Documents to download

The Department for Work and Pensions (DWP) has the power to make direct deductions from benefit payments to pay certain debts and costs owed by claimants. This can include money owed to the Government due to a benefit overpayment or loan, or to a third party such as a landlord, utility provider, local authority, and the courts.

Universal Credit (UC) broadly replicates the rules which apply in the legacy benefits it replaces. However, recoveries of advances and tax credit overpayment debts have been common under UC.

Of the 4.96 million households in Great Britain on Universal Credit in February 2023, 2.25 million (45%) had a deduction, and the average amount was £61. The total amount deducted from UC awards was £137 million. Advance repayments accounted for just under £61 million (44%).

Welfare rights organisations and others have argued that the level of deductions is creating hardship. In response, the Government has reduced the cap on the total amount that can be deducted, and increased the period of time claimants have to repay advance payments. They argue, however, that deductions help claimants to manage their finances, and that a balance has to be found between helping people out of debt and affordability.

There have been calls on the Government to further reduce the rates at which deductions are made, or to pause deductions to provide a breathing space for low income households under pressure due to the increased cost of living. Some organisations have also argued that the priority order for deductions should be changed to give greater emphasis to debts where non-payment has the most serious consequences, and less emphasis on debts to the Government.

Documents to download

Related posts