Brits warned as more than one million have their Universal Credit pay reduced

Just over a million people in Britain who claimed benefits during the first wave of the coronavirus pandemic have seen a drop in their Universal Credit, new data has revealed.

With the country in yet another national lockdown, many rely on these benefits to survive, but the shocking statistics, gathered by the Child Poverty Action Group (CPAG) show that nearly 63% of those who claimed between March and June 2020 are actually living on less than they've qualified for.

So why did this happen, and who did it affect? Here's what you need to know.

Why have people had Universal Credit payment deductions?

It's more straightforward than you'd think, and is down to re-paying an advance loan many can opt to take out when they initially claim.

There's been a huge surge in people claiming the government benefit as Covid-19's knock-on effects have meant many have lost their jobs and had no other option but to sign on.

For those claiming, they have to wait five weeks before receiving their first payment and this can often be too long of a wait, meaning many opt to take the advance loan to cover costs over those five weeks.

CPAG analysed official figures and said almost all of the Universal Credit deductions include the repayments of the advance loan.

Of the 1,060,000 claimants having money regularly deducted, 810,000 were repaying an advance, 50,000 had a deduction for another reason and 200,000 were repaying an advance and another debt.

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Deductions can be taken for a range of additional reasons including to repay previous benefits overpayments, rent arrears, utility bills and mortgage interest.

Up to 30% of the monthly allowance can be deducted, with this due to drop to 25% in October 2021.

Who have the deductions affected?

If you're on Universal Credit and opted for the advance loan when you were first accepted, chances are you've been affected by these deductions, but they're nothing to panic about.

As well as this, you could be seeing deductions to a number of other reasons, such as rent arrears or repaying times when you've been overpaid in error.

Dr Ruth Patrick, lecturer in social policy and social work – who leads Covid Realities and co-authored the report, said: “When the pandemic struck millions of families were forced on to Universal Credit and hoped for safe harbour there.

“In reality, they found a system that expects them to survive for five weeks without any payments or, if they take an advance, to live on much less than their assessed need so that they can repay money they had no option but to ask for.

“The pandemic has exposed just how harsh and nonsensical this is.”

A spokesman for the Department for Work and Pensions said: “Advance payments are available to claimants in need of urgent financial support, and from later this year claimants will be able to spread the repayment of this across two years of payments rather than one.

“For claimants who find themselves in unexpected hardship, the spreading of payments can be deferred for up to three months.”

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