Universal Credit: Household Debt

Oral Answers to Questions — Work and Pensions – in the House of Commons at 12:00 am on 21st May 2018.

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Photo of Helen Hayes Helen Hayes Labour, Dulwich and West Norwood 12:00 am, 21st May 2018

What assessment her Department has made of recent trends in the average level of household debt of people receiving universal credit.

Photo of Alok Sharma Alok Sharma The Minister of State, Department for Work and Pensions

The Government have taken a number of steps to prevent problem debt, such as capping payday lending costs. We also have interest-free advances within universal credit, and a system of priority deductions to help claimants who are in arrears.

Photo of Helen Hayes Helen Hayes Labour, Dulwich and West Norwood

A recent Trussell Trust survey found that 70% of respondents were in debt as a result of the initial universal credit wait and more than half had experienced problems with their housing linked to debts and arrears. Advance payments simply stack up more debt, and food banks in areas where universal credit has been fully rolled out for more than a year have seen an average increase in need of 52%. The Secretary of State has it within her power to make further changes to universal credit to stop this avoidable hardship and distress now. Why will she not do so?

Photo of Alok Sharma Alok Sharma The Minister of State, Department for Work and Pensions

As the hon. Lady will know, a report that was published last year by the National Federation of ALMOs found that more than three quarters of tenants who started claiming universal credit were already in rent arrears. Other research shows that after four months on universal credit the number of claimants in arrears fell by a third. The key point is to make sure that we get help to individuals and that is precisely what the budget changes the Secretary of State has outlined do.

Photo of Craig Tracey Craig Tracey Conservative, North Warwickshire

Could the Minister confirm whether, under universal credit, claimants are more likely to be in work within six months than they were under jobseeker’s allowance?

Photo of Alok Sharma Alok Sharma The Minister of State, Department for Work and Pensions

Yes, I can absolutely confirm that under universal credit claimants can get into work faster and stay in work longer than under the legacy system.