Citizens Advice Scotland (CAS) has highlighted that some Universal Credit recipients will be less than £3.50 per month better off due to the increasing effect of deductions as a result of the shift to index benefit increases to inflation.
The decision to increase benefits by 10.1% next spring should result in a monthly increase of £65.49 for the typical UC household.
However, over half of all Universal Credit families are subject to deductions, which CAS estimates to be approximately £62 per month on average.
An estimated 188,300 Scottish families are subject to deductions and would likely receive just a tiny portion of the uprating as a result.
The majority of deductions relate to advance payments; individuals who apply for UC must wait a minimum of five weeks for their initial payment, but they can accept an advance to receive the necessary assistance sooner.
Repaying the advance may leave them unable to support themselves throughout the next year.
CABs observe the effect these deductions have on individuals. A customer of the East of Scotland CAB who is a single UC recipient has received six foodbank referrals in three months and has exhausted her Scottish Welfare Fund options. Reduced income resulting from Universal Credit deductions is the basis of the hardship. The client has two child dependents.
CAS social justice spokesperson David Hilferty said: “The decision to uprate benefits in line with inflation this coming spring is the right one and should be providing welcome and desperately needed extra help for people.
“However the deductions system for Universal Credit means there is a risk tens of thousands will see no meaningful increase, as deductions from their payments effectively wipe out the value of the uprating.
“The Citizens Advice network is already seeing people who are faced with impossible decisions about how to spend limited budgets.
“People need help now – and when they do get that support, it is vital that they can keep all of it.
“The government should consider a pause on all deductions to Universal Credit and reform the advance payment system, potentially shifting towards a model of non-repayable grants for new claimants rather than loans which just send people into a spiral of debt.”