Universal Credit

(asked on 1st May 2019) - View Source

Question to the Department for Work and Pensions:

To ask the Secretary of State for Work and Pensions, what information her Department holds on the number of universal credit claimants that have debts in addition to a universal credit advance.


Answered by
Alok Sharma Portrait
Alok Sharma
COP26 President (Cabinet Office)
This question was answered on 8th May 2019

The Government recognises the importance of safeguarding the welfare of claimants who have incurred debt. Universal Credit already has procedures and regulations in place to protect claimants from excessive deductions. The maximum rate of deductions cannot normally exceed 40% of the Universal Credit standard allowance, and from October 2019, this will be reduced to 30% of a claimant’s standard allowance of their UC award. If a claimant is in financial difficulty as a result of the level of deductions being made they can contact the Department to request that a reduction in deductions be considered.

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, and in the Autumn Budget 2018, we announced that from October 2021, the payback period for these advances will be extended further, up to 16 months.

Currently there are around 850,000 claimants that have a UC advance repayment in place. Of these claimants, the table below shows 440,000 also have at least one other debt relating to benefit overpayments, social fund loans or previous advances (figures rounded to nearest ten thousand). The data held by the Department does not include other third party debts, for example arrears, utility bills or other borrowing. However, research conducted by Almo’s shows that while many people join UC with pre-existing arears, this fell by a third after 4 months on universal credit.

Debt Source/Combination

Volume

Percent

Tax Credits only

120,000

27.31

Social Fund only

80,000

18.29

Other Combinations inc Social Fund

62,000

14.04

Other Combinations

40,000

9.05

UC Overpayment only

22,000

4.94

Other Combinations inc UC

20,000

4.49

Other Combinations inc Leg OP & SF

18,000

4.05

Legacy Benefit overpayment only

18,000

4.04

Other Combinations inc Legacy

17,000

3.89

UC Recoverable Hardship Payment

10,000

2.39

Legacy Benefit overpayment and Social Fund

10,000

2.22

Housing Benefit only

10,000

2.20

Tax Credits & Housing Benefit

9,000

2.05

Housing Benefit & Social Fund

5,000

1.03

Source: DWP internal statistics

Notes:

1. Data has been sourced from DWP internal statistics.

2. The figures within the data table for those with more than two types of benefit debt have been combined and reported according to whether they have both a legacy benefit (LegOP) and a social fund (SF) debt, either of these singularly or another UC related debt.

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