Citizens Advice responds to new Universal Credit figures

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Citizens Advice responds to new Universal Credit figures

Friday 07 June 2019

The government has published new figures that show the number of people with outstanding Tax Credit overpayments who have moved onto Universal Credit.

Gillian Guy, Chief Executive of Citizens Advice, said:

“These new figures show the staggering number of people who get money deducted from their payments when moving from Tax Credits onto Universal Credit.

“Deductions can be made to repay previous overpayment debts, but these can be from years ago and often come as a surprise. They can also come on top of other deductions leaving some people unable to cover their essential costs.

“Our evidence shows that many people on Universal Credit are already struggling. Half of the people we help while waiting for their initial payment are unable to keep up with bills or rent – so any deductions can push people over the edge.

“More than a million people claiming Tax Credits are expected to move onto Universal Credit in the next stage of the rollout. The government must ensure that people have enough to live on and make sure that any debt collection is affordable.”

The new government figures show:

Some 570,000 of the 2 million people claiming Universal Credit are repaying Tax Credit overpayments through deductions from their Universal Credit.

In the latest month, 1 in 5 (410,000) people claiming Universal Credit had money deducted directly from their payment.

New data shows that median average overpayment debt is £610. Some people have considerably higher debt, resulting in a mean average of £1,560.

In practice, rules allow Tax Credit overpayment deductions of £47.67 a month for a single person over 25, or higher for people who are in work, meaning that it could take more than a year to repay average Tax Credit overpayment debts.

Background:

  • Citizens Advice helped people with nearly 10,000 Universal Credit deductions issues in the year to March 2019.

  • Tax Credits overpayments will usually be deducted at 15% (25% if you are working) of the Universal Credit standard allowance – £47.67 a month for a single person over 25.

  • A quarter of Universal Credit claimants had a deduction of more than 20% of their standard allowance in October 2018. This can result from money being deducted for multiple reasons at the same time.

  • After advances, benefit overpayments were the second most common driver of deductions in October 2018.

  • 10% of all the money awarded in Universal Credit in October 2018 was taken in deductions.

A recently released DWP report found:

  • Three quarters (75%) of those with Tax Credits overpayments said they only discovered they had been overpaid after their UC claim had started.

  • Over a third (38%) were ‘having financial difficulties’ – classified as those falling behind with some, or many, bills and commitments. Among this group, around 6 in ten (62%) said their difficulties started in the same month or after they began claiming Universal Credit.