Universal Credit: Debts

Department for Work and Pensions written question – answered on 28th July 2022.

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Photo of The Bishop of Durham The Bishop of Durham Bishop

To ask Her Majesty's Government what assessment they have made of the effect of government debt deductions on Universal Credit recipients’ ability to afford essential items; and what steps they are taking to prevent debt deductions contributing to destitution as the cost of living increases.

Photo of Baroness Stedman-Scott Baroness Stedman-Scott The Parliamentary Under-Secretary of State for Work and Pensions, Parliamentary Under-Secretary (Foreign, Commonwealth and Development Office)

The Department has not made an assessment. However, DWP takes every care to recover benefit debt without causing undue financial hardship.

To that end we have lowered the standard cap on deductions from Universal Credit twice over recent years, firstly from 40% to 30% in October 2019 and then to 25% in April 2021.

We also ensure that any deductions are taken in priority order, which effectively means that higher priority deductions, such as utilities payments, are taken first, with debt only taking up the balance of the overall cap.

Where a person feels they cannot afford the proposed rate of recovery, and the debt has not arisen as a result of fraud, they are encouraged to contact us. When they do, we work with them, reviewing their financial circumstances and in most instances, agreeing a temporary reduction in their rate of repayment. We have recently extended the time period for any reduced repayment of this type to remain in place.

In exceptional circumstances, the Department does have discretion to waive recovery of debt. Guidance on this can be found in full at Chapter 8 of the Benefit overpayment recovery guide, on the GOV.UK website, which was updated in 2022 to ensure that all appropriate factors are taken into account when a case is being considered for waiver.

In recognition of the financial pressures people are currently facing the Government is providing over £15bn in further support, targeted particularly on those with the greatest need. This package is in addition to the over £22bn announced previously, with Government support for the cost of living now totalling over £37bn this year.

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