STRUGGLING Brits have had £60 on average docked from Universal Credit payments during the crisis to cover the cost of advance loans.
A combined £100million was deducted from 1.6million Brits’ monthly benefit payments in May, according to new figures published by the government.
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In a written response to SNP MP Chris Stephens, it was revealed that four in ten (40%) claimants had cash taken from their benefit payments in May.
This was to repay what’s known as advance loans, as well as to cover to the cost of other deductions excluding sanctions and overpayments.
In March, the government suspended sanctions for failing to look for work and the requirement to meet job coaches due to the pandemic before restarting these in June.
The Department for Work and Pensions (DWP) also promised in April that it wouldn’t chase benefits that had been overpaid during the coronavirus crisis, although these repayments have since restarted.
This temporary grace period was designed to ensure people had more money in their pockets during the crisis.
It followed similar help announced by city regulator the Financial Conduct Authority, which has given users of credit cards, personal loans, car finance, and high-cost credit until October 31 to apply for a repayment freeze.
But this help wasn’t extended to those who’d taken a Universal Credit advance loan, meaning these borrowers continued to get lower benefit payments during the crisis while they repaid the loan.
Universal Credit can take up to five weeks to be paid once you’ve registered, and any existing benefits you receive will stop altogether in the meantime.
This is one of the reasons why The Sun is calling for the wait to be slashed to two weeks as part of our Make Universal Credit Work campaign.
During this five-week wait, households hard on cash can apply for an advanced loan to tide them over until their first Universal Credit payment is made.
But you’re expected to pay it back within the first 12 months of getting it.
And DWP will deduct an amount from your Universal Credit payment every month to cover this cost, starting with your first pay out.
Mr Stephens told The Mirror, which first published the data, that these figures add “more weight” to the case for non-repayable grants to be introduced instead of loans.
Conservative MP Will Quince, who responded to Mr Stephens’ request, says that from October 2021, the advance loan repayment period will be extended from 12 months to 24 months
The amount that can be deducted from benefit payments will also fall from 30% to 25% at the same time.
Mr Quince added: “For those who find themselves in unexpected hardship, advance repayments can be deferred for up to three months in certain cases.”
The number of people claiming Universal Credit currently stands at more than 4million.
Think tank the Resolution Foundation has warned that hundreds of thousands of Brits have gone without help during the crisis as they were afraid they wouldn’t be able to repay the loans.
Meanwhile, MPs on the Treasury Select Committee have also called for Universal Credit claimants to have an extra £20 a week bonus extended beyond the 12 months initially granted by chancellor Rishi Sunak.
It comes as UK unemployment has risen to 4.1% in the three months to July with 695,000 workers losing their jobs since March, according to the latest ONS data.