even more an issue for women of colour, women from lower socio-economic groups and women who are disabled who are more likely to be in lower paid, insecure jobs.

Benefits policies which punish people for not doing more hours, while not providing the infrastructure they need to do so, or which don’t incentivise working more hours don’t help. The chaos caused by the housing benefit cap, which is leading to a silent exodus of families from metropolitan areas, makes finding your feet even harder. Many we have spoken to have problems with tax credit overpayment and clawback and an inability to negotiate a repayment plan that works for them.

Once in debt, it is hard to climb out. We need to be very clear about the challenges being faced and the way each contributes to the other so that we can help women – and their families – out of the terrible financial crisis many now find themselves in. Tweaking things at the edges is simply not good enough.

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