Latest news straight to your inbox Subscribe Thank you for subscribing We have more newsletters Show me See our privacy notice Invalid Email

Campaigners have called for the DWP to put an end to clawing back advance payments from Universal Credit claimants - and to cut the five-week waiting period for the new benefit.

As we mentioned when we revealed the Government's Universal Credit cuts hit-list in full for the first time , benefit payouts end up being reduced because of sanctions (financial penalties imposed for breaking rules such as not turning up at jobcentre appointments) and to pay back debts.

These include the advances given to claimants during the five-week wait for their first payout of Universal Credit.

Recovering this money is among the DWP's top priorities.

But now there are calls for these upfront payments of the new benefit to be treated as grants rather than loans - because they end up pushing people further into debt.

(Image: Getty Images/iStockphoto)

More than half of Universal Credit claimants have had money deducted, recent figures showed.

A quarter of all Universal Credit claimants saw their payments slashed by more than 20 per cent to pay back debts, including advance payments, while two fifths found their benefits cut by 10 per cent.

Previous research among clients of StepChange who had money taken from benefits to repay debt showed 71 per cent said it caused them hardship and a quarter had cut back on food spending.

The loans can be equal to one month's benefit but they have to be repaid within 12 months of them being taken out.

The DWP can deduct up to 40 per cent of your Universal Credit allowance to repay debts. This will fall to 30 per cent in October this year, but is having a huge impact.

(Image: Jerome Ellerby)

Garry Lemon, of the Trussell Trust, which manages a network of 420 foodbanks across the UK, said: "Universal Credit isn't the poverty-fighting reform that was promised.

"The five-week wait for a first payment is leaving many without enough money to cover the basics.

"Unaffordable loans and repayments aren't the solution.

"Last year, the biggest reason for a referral to a food bank was benefit payments not covering the cost of living.

"It's no surprise that taking money off these already low payments to pay back advance payments pulls people deeper into crisis right at the very point when support is most needed."

Those who have "additional inescapable costs", such as disabled people and families with children, the most likely to fall into the poverty bracket.

A report from the trust said: "Repayments don’t take into account people’s ability to afford them. It's vital that this is done in an affordable way."

"In some cases, you can have your repayment levels renegotiated, but this is rare.

"By that point, you’re likely already to be in financial difficulty, and may be in arrears on other bills."

StepChange says that after three months, 44 per cent of Universal Credit claimants are still struggling to pay their bills.

Peter Tutton, of StepChange, said: "Benefit deductions for debt repayments are leaving households short of what they need to get by, with many forced to borrow to make up the difference.

"With over a million people already using high-cost credit to fill holes in their monthly budget, it must be a priority to not make this debt trap worse."

What can be done about it?

The two charities have now highlighted several ways in which the DWP could tackle the growing problem, the Mirror reports .

1. The Trussell Trust says the Government should prioritise plans to end the five-week wait entirely.

It should reduce this to a maximum of two weeks and pay benefits fortnightly. It could achieve this by making the assessment period two weeks rather than a month.

2. Further to this, it said the first assessment period should be backdated so that it falls with the start of a claim. This would mean the first payment would start straight away.

(Image: Getty Images/iStockphoto)

3. In the short term, it said advance payments should be treated as non-repayable grants, at the very least for the most vulnerable groups.

4. It said in cases where repayments are required, it should make deductions flexible and increase the maximum repayment period to 24 months.

5. Lastly, it said all deductions should be included in the Government’s proposed 'breathing space' and statutory debt repayment plan schemes, so that deductions are stopped for anyone under the protection of these schemes.

What the DWP said

(Image: PA Wire/PA Images)

A DWP spokesman said: "With Universal Credit your first payment is available on day one as an advance, so people are able to access money right away.

"This is deducted over 12 months in a managed way and we are increasing the number of months that deductions will take place over.

"We understand the burden that debt can place on people and our work coaches provide tailored help with managing finances, including signposting to budgeting support and setting up more frequent payments.

"Meanwhile safeguards are in place to ensure that deductions are affordable."