More than one million households have seen money taken from their monthly Universal Credit (UC) payments to repay Advances or outstanding debts, according to new analysis for the Covid Realities research project.
The number of households claiming UC has soared during the Covid pandemic, as rising numbers are made redundant or told to work fewer hours.
Nearly two thirds (63%) of those who claimed UC between March and June (‘Covid-claimants’) are having deductions taken from their monthly UC payments, compared with 41% of all UC claimants, the analysis by Child Poverty Action Group for the Covid Realities research project shows. That means a million new UC claimants living on less than their assessed need.
1,060,000 ‘Covid claimants’ have a deduction of some kind from their UC. Of those, 810,000 are repaying an advance only, 50,000 have a deduction for another reason and 200,000 have deductions to repay a UC advance and another debt.
The Government suspended some deductions for three months from April 2020 as part of its emergency response to the pandemic.
However, deductions for the repayment of UC advances were not part of the suspension and continue to be made as another lockdown begins in England and Scotland and more job losses and UC claims look likely.
Deductions can be taken from benefits for a range of reasons including repayment of a UC advance, legacy benefit overpayments, budgeting loans, rent arrears, utilities bills and mortgage interest.
For UC claimants, deductions are limited to 30% of the UC monthly standard allowance but this still means that £179 (for couples) can be deducted each month.
CPAG says these deductions can push families who are already living in poverty further into debt and financial misery.
According to their own analysis, the average household in poverty is 23% below the poverty line. However, if this family has to repay an advance, this will push them to £500 per month below the poverty line.
As well as ending the five-week wait for Universal Credit, the report calls on the government to write off historical tax credit overpayments from more than two years ago – when people’s circumstances may have been very different. It also calls on the UK Government to make UC advances non-repayable.
Dr Ruth Patrick, Lecturer in Social Policy and Social Work, who leads Covid Realities and co-authored the report said: “When the pandemic struck millions of families were forced on to universal credit and hoped for safe harbour there.
“In reality, they found a system that expects them to survive for five weeks without any payments or, if they take an advance, to live on much less than their assessed need so that they can repay money they had no option but to ask for.
“The pandemic has exposed just how harsh and nonsensical this is. It has shone a light on the hardship faced by UC claimants – both those who were claiming before the pandemic and those who had to claim because of it – – many of whom are forced to struggle to get by on significantly less than what the Government’s own benefit calculations suggest they need.
“The Government should respond to the many calls for reform and make advances non-repayable. That would take UC a step closer to being fit for purpose and offer some hope to the many families receiving UC who are going into a new year worrying about the new restrictions, school closures and whether they can stay afloat financially.”
A Department for Work and Pensions spokesperson said: “Advance payments are available to claimants in need of urgent financial support, and from later this year claimants will be able to spread the repayment of this across two years of payments rather than one.”
They added: “For claimants who find themselves in unexpected hardship, the spreading of payments can be deferred for up to three months.”