Universal Credit: Deductions

Department for Work and Pensions written question – answered at on 22 January 2020.

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Photo of Baroness Thomas of Winchester Baroness Thomas of Winchester Liberal Democrat

To ask Her Majesty's Government what plans they have, if any, under Universal Credit to stop the automatic deduction of a claimant’s debts from the standard rate of Universal Credit if creditors have agreed a reduction in the rate of repayment.

Photo of Baroness Stedman-Scott Baroness Stedman-Scott The Parliamentary Under-Secretary of State for Work and Pensions

The Department’s deductions policy strikes a fair balance between a claimant’s need to meet their obligations and their ability to ensure they can meet their day-to-day needs. From October 2019, Universal Credit deductions have been reduced to 30% of a claimant’s standard allowance down from 40% to better achieve these objectives.

Creditors can request debts to be collected through Universal Credit, typically where other repayment methods have been unsuccessful. We are led by the creditor, and at any time any creditor could inform us they wish to take back responsibility for collecting the debt from Universal Credit - such requests would trigger an end to deductions as soon as possible. The rate at which repayments are recovered from Universal Credit are set out in Schedule 6 to the Social Security Universal Credit, Personal Independence Payment, Jobseeker’s Allowance and Employment and Support Allowance (Claims and Payments) Regulations 2013 – SI 2013/380.

For any of the deductions laid out in the regulations, creditors can approach Universal Credit directly and typically there is no requirement for them to proactively get the claimant’s consent. Any requests for deductions are considered by the Department on an individual basis.

Where recovery relates to benefit overpayments, this is managed in a sensitive way. Maximum deduction rates are set out in legislation (Regulation 11 of the Social Security (Overpayments and Recovery) Regulations 2013) and where a claimant cannot afford the proposed rate of recovery they can contact the Department’s Debt Management team so this can be reviewed. If a reduction in the repayment rate is agreed, we will implement it quickly so that payments are adjusted accordingly.

The Department is always developing our understanding on the impact deductions can have on claimants, and has heard evidence from external organisations on this issue. Ultimately, we have to balance these impacts with the need for claimants to meet their obligations.

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