Nearly have of all Universal Credit claimants are having money deducted from their monthly payments to repay advances, the Minister for Employment Alok Sharma has admitted.
Advance payments were introduced to help new claimants who are sruggling to cope whilst awaiting their first Universal Credit payment, which was recently reduced to five weeks from six weeks after charities and campaigners warned the wait was pushing vulnerable households into poverty and debt.
But the latest admission suggests that the need for advance payments is quickly becoming the new norm, giving reason to calls for the five week wait to be reduced even further.
Responding to a parliamentary question earlier this week, Alok Sharma MP said: “Universal Credit (UC) new claim advances provide access to a payment for those in financial need, which can be accessed on the same day, until their first UC payment is due.
“Claimants can access up to 100% of the total expected monthly award, for which they can pay back over a period of up to 12 months.
“The Department has taken a number of steps to ensure that advances meet the needs of claimants and that recovery arrangements are personalised and reasonable.
“From October 2019 we are reducing the maximum rate of deductions to 30 per cent and from October 2021 we are increasing the maximum recovery period for advances from 12 to 16 months.
“The latest available data is for eligible claims to UC Full Service that are due a payment in February 2019. Of these claims 44% had a deduction to repay a UC advance.”
His admission comes after figures revealed that more than 1 in 4 Universal Credit claimants are hit by deductions for tax credit errors.
More than one in four claimants are having money taken from their payments to repay tax credit overpayments, with the total number of those affected in the region of half a million.