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.
Tax Credits only
Social Fund only
Other Combinations inc Social Fund
UC Overpayment only
Other Combinations inc UC
Other Combinations inc Leg OP & SF
Legacy Benefit overpayment only
Other Combinations inc Legacy
UC Recoverable Hardship Payment
Legacy Benefit overpayment and Social Fund
Housing Benefit only
Tax Credits & Housing Benefit
Housing Benefit & Social Fund
Source: DWP internal statistics
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.