Almost half of all Scottish households on Universal Credit are being hit by a staggering £10 million a month “poverty tax” of DWP deductions from their benefits.
In one month alone last year 180,000 households in Scotland had an average of £60 deducted from their social security payments, according to official figures.
The massive sum, from November 2021, was mainly to pay back the loans issued by the Department of Work and Pensions to cover the five-week waiting period at the beginning of a new UC claim.
SNP MP Chris Stephens, who uncovered the figure in parliamentary questions, said the deductions said £286,000 a month clawed back from claimants in his Glasgow South West constituency.
In ten Scottish constituencies over half of claimants are having their benefits clawed back to some extend, with average monthly deductions ranging from £57 to £62 a household.
Stephens, a member of Commons DWP Select Committee, said: “This is essentially a Poverty Tax on people who are struggling to heat their homes and put food on the table.
“Universal Credit is meant to be a subsistence benefit that covers basic living costs. If £60 a month is being taken away from it, when living costs are rising rapidly, how are people meant to subsist?”
He added: “The upfront loans should be replaced by upfront grants, recovery of tax credit overpayments should be capped at a lower level, and debts that have not been pursued for more than six years should be written off entirely, in line with the approach taken in the private sector.”
Most of the deductions, some 44 per cent are to pay back UC advance payments made while claimants wait for their benefit to be processed and 17 per cent are to repay historic tax credit overpayments.
Since April 2021 the DWP reduced the normal maximum rate of deductions in Universal Credit from 40 per cent to 25 per cent of a claimant’s Standard Allowance.
But Andrew Forsey, director of charity Feeding Britain which runs the Threehills Community Supermarket in Glasgow, said this was not enough.
He added: “The DWP moved in the right direction last year by lowering the cap on deductions and doubling the length of time people had to repay those upfront loans.
“But these figures show that additional action is required – especially now that £20 a week has been cut from the basic rate of Universal Credit, as well as the fact that this basic rate looks set to fall even further behind the cost of living in April.”
In his response to Stephens, DWP Minister David Rutley said the government sought to “balance recovery of debt against not causing hardship for claimants and their families”.
The Minister stated: “Processes are in place to ensure deductions are manageable, and customers can contact DWP Debt Management if they are experiencing financial hardship, to discuss a reduction in their rate of repayment or a temporary suspension, depending on their financial circumstances.”
He added: “Advances are a claimant’s benefit entitlement paid early, allowing claimants to access 100 per cent of their estimated Universal Credit payment upfront, resulting in 25 payments over a 24-month period. This is not a debt.
The hardest hit parts of Scotland with deductions in one month were:
Constituency Total deducted in one month
Glasgow East £315,000
Kirkcaldy and Cowdenbeath £302,000
Glasgow North East £290,000
Glasgow South West £286,000
Dundee West £281,000
Glenrothes £276,000
Motherwell and Wishaw£272,000
Rutherglen and Hamilton West £271,000
Linlithgow and East Falkirk £267,000
Kilmarnock and Loudoun £262,000
To sign up to the Daily Record Politics newsletter, click here.
