Third of UK’s universal credit claimants hit by deductions from payments

Cuts to pay rent and utility bill arrears drive people into poverty, warn campaigners The Observer by
Chaminda Jayanetti and
Michael Savage

One in three people on the government’s new welfare system are having their payments cut to cover debts, the Observer can reveal.

In a sign of the troubling levels of indebtedness affecting some of the most impoverished communities, official figures show that hundreds of thousands of universal credit payments are being subject to deductions used to pay back arrears in rent, council tax and utility bills.

Charities and campaigners warned that the deductions were driving people into poverty. Frank Field, the Labour chair of the Commons welfare select committee, said they were “fast becoming a main supply route to food banks”.

Figures released by the Department for Work and Pensions under the Freedom of Information Act show that in May this year, 316,100 universal credit claims had deductions imposed on them by the government for reasons other than fraud penalties or job centre 

The increasing use of advance payments is one factor driving the surge in universal credit deductions. However, benefits can also be cut to repay rent, council tax and utility arrears, certain hardship payments and benefit overpayments.

Field told the Observer: “This nationalised form of debt is fast becoming a main supply route to food banks. Too many people are left short of money under the present system. We need an alternative scheme like the one used by some of the utility companies who write off parts of the debt if they can get regular small repayments.”

Abby Jitendra, policy and research manager at the Trussell Trust, Britain’s largest food bank provider, said deductions could be “the tipping point into crisis” for some. “Repaying an advance payment, for example, can be an unaffordable expense when taken from a payment that wasn’t enough to start with, pushing people further into debt at the time when support is most needed,” she said.

Gillian Guy, chief executive of Citizens Advice, said: “Deductions from universal credit can make it harder for people to get by. People receiving universal credit are unlikely to have much slack in their budgets, so even small amounts can put a huge strain on their finances.

“Building on last year’s improvements to universal credit, the government now needs to ensure deductions are made at a manageable rate and take a person’s ability to cover their expenses into account.”

Charlotte Hughes, an anti-austerity campaigner who provides support and advice to benefit recipients, said deductions were unpredictable and often made without warning. “The first time somebody knows that money’s been taken out of their account is when they go to the bank,” she said. “It’s just a minefield.”

“Living with that stress that you don’t know what money you’re going to get from week to week, from month to month, that makes you ill – and that’s before you can’t eat, and before you can’t look after your kids properly. It’s rampant.”

A spokeswoman for the Department of Work and Pensions said: “We recognise the importance of safeguarding claimants who have incurred debt and there are protections in place for vulnerable claimants, but we also have a responsibility to the taxpayer to collect advances of benefits where possible.

“With universal credit, people are offered a range of assistance, including personal budgeting support to help them manage their money.”

 

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