Benefit deductions that leave struggling families paying back up to £60 a month from their Universal Credit must be paused during the cost of living crisis, MPs have demanded.
The powerful Commons Department of Work and Pensions committee has called on the government to halt the automatic clawback of accidental overpayments and loan advances to give households “much-needed breathing space” this winter.
Charities highlighted in evidence how people with deductions are being left without enough money to afford food or pay their bills, with some claimants turning to food banks to survive.
READ MORE: UC overpayments should be waived says Scottish MP
Scots claiming Universal Credit are losing millions of pounds every month as a result of deductions system branded a “poverty tax” by committee member Chris Stephens MP.
Official figures show 189,000 households in Scotland had an average of £60 deducted from their social security payments in just one month this year.
Now MPs have called on the automatic payments to the Government and other agencies take out of people’s benefits to be halted as claimants battle soaring costs.
Chris Stephens, the SNP member of the committee, said: “The recommendations in this report are evidenced based as all good policy should be.”
"It demonstrates what politicians, the third sector, charities and the Daily Record have been arguing over the last few years, and that is the very real impact deductions are having on people lives and driving people to poverty.
“The deductions system must end and be replaced with grants, a principle the Government have conceded with one off payments.
The Glasgow South West MP added: “But it is clear that the social security system is no longer providing the safety net it should, and it is frankly startling that not one of the Tory contenders has spoken of these issues during the leadership campaign.”
Deductions are taken by the Department for Work and Pensions (DWP) from people’s benefits to pay off debts, which could include advance payments of benefits, and previous errors or overpayments of benefits by the Government.
For example, new Universal Credit claimants face a five-week wait while their claim is assessed before receiving their first payment.
If they need an advance payment to help them through this period, this will be deducted from the amount they receive each month going forward.
Deductions can also be taken to cover some third-party debts, such as rent arrears.
The committee’s report, Cost of Living, calls for deductions to be paused and gradually restored only when inflation reduces, or if benefits are increased to accurately reflect the cost of living.
It also recommends the Government reviews and increases the benefit cap, which has been frozen since 2016, urgently and before the end of the year at the latest.
This year benefits were uprated in line with an inflation rate that was seven months out of date – rising 3.1 per cent in April in line with the Consumer Prices Index (CPI) inflation rate in September 2021 while the on the day inflation rate was close to nine per cent.
Sir Stephen Timms, Labour MP and committee chairman, said: “Inflation is at a 40-year high, with spiralling energy, food and fuel prices adding up to a cost of living crisis not seen for a generation and a bleak outlook for many families.
He added: “The Government must urgently increase the speed with which the DWP’s systems can make changes to benefit and pension rates to make sure the social security safety net lives up to its name for the most vulnerable people in our society.”
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