As the cost of living crisis continues to hit low-income households hardest, Child Poverty Action Group and the North East Child Poverty Commission are calling for changes to universal credit and benefit deductions rules in light of new data revealing the government is clawing back over £80 million a month in deductions from families’ universal credit (UC).
The number of children living in households with debt deductions being taken from their UC has risen to more than 2.2 million – making up more than half (53%) of all children in households receiving universal credit. These families are missing out on an average of £73 a month as a result.
In the hardest hit parts of the country, the proportion of all children in UC households whose parents or carers are subject to deductions is more than two thirds.
The worst affected areas
The worst affected local areas are in the North East and North West of England, where the proportion is as high as 68% in the Middlesbrough, Middlesbrough South and East Cleveland, Redcar, Blackpool South and Knowsley constituencies.
Deductions can be taken from benefits for a range of debts, including to utility companies, but most commonly they are for the repayment of a UC advance – a loan which many families have to take out to survive the five-week wait for a first UC payment. This represents £34.7 million a month – or 43% – of all deductions clawed back from households with children.
In the North East, which now has the highest child poverty rate of anywhere in the country, UC advance repayments account for 50% of all deductions.
Calling on the government
Child Poverty Action Group and the North East Child Poverty Commission is calling for:
- an end to the five-week wait for a first UC payment – as the single biggest driver of debt deductions from families
- a reduction in the maximum rate at which deductions can be taken for repayment of a government debt to 5% of a claimant’s benefit and
- a reduction in the overall cap on deductions (for any type of debt) to 15% (from the current 25%).
Alison Garnham, Chief Executive of Child Poverty Action Group, said:
“With so many families struggling to keep their heads above water as prices soar, every pound deducted by the government from universal credit is a pound less for food, energy and other household essentials. Deductions are forcing families to live on less than they are entitled to, leaving more than two million children with much less than they need. They are making a dire situation for low-income parents even worse. Ministers must lower the maximum rate at which deductions can be taken and scrap the unfair five-week wait for UC which is pushing already hard-pressed families into debt.”
Amanda Bailey, Director of the North East Child Poverty Commission, said:
“It is clear from all the organisations we work with that deductions from universal credit are causing significant, but entirely avoidable levels of hardship for families across the North East. It cannot be right that, in the region with the highest child poverty rate in the country, parents and carers are being forced to take out a repayable advance from the government because they simply do not have any financial buffer to survive the five-week wait – and over 120,000 children in the North East are being left without the support they need, month after month, as a result of UC deductions. The government must act now on this issue, which is disproportionately affecting families in areas already in greatest need.”