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Universal Credit deductions and levelling down

Failing to uprate benefits in line with inflation means the value of some of the main UK benefits fell to a fifty-year low last month. Compounding the problem of benefit adequacy is the issue of whether claimants actually receive what they are entitled to as a form of social protection due to benefit ‘debts’ and third-party deductions.

According to the latest available figures, two out of five (42%) Universal Credit (UC) claims were subject to some form of deduction from their payment late last year. As a result, just over 2 million UC payments were below the levels officially set by the UK government. Over half (53%) of children living in a household claiming Universal Credit were affected by these deductions - almost 2 million children.

For new claimants, the quickest and simplest way of addressing this would be to get rid of the 5-week wait. Almost half (46%) of the deductions made were for the recovery of an advance payment.

Across the UK, deductions to Universal Credit vary considerably: with 30% of UC claims subject to a deduction in Wimbledon, compared to 58% of UC claims in Middlesborough. Not only does this undermine the effectiveness of the UK social security system to protect against poverty, it also compromises the government’s ‘levelling up’ agenda.

This is because people living in some of the most deprived areas of the country are even less likely to receive the level of payments they need to keep their families safe, warm and fed. The 10 parliamentary constituencies most impacted by deductions to Universal Credit are also some of the most deprived areas in the UK.

For example, almost half a million pounds is deducted from Universal Credit claims each month in Middlesborough. This is perhaps to be expected – a legacy of low incomes has indentured claimants to landlords, the welfare state and utility companies in certain areas. Scrapping these deductions would mean each claimant in Middlesborough received £63 more on average per month. Notwithstanding low benefit levels, this could make a significant difference to those on the lowest incomes.

Deductions and third-party deductions have been identified as one of the key drivers of hunger, destitution and food insecurity. Recent research by the Trussell Trust found that more than half of foodbank users were in debt with the DWP. As a result, many claimants are being pushed deeper into poverty, with poor mental health and food insecurity widespread amongst those affected.

Adjustments have been made to reduce the amount that can be deducted from UC claimant’s personal allowance to service prior ‘debts’ and third-party deductions. However, it remains the case that up to 25% of a claimant’s personal allowance can be deducted. At present, this reduces the amount received by a single UC claimant aged under 25 from £265.31 to just £198.99 per month.

These sorts of practices have become part of the fabric of the social security system: UC deductions alone mean around £1.5 billion is being held back from some of the lowest income people across the UK by the DWP each year. Needless to say, this money could make a substantive difference to meeting basic needs given the rising cost of food and energy.

Beyond this though, cancelling deductions could make a considerable difference to the ‘levelling up’ agenda. Of course, issues of adequacy and conditionality within the benefits system require attention longer term (and a more ambitious reform agenda). But an efficient way of targeting resources where they are most urgently needed right now is to cancel deductions and restore the real terms value of social security by keeping this in line with inflation.

At a very basic level, our social security system is supposed to function as a safety net, not as a creditor. Deductions mean the social security system is more a tool for levelling down than levelling up and it needn´t be.


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