Universal Credit Deductions

Ian Byrne Excerpts

Wednesday 19th July 2023 Westminster Hall

[Ian Byrne (Liverpool, West Derby) (Lab)]

It is a real honour to serve under your chairship, Dame Maria. I thank my good friend, the hon. Member for Glasgow South West (Chris Stephens), for securing this important debate and for his excellent speech, and other hon. Members for their fantastic contributions.

The DWP has the power to make direct reductions from benefit payments to pay certain debts and costs owed by an individual. This can include money paid to the Government due to a benefit overpayment, or a loan to a third party such as a landlord, utility provider, local authority or the courts. It is worth noting that the majority of benefit deductions are for DWP debts, including those related to universal credit advance payments, overpayments and budgeting loans.

I want to draw attention to several factors of universal credit deductions that seem to be having an extremely negative impact on my Liverpool, West Derby constituents. First, many new universal credit claimants now take out an advance while they wait for their first payment, and the advance is usually recovered by deductions of equal instalments over a period of 24 months. The pain that our constituents are facing right across the UK has been outlined today, but taking out that advance payment seems to be actively encouraged by the DWP. Secondly, when someone moves on to universal credit, any outstanding tax credit debt is now transferred to the DWP, allowing it to recover the debt through any of the methods available to it, which are far more extensive than those available to His Majesty’s Revenue and Customs. Universal credit rules allow the DWP to make deductions for overpayments caused by DWP error, which was not the case with legacy benefits.

A major area of concern with deductions is the basic premise of affordability. It is staggering that there is no requirement for the DWP to determine whether someone can actually afford a deduction, or to consider what that deduction would do to their and their family’s life. From the weekly emails I receive from desperate Liverpool, West Derby constituents, and from speaking to people in my surgeries, it is plainly clear that many simply cannot afford the deductions enforced on them The levels of universal credit deductions faced by far too many of my constituents, including extremely vulnerable people, are causing them to struggle to pay for essentials such as heating, fuel, food and toiletries—the very essentials of life. It is driving them into absolute, abject poverty.

At the mobile food pantry that we run in Liverpool West Derby every Friday with Fans Supporting Food Banks and St Andrew’s Community Network, I hear many stories of people being forced into using emergency food aid as a result of DWP deductions. This is replicated across the city at the other five services that we run, and the pattern repeats across the UK, as we have heard from Members today. The Government argue that their deductions can help claimants to better manage their finances, but in December 2022 the Trussell Trust reported that more than half of all universal credit claimants who experienced deductions in their benefits had one day when they could not afford to eat at all or only had one meal because they could not afford to buy enough food in the previous 30 days. We need to remember that we are the sixth richest country in the world, and to drive people into these circumstances is completely immoral.

The Trussell Trust highlighted new research showing that 47% of people referred to food banks had faced deductions to their or their partner’s benefits income to pay back a benefit advance, benefit overpayment, DWP loan, or any other debt or fine. That rose to 57% among those referred to food banks who were in receipt of universal credit. In its June 2023 report, “The welfare debt trap: Adjusting the level and priority of deductions from benefits to prevent hardship”, Citizens Advice found that the deductions have created hardship and are applied disproportionately to households in which someone has at least one long-term health condition or disability and to households with children, which are also more likely to have deductions applied at a higher level. Those people are the most vulnerable.

The current system of deductions clearly targets our most vulnerable citizens and is driving millions of people into poverty. It is supposed to be a safety net. Let us be crystal clear—amazing, I can see the Minister puffing his cheeks— that the current universal credit deductions system is not fit for purpose and needs fixing urgently. Where do we go from here? I urge the Minister to take the following measures into consideration for the benefit of the huge number of people, many extremely vulnerable, who are suffering as a consequence of these actions. The DWP must place affordability at the heart of deductions and prioritise the reduction of the total amount being deducted from households. At the heart of the calculations must be the basic human right every citizen should have: to be able to afford food, water, shelter, clothing and heating. The DWP must not be allowed to push people into abject poverty.

The Government must provide immediate breathing space for low-income households that are under extreme pressure due to the cost of living crisis. The priority order for deductions must be changed to put greater emphasis on debts where non-payment has the most serious consequences and less emphasis on debts to the Government. The Government must get serious about helping people not to accrue debts in the first place, especially through the use of advanced payments or loans. Deductions for overpayment owing to DWP error should not be made. Minister, my door is always open to discuss how a right to food could be implemented to tackle the scourge of food poverty, which we see across all our communities and have heard about so bleakly today. The ball is firmly in his court.

[Dame Maria Miller (in the Chair)]

We come to the last Back-Bench speech and will then move to Front-Bench contributions at 10.28 am.