SCOTTISH Labour leader Richard Leonard has demanded a Covid debt amnesty for families suffering a financial crisis due to the pandemic.

He called on both the Scottish and British governments to intervene to ease the burden of debt on workers who have found themselves furloughed or out of work. 

Arrears on household bills and council tax incurred by low-income families during the coronavirus crisis should be suspended by the Scottish government, Mr Leonard said, adding that this measure should continue until next May’s Holyrood election. 

Scottish Labour said that the relief should be put in place on the same timescale as an evictions ban to protect tenants. 

Mr Leonard said: “Christmas and the new year are always periods that lead to a surge in debt for poorer and hard-pressed families.

“Nine months of Covid hardship will inevitably make this burden so much worse for households.

“A huge personal debt crisis is being caused by Covid as people being furloughed or losing their jobs and others on welfare benefits are unable to pay their rents, mortgages and other essential bills.”

The Scottish Labour leader also called for the Tory government at Westminster to protect citizens from pay-day lenders. 

Mr Leonard said that outstanding debts to such companies, along with banks and credit agencies, should also be tightly regulated on a permanent basis, with interest payments and fees curbed or waived by the UK government.

The relief package for debt-ravaged families would apply to low-paid employees, as well as workers forced onto furlough or those who have lost their jobs. 

Mr Leonard added: “This is causing immense stress and hardship for many people struggling to get by.

“It’s also holding back a post-pandemic economy recovery and could risk another financial crisis as the debt becomes unsustainable.

“The Scottish and UK governments must use their respective powers to introduce a ‘Covid debt amnesty’ for furlough and unemployed workers as well as those on low incomes and benefits.

“Making this commitment over the Christmas and new year period would go a long way to ease the debt worries that so many Scots have at this time of year, and which will have been intensified by Covid.”