Universal Credit Deductions

Mick Whitley Excerpts

Wednesday 19th July 2023 Westminster Hall

[Mick Whitley (Birkenhead) (Lab)]

It is a privilege to serve under your chairmanship, Dame Maria. I congratulate the hon. Member for Glasgow South West (Chris Stephens) on securing a debate of such enormous importance to our constituents. It is good to see the Minister in his place. I hope that in his remarks he will do away with the prevarication and tired excuses that we so often hear from the Dispatch Box on this subject, and that he will have the courage to confront head-on the disastrous consequences of this Government’s cruel and pernicious benefits regime for millions of people across this country.

The design and roll-out of the universal credit system have proven to be a catastrophe for the worst-off in our society. In my constituency of Birkenhead, nearly 14,000 people are in receipt of universal credit. With the exception of housing, there is no issue that constituents come to me about as frequently as the inadequacy of universal credit payments during the cost of living crisis, the questionable and often downright wrong reasons for which deductions are made, and how the five-week wait is forcing many people even deeper into debt.

Research by the Joseph Rowntree Foundation shows that this is a nationwide crisis. The basic level of universal credit now stands at its lowest level as a proportion of average earnings, and 90% of low-income households on universal credit are going without essentials. When we talk about people who have deductions made from their payments, it is important to acknowledge that most claimants struggle to survive even when they receive their payments in full.

We should also remember that a significant proportion —around 40%—of the people we are talking about are already in work. Although Ministers talk about deductions being a necessary incentive to ensure that claimants fulfil their obligations under the scheme, the vast majority of deductions are in fact debt repayments, either to the DWP or to third parties.

Universal credit deductions are now one of the leading causes of destitution in this country, and the most vulnerable are paying the price. Families with children, and families in which somebody is unable to work because of illness or disability, are significantly more likely to have deductions to their universal credit payments, and 2.2 million children are growing up in households in which deductions are routinely made from universal credit payments. Although it has been reported that the average reduction amounts to 15%, nearly half of all households with a deduction have over 20% of their basic allowance deducted.

Yesterday, I met Victoria Benson, chief executive of the charity Gingerbread, which provides invaluable support to single parents, to discuss the impact of the two-child limit and universal credit deductions on single-parent families. She explained that single parents are disproportionately over-represented among universal credit claimants. Some 70% of single-parent households are in receipt of universal credit, and that figure is likely to rise to 90% by the summer of next year as a result of the managed migration from legacy benefits.

The struggles of being a single parent—raising children on one’s own, trying to make ends meet and searching, often in vain, for affordable childcare—are very real. Now, many single parents are also forced to grapple with deductions that leave them with an uncertain income each month and unable to afford the essentials for either their children or themselves. The result is parents going without food so that their children can eat, and falling even deeper into debt.

We are all entitled to a basic level of comfort and dignity. If the universal credit system is not guaranteeing that to the millions of people who rely on it as a lifeline, it is simply not fit for purpose.