Bank of Mum and Dad to end Covid bailouts

The Bank of Mum and Dad has been working overtime, with the over-50s lending £8.2billion to younger family members whose incomes and livelihoods have been threatened by Covid-19. One in four supported their family members financially at some point during the pandemic, giving on average £1,300 each. This was an increase of almost half on the previous year, according to research from financial services company OneFamily, which showed the under-30s have been hit hardest by the pandemic. The main reason cited was younger family members seeing income fall during lockdown, followed by furlough or job losses.

Matthew Ellis, head of OneFamily Advice, said while "millennials" have been most severely impacted, the over-50s have felt a great pressure to support their families, with almost half saying it put a strain on their finances as they raided current and savings accounts, borrowed on credit cards or sold belongings to raise cash for loved ones.

The Bank of Mum and Dad is now looking to reduce funding by £1.8billion to ease the burden, according to research from Direct Line Life Insurance.

Almost two million will get less financial help from their families, although some parents and grandparents will compensate by gifting their time instead, for example providing more childcare.

Across all age groups, nine million, or one in six, say the pandemic has affected their household finances, with almost half having to borrow £1,000 or more to stay afloat.

Direct Line communications manager Vincent Guadagnino says the last year has brought families closer together as they shared financial, childcare and emotional support.

He said: "Covid-19 has been a challenging period but has also emphasised how important family is."

The young, self-employed and those on low incomes have born the financial pain over the last year, official figures show.

Sarah Coles, personal finance analyst at Hargreaves Lansdown, said under-30s were more likely to see their income fall or be placed on furlough, while the self-employed lost work and often fell through the safety net of the Government support schemes: "Many ransacked their savings and 1.8 million self-employed people weren't in a position to pay their tax bill."

Nobody has been entirely untouched. Even those earning £40,000 or more say their work has been impacted.

Al Ward, head of customer savings at Standard Life Aberdeen, said one positive is that the under-35s have learned the value of investing for the long term.

"Britons are feeling less financially secure overall but the pandemic appears to have prompted millennials to invest more for their future," he said.