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Daily Record
Daily Record
Politics
Andrew Quinn

Scots lose out on £11.5million a month in Universal Credit payments due to 'poverty tax'

Scots have lost out on more than £10million in a month in Universal Credit payments due to a "poverty tax", official figures reveal.

The UK Government deducted £11.5million from 194,300 Scottish households on Universal Credit in November 2022.

The figures obtained by Glasgow South West MP Chris Stephens show that each household had £59 deducted on average.

The total amount of money taken away increased by £165,000 between May and November 2022. The number of households who were subject to deductions grew by 6,000 in the same period.

Almost half of the money taken away was to repay upfront loans that households are forced to take out from the Department for Work and Pensions (DWP) when waiting five weeks for their first Universal Credit payment.

Some cash was deducted from claimants if they received an overpayment in error.

Claimants also lost money due to third party deductions. This is when money is taken off Universal Credit to pay off debts for other things including utilities, council tax, child maintenance, rent, service charges and court fines.

Stephens has branded the deductions a "Poverty Tax" and has urged the Chancellor to help hard-pressed Scots by slashing the rate of reductions.

He said that next week's budget would be a good opportunity to do so.

Stephens said: "The larders being run by Good Food Scotland have never been so busy. People are finding it near impossible to keep up with basic living costs.

"The UK Government’s Poverty Tax is one of the biggest reasons for that hardship, and my constituents are among the hardest hit. The Chancellor has a golden opportunity in next week’s Budget to tackle this injustice head on.

"There should be an amnesty on deductions resulting from the DWP’s own errors, a replacement of upfront loans with grants, and a much lower cap on the monthly rate of deductions.

"These three moves would help to reduce the need for food aid in Scotland."

Stephens is also the chair of Good Food Scotland. The programme aims to get rid of hunger in Scotland.

Good Food Scotland has set up 'larders' in different areas of Glasgow. These aim to ease the cost of living crisis by running membership food shops which sell food at discount rates.

Stephens discovered the scale of the deductions system after submitting a written question to the UK Government.

The three hardest hit constituencies were in Glasgow.

Some £360,000 was taken from 6,100 of Glasgow North East's 10,600 Universal Credit claimants. The average deduction was £59.

In Glasgow North East, £330,000 was taken from 5,800 people while £321,000 was deducted from 5,500 in Glasgow South West.

Glasgow North East had an average deduction of £57 while it was £58 in Glasgow South West.

Dundee West had the highest average with £64 taken away. This was from 5,000 deductions, which amounted to £316,000.

The next worst affected was Rutherglen and Hamilton West with £303,000 taken from 5,200 people. The average deduction was £59.

The seats of Kirkcaldy and Cowdenbeath and Motherwell and Wishaw had £301,000 deducted from 5,100 and 5,000 people each.

Glenrothes, Linlithgow and East Falkirk, and Glasgow Central were the next worst impacted, with £291,000, £283,000 and £277,000 taken.

Andrew Forsey, national director of the charity Feeding Britain which runs Good Food Scotland, said: "Two years have passed since the UK Government last eased the rate of deductions from Universal Credit.

"A further significant easing is now long overdue. In the absence of reform, these deductions will continue to act as a recruiting sergeant for food banks."

The Daily Record revealed last year that half of households in Scotland were relying on Universal Credit had suffered deductions in their benefit payments.

Stephens had submitted a written question to the UK Government asking how many Universal Credit claims were subject to deductions in the most recent month for which data was available.

The DWP said that it has reduced the standard cap on deductions twice in recent years to 25 per cent of the Universal Credit Standard Allowance.

The department also said that it has doubled the period over which new claim advances can be repaid and has stopped utility companies from being able to increase payments automatically.

A DWP spokesperson said:

“Deductions help protect claimants from enforcement actions such as eviction, ensure priority debts such as child maintenance are still addressed and recover taxpayers’ money when overpayments are made.

"We must strike the right balance between ensuring those protections are in place and allowing claimants to retain as much of their award as possible for day-to-day needs.”

Eviction notices, rationing energy and foodbanks

Universal Credit deductions have caused people to ration their heating, face eviction from their homes or accumulate bigger debts.

Many of these people suffer from health problems and the deductions are not helping.

One single young man, who suffers from depression, anxiety and ADHD, told Citizens' Advice Scotland how deductions have left him with only £259.61 a month to live on.

He gets £25.06 taken away to pay for an advance he received and £50.24 for a DWP loan repayment each month.

He is at risk of losing power due to not being able to top up his prepayment meter. The man also said that he has been issued an eviction notice as he is in rent arrears.

Another man who has a number of health problems including the lung condition emphysema, long covid and depression, said that deductions are causing him to ration his energy.

He loses £79.24 a month due to repaying rent Council Tax arrears and a Universal Credit advance.

This leaves him with £256 a month to meet his needs. He has asked for the deductions to be reduced but this has been refused.

He now has to use his local food and fuel bank. He has been rationing his energy use by turning off the heating.

He said that his health had deteriorated recently.

One man said that he received nothing in Universal Credit for a month because of various deductions.

He had been relying on help from friends and family but they were no longer able to assist him.

He also had used all his credit with his energy supplier.

Another man who is a carer for his registered blind partner, said that he was struggling to meet his daily living costs.

He had £38.67 taken away to repay an advance he had received and £86 for a historic DWP debt which was not yet identified.

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