Oral Answers to Questions

Yvonne Fovargue Excerpts

Monday 5th February 2018 Commons Chamber

[Sarah Newton]

Unlike the previous system, universal credit is more targeted, and support is focused on those who need it most. Transitional protection is available for people who move into universal credit from other benefits, provided their circumstances stay the same. When giving evidence to the Select Committee last week, my hon. Friend the Minister for Employment said that he was aware of the situation, and he is thinking carefully about this issue.

[Yvonne Fovargue (Makerfield) (Lab)]

9. What recent assessment her Department has made of trends in the average level of household debt for people on universal credit.

[The Minister for Employment (Alok Sharma)]

The Government have taken a number of steps to reduce the risk of problem debt, including capping payday lending costs and promoting savings.

Within universal credit, we also have interest-free advances and a system of priority deductions to help claimants who have got into arrears.

[Yvonne Fovargue]

The Government’s own data shows that rising numbers on universal credit are falling into rent arrears, and many claimants in my constituency are going to food banks or approaching payday lenders. Although an advance is available, this is a loan, which is to be repaid at 40% of the standard allowance. Another 40% can be deducted to repay creditors—for example, utilities. That is a total of 80%. Can the Minister reassure me that 80% of the individual allowance cannot be deducted, and that affordability checks, like those that all payday lenders have to do, are carried out before any deductions are actioned?

[Alok Sharma]

Of course the hon. Lady is absolutely right to highlight that we want to make sure we help those who are in arrears. She will know that research done by the National Federation of ALMOs—arm’s length management organisations—has reported that three quarters of tenants were in rent arrears already before they moved into universal credit. She talks about deductions; the percentage is 40%. However, I am happy to meet her to discuss this matter further.