One recent study found that half of all Universal Credit recipients lose some of their payments due to automatic deductions implemented by the Department for Work and Pensions (DWP).
Claimants are losing £1 out of every £13 in fundamental charges to repay money owed to private landlords, utility companies, as well as making up for mistakes made via the tax office, according to left-wing think tank the New Economics Foundation (NEF).
In response to a series of parliamentary questions, the NEF found that this resulted in a total loss of £1.3 billion to the benefits guide in 2022-2023.
Automatic Deductions Put Universal Credit Claimants in Difficulty
Although some claimants have been refused money throughout the time they have been on benefits.
Annie, from the North East of England, whose name has been changed to protect her identity, is a single mother of children. Due to diagnoses of intellectual disability that prevent her from working, she is entitled to Incapacity Benefit.
Now Annie is involved in Changing Realities, an initiative that maps low-income lives and advocates for change. The initiative is funded by the Universities of York and Salford and involves over a hundred mothers, fathers and carers across the country.
The amount of Annie's benefit, which is £660, is reduced by £66 each month, partly to pay off a budget mortgage she took out with the Department for Work and Pensions to cover extra costs at the start of the school year and over the festive period.
That's the most effective mortgage that any of us [benefit recipients] have got entry to, and having a bit cash to cowl the fees that cannot healthy into each day finances facilitates a lot, particularly for pre-Christmas and back-to-faculty in September.
What's more, Annie finds it hard to cover her costs each month because of the automatic deductions. The £66 that has been deducted can be used for things like meals or activities for the children.
These days, meat and fruit are considered luxuries, and Annie regularly skips meals to make sure her children eat.
In order to guide her children, she also foregoes buying new shoes for herself.
The amount excluded varies across the country; in Blackpool South, two thirds of families benefit from deductions, almost twice as many as in South West Devon.
According to the NEF, these deductions place families in a cycle of indebtedness that deteriorates their intellectual and physical health, starting with a series of competitive debts and ending with inadequate support.
Sam Tims, a senior economist at NEF, commented: “Cuts to the already insufficient levels of universal credit make it increasingly difficult for people to afford essentials like food and heating. The resulting mental and physical stress often leads to more time off work."
"To create an economy where everyone can thrive, the next government must ensure that social security adequately covers essential needs and is not undermined by debt collection."