More than a million households on universal credit – 60% of everyone receiving the payments –are having their benefits cut to repay debts and loans.
Data sourced under the Freedom of Information Act show that in May – the most recent month for which figures are available – 1,048,000 universal credit claimants had a deduction of their benefit payment out of 1,759,000 claimants who received any universal credit payment that month.
The figures exclude deductions for fraud and sanctions. Nearly a third of all people on the troubled welfare scheme are having more than a fifth of their payment cut, often to repay loans that some claimants received to tide them over during the five-week wait for their first payment to arrive.
Charlotte Hughes, an anti-austerity campaigner who provides support and advice to benefit recipients, said universal credit deductions come up as an issue in her work every day. “Everyone is being hit by deductions in one way, shape or form. I don’t know anybody that actually receives the full amount of money that they’re supposed to get.”
She added that many claimants were having to use food banks as a result. “Your health suffers, your housing situation suffers, you can’t eat properly, you worry, you stress. It’s just never-ending.”
Gillian Guy, chief executive of Citizens Advice, said: “Our evidence shows many people on universal credit are struggling to make ends meet, and that deductions are contributing to this.” She said the government should introduce affordability tests when recouping debts from claimants.
The government’s flagship welfare scheme rolls six benefits into one, but has been beset by problems and is years behind schedule. Government adverts promoting it were banned as misleading earlier this month
The shadow work and pensions secretary, Margaret Greenwood, said: “This is yet more evidence of just how badly universal credit is failing. Harsh, punitive Conservative policies that take no account of what it is like to live on a low income are pushing people into poverty rather than protecting them from it. Labour will scrap universal credit, end the five-week wait and the benefits freeze and ensure that our social security system supports any of us in time of need.”
A separate freedom of information request shows that universal credit claimants who are having their benefits deducted to repay debts and loans owe an average of £903. About 570,000 households owe more than £1,000, including 80,000 people owing more than £5,000.
The largest deductions are often due to overpaid tax credits, incurred when claimants earned more than expected under the existing tax credit system. Many of these debts date back many years.
Minutes of a meeting of welfare rights advisers in October 2018 show that Neil Couling, the head of the universal credit programme, “admitted that the government over the last 18 months has demanded a push to recover old debt and has provided UC with extra funds to do this”.
Sarah, from Lancashire, is one claimant affected by this “push”. Unable to work for health reasons, she lives with her partner and daughter. The government has been deducting more than £100 a month from her universal credit payment, mostly to repay tax credit overpayments dating back to 2009. The level of the deduction changes each month, as does the amount of benefit she receives, making it impossible for her to budget.
“If I owe money I’ll pay it back,” she said. “I have no qualms about paying money back that I owe. But my argument is, ‘Why are they taking such a big chunk of my money?’ Over £150 some months – that’s a lot of money. That’s like two weeks’ worth of shopping, that they’re taking off me and we are running out of food.”
She started claiming universal credit in 2017 after leaving full-time work to become a part-time paid carer for her uncle. A car accident and subsequent diagnosis with osteoarthritis and fibromyalgia forced her out of paid work altogether.
The deductions are forcing her to borrow from her family. “We’re robbing Peter to pay Paul. We get our money today, we get our food shopping, we always make sure our bills and everything are paid first, and then we pay back whoever we owe. So we end up with no money left.”
On top of her tax credit debts, she is also having £50 a month deducted for a loan that she never borrowed. After the Observer spoke to the Department for Work and Pensions about Sarah’s case, it accepted that the loan deduction was a mistake and pledged a refund, while agreeing to discuss recovering the tax credit debts at a more affordable rate.
The DWP said: “Safeguards are in place to ensure that deductions are affordable, and in October we reduced the standard maximum deduction rate from 40% to 30% of the standard allowance. If someone is in financial difficulty because of deductions they can ask us to look again at their claim.”