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Universal Credit Benefits Deducted To Repay Debts and Loans

25 Nov 2019
Approx Reading time: 3 minutes
  • Over 1 million universal credit claimants have their benefits recouped to settle debts and loans
  • Universal credit is pushing people into poverty instead of helping them
  • Labour Party suggests that it will scrap out universal credit if it wins the upcoming General Election

Millions of families on universal credit have their benefits deducted to repay loans and debts. Approximately 60% of the households receiving universal credit are missing on these benefits because of debts.

Universal credit benefits cut to repay loans

According to the Freedom of Information Act data, there were over 1.048 million families on universal credit that had benefit deduction. It is a considerable number considering in May there were a total of 1.759 universal credit claimants. However, the figures exclude the deductions for sanctions and fraud.

According to anti-austerity campaigner Charlotte Hughes, the deduction issues on universal credit benefits are a daily occurrence. She indicates that the deductions hit almost everyone in one way or another. As a result of the deduction, there is hardly any household that receives the entire amount they should get. Because of this, most families resort to food banks. Consequently, this affects their housing situation, health, and even eating since it is a never-ending cycle.

Universal credit scheme has pushed families to poverty

Citizens Advice CEO Gillian Guy stated that evidence shows that people on universal credit are struggling so much. It is a situation that the deduction on the benefits has aggravated. According to Gillian, there is thus need for the introduction of affability tests when reclaiming loans from claimants.

Also Read: FCA Partners With UK Finance To Help Mortgage Prisoners

Universal credit is a government welfare scheme that combines six benefits to one. However, the program has been facing problems, and it is behind schedule. Pensions’ secretary Margret Greenwood indicated that it shows how badly the scheme had failed. She said that stringent Conservative policies do not consider how hard it is to live on a low income. The policies have nonetheless continued to push people to poverty instead of protecting them.

Labour Party to scrap universal credit

However, the Labour Party is planning to institute changes if it wins elections. During the launch of its manifesto, it indicated that it would scrap universal credit because the scheme has been catastrophic. The party has equally indicated that it will halt the transfer of existing legacy benefits to the universal credit claimants. As a result, this has pushed several people into poverty and resulted in several families losing their homes. Also, families are turning to food banks, and some cannot even feed their children properly.

The labor party promises to provide a system that will help in ending poverty by securing a minimum living standard. There are several dependants on universal credit, and on average, each owes around £903. Therefore the Labour party does not intend to scrap it immediately, but that should be a long term change. The first step will be to stop pushing people into it and develop an alternative system that is respectful.

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Rebecca White

Rebecca White is chief editor at CreditRaters.com. Rebecca has an extensive amount of knowledge on financial subjects including short-term loans & debt consolidation in the UK and USA. Rebecca has wrote for many publishers such as Debt Secret, My Money, VL and more.