The commons work and pensions committee has condemned the DWP for trying to persuade universal credit (UC) claimants to get further into debt by taking out a ‘budgeting advance’, whilst wrongly insisting that the advance is not a loan.
In a recent report on support for childcare costs under UC ,the committee expressed ‘deep alarm’ that the DWP had suggested that parents trying to find up-front payments for childcare so that they could get back into work should take out a budgeting advance.
The DWP even claimed in its advice that the advances ‘are not a loan’ even though its own website says that they are.
Budgeting advances have to be repaid, usually over a period of 12 months by deductions from your UC. If you stop claiming UC and fail to repay your advance, the debt will be aggressively pursued by the DWP’s Debt Management centre.
The committee had already raised concerns about claimant debt in its report on Universal Support.
The Committee said that:
‘. . . persistent debt can prevent claimants from finding and staying in work, and the extra costs and pressures of debt can quickly spiral out of control.
‘DWP's aggressive approach to collecting debts can compound matters further, leaving claimants "swimming against a tide of unmanageable repayments" which "pile debt upon debt, trapping people in a downward spiral of debt and hardship".
‘Yet , as the report noted, debt advice is not routinely offered as part of the “Universal Support” service intended to help claimants navigate the transition to Universal Credit.’
Chair of the Committee Frank Field said:
“It is simply irresponsible of Government to suggest that the way around this policy’s inherent problems is for struggling, striving parents to take on more debt - still more so to claim, untruthfully, that it is not a debt at all. It clearly is.”