DWP claws back £1 from every £13 of Universal Credit affecting 3.2 million claimants

-Credit: (Image: Pete Stonier)
-Credit: (Image: Pete Stonier)

According to an analysis of Department for Work and Pensions (DWP) data, approximately 3.2 million Universal Credit claimants are losing substantial amounts of money each month due to payment deductions. This comes in the wake of a significant increase in overpayment of benefits such as Carer's Allowance, leaving the department pursuing over 130,000 British carers for nearly £250 million, with many facing large deductions to repay it.

The New Economics Foundation's analysis discovered that DWP benefit reductions due to overpayment or claimant debt were decreasing the overall average Universal Credit payment per person by eight per cent. This means that £1 in every £13 distributed by the department is being recouped through their automated repayment system.

Benefit recipients can have their payments deducted for a multitude of reasons beyond the DWP, ranging from owing rent to a private landlord to falling behind on utility bills. At present, half of all Universal Credit recipients are seeing their payments reduced to repay debts, costing the average claimant £63 each month.

READ: 1,042 motorists caught out by Stoke-on-Trent's new speed cameras The devices have gone up in Sneyd Green, Trent Vale, Baddeley Green and Hanley

READ: Stoke-on-Trent dubbed the 'ugliest city' in the country | Historian hits back at social media poll saying the Potteries has 'splendid buildings and architecture' - but concedes some parts are 'neglected'

The data showed that 730,000 households were repaying an advance from the DWP to cover the initial five-week wait for the first Universal Credit payment, while 910,000 households were repaying budgetary loans to meet emergency costs amid the cost of living crisis of the past two years.

The analysis by the economics think tank suggests that the nearly £1bn distributed through the Household Support Fund and other discretionary cost of living payments to the poorest households has been overshadowed by the magnitude of the DWP's automated deduction system for payments, reports the Manchester Evening News.

Sam Tims, a senior economist at the New Economics Foundation, commented: "The social security system should provide a safety net for us all. But low-income families are trapped in a vicious cycle of debt due to insufficient wages and state support and the relentless pursuit if debts that built up as a result."

He further added: "Cuts to already meagre levels of Universal Credit have made it harder for people to afford the basics like food on the table and a warm home. The mental and physical strain this creates makes it more likely that they will be forced to take time off work."

Tims also stated: "If we want an economy that allows everyone to thrive, the next government must guarantee that social security covers people's essentials and ensure this guarantee isn't undermined by the pursuit of debt."

It is noted that deductions for overpayment or debt are limited by the DWP to 25 per cent of the total benefit payment. However, the department can still request employers to deduct owed amounts from the salaries of those who are working and owe money to the DWP.

Sign up to our main daily newsletter here and get all the latest news straight to your inbox for FREE