The Lloyds Bank Foundation has issued a report this week warning that unfair deductions from universal credit are leaving more than 2 million people unable to afford basic necessities and driving them further into debt.  The charity has called for an immediate review of the way debts are collected and for historic debts to be wiped out.

In its report ‘Driver of poverty’ the charity argues that ‘UC deductions are confusing, unmanageable, and forcing people into hardship, often through no fault of their own.’

The DWP has the power to automatically deduct up to 25% of a claimants UC for debts caused by advance payments, government errors and some third party debts such as utility bills and rent.

44% of all UC claimants have money automatically deducted, with an average of £78 a month being taken, but some claimants having much larger deductions.

Claimants with deductions are almost twice as likely to have gone without food toiletries or utilities as those with no deductions.

Many deductions are a result of claimants having to take an advance on their UC to see them through the five week wait for the first payment.

But millions of new UC claimants discover that they are suddenly paying back overpayments of tax credits that occurred years earlier and which were due to an official error of which they weren’t even aware.  The Foundation says that these errors are not explained, are difficult to challenge and deductions are automatically taken without any consideration of whether the claimant can afford them.

The report quotes one claimant as saying:

“This month I have just £143 to live on, I don’t understand what the deductions are for and there is nobody I can speak to who can explain. I have to beg and borrow from friends and family who are already struggling themselves in order to get by. Deductions don’t help me find a job, and really impacts on my mental health. I walk everywhere because I can’t afford travel costs, but I’m exhausted. I’ve lost so much weight I fit into children’s clothes. I use foodbanks, but you can only use the food bank three times a year. I can use it one more time this year.”

Lloyds Bank Foundation is calling for an urgent review of the way UC deductions are managed and for the government to:

  • Convert advance payments into grants.
  • Write off historic debts that are due to government error.
  • Carry out checks made by qualified debt advisors to make sure any repayments are affordable in the same way that other bodies are obliged to.

You can download the full ‘Driver of poverty’ report from this link.


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    Astrid · 2 years ago
    Reading this has made for depressing future. It only proves that this is deliberate to keep disabled struggling with no hope of any help, they have taken dignity respect for self and no way to fight the unfair treatment. I don't know what to do as there is no where to turn. Our goverment hates benefits probably hope's we don't survive maybe they should post us end of life pills instead of forms it would be more humane.
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    K.V · 2 years ago
    Is there a valid reason for the DWP making claimants for UC wait for 5 weeks.....seems to me like a punishment for needing help. This country is becoming very heartless and cruel to its citizens.
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    Maria Sutch · 2 years ago
    I claimed UC for the first time during the Pandemic in 2020 following the death of my long term partner and being made redundant from my job in hospitality. Having waited 7 months to receive my first payment I was then informed I had to pay back Working Tax credits to the tune of £2220.85 which were overpaid to my partner and I over 10 years ago ! This amounts to nearly £50.00 a month being taken from my UC and ESA claim. I was never aware of any overpayment but I've given up arguing with HMRC and DWP. They really are a law unto themselves. I don't have anymore fight in me so I'm just paying it off, while still waiting for my PIP review/ renewal so I can apply for my new Blue Badge. 
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