Advance Loans Must Be Scrapped to Prevent Thousands Falling Into DWP Debt

Ruth Maguire MSP has added her voice to calls for the UK Government to convert Universal Credit advance payment loans into non-repayable grants. This comes after figures show 1.6 million people in receipt of the benefit suffered an average deduction of £60 in just one month at the height of lockdown.

Two in five households on Universal Credit had money deducted from their claim in May, almost entirely to repay loans to the Department for Work and Pensions (DWP). These figures were obtained by SNP MP and Work and Pensions Committee member, Chris Stephens, in an answer to a written parliamentary question.

Other deductions to repay historic debt and overpayments were suspended in May but now they have resumed, it is likely that more than £1 billion in total will be deducted from Universal Credit claims this year, according to Feeding Britain – who have identified deductions from Universal Credit as one of the prevalent causes of food bank demand.

In North Ayrshire and Arran, 4,100 claims had an average of £54 deducted, making it one of the five worst affected areas in Scotland.

The UK government has said it fears that introducing advance payment grants for Universal Credit could see an increase in fraudulent claims. The SNP has proposed a solution to this, whereby advance payments become non-repayable grants once the claimant has been deemed eligible for Universal Credit. This would take away the need to reverse the five-week wait, which the DWP has said would be “operationally challenging.”

The SNP MSP for Cunninghame South said: “The loans given out by the DWP at this time are only serving to put further financial pressure on struggling households rather than supporting them, as the welfare system should do.

“The waiting period for Universal Credit at this time has left thousands of people in North Ayrshire with no choice but to rely on these loans with little to no other income coming in.

“The loans should be replaced with non-repayable grants to genuinely relieve hardship faced by many households through no fault of their own during the pandemic.”

The figures released by the DWP, containing a breakdown of May’s deductions by each region and parliamentary constituency:

The 10 hardest hit parts of Scotland were:

1. Glasgow East – 4,600 claims had an average of £55 deducted

2. Kirkcaldy and Cowdenbeath – 4,200 claims had an average of £60 deducted

3. Rutherglen and Hamilton West – 4,200 claims had an average of £53 deducted

4. North Ayrshire and Arran – 4,100 claims had an average of £54 deducted

5. West Dunbartonshire – 4,100 claims had an average of £57 deducted

6. Glasgow North East – 4,000 claims had an average of £53 deducted

7. Kilmarnock and Loudon – 3,900 claims had an average of £56 deducted

8. Motherwell and Wishaw – 3,900 claims had an average of £55 deducted

9. Ayr, Carrick and Cumnock – 3,800 claims had an average of £54 deducted

10. Coatbridge, Chryston and Bellshill – 3,800 claims had an average of £57 deducted

%d bloggers like this:
search previous next tag category expand menu location phone mail time cart zoom edit close