Budget: Not enough on Universal Credit | Depaulcharity

Depaul helps people who are homeless, vulnerable and disadvantaged.

Budget: Not enough on Universal Credit

October 29th, 2018

Budget fails to stop Universal Credit from forcing destitution and debt on young homeless people, says Depaul UK

The Budget today failed to reduce the five-week payment delay for new Universal Credit claimants, said youth homelessness charity Depaul UK, which calls on the Government to cut young people’s wait when making new claims.

While the Chancellor announced that there will be protections for people transferring to Universal Credit from other benefits, new claimants will still be hit by a five-week payments delay.

Depaul UK CEO Mike Thiedke said: “We urge the Government to allow young people to receive a first payment far earlier in new claims, instead of having to take out a loan. The majority of young people who become homeless don’t have existing benefits claims, savings or any other income to rely on while awaiting their first Universal Credit payment.

“Universal Credit should work as an effective safety net, but the five-week delay means it fails to do this. Instead, it leaves the young people affected by homelessness facing weeks of destitution and months of unbearable debt when they start to claim Universal Credit.

“Changes announced today around the rate at which deductions can be made from a Universal Credit claim and the repayment period are small steps in the right direction, but do not go nearly far enough.”

He added: “The Government recognises that debt is linked to family breakdown, unemployment, stress and mental health issues. Yet it still expects young people to take out a loan at the start of a Universal Credit claim when they can be at their most vulnerable.”

Almost nine out of 10 young people arriving at Depaul UK services have no open benefit claims and so will still face the five-week wait, which, as Universal Credit rolls out, will hit hundreds of thousands of people making new claims each year.

New claimants of Universal Credit can take out a “Budgeting Advance” loan to cover these five weeks, with deductions automatically taken from future Universal Credit payments to pay back the loan. But these automatic loan repayment deductions can leave under-25s, who receive less Universal Credit, unable to meet their basic living costs for months to come.

Under measures announced today in the Budget, in addition to more protections for existing claimants, from October 2019 deductions will be capped at 30 percent, rather than the current 40 percent, of Universal Credit standard allowance.

The Budget also announced that from October 2021 advances can be repaid over 16 months rather than 12.

People aged under-25 receive just £58 a week in Universal Credit standard allowance, £15 less than those aged 25 or over, from which they have to meet all of their costs apart from their rent. Among those affected are many Depaul UK service users. Steve, 22, was left with just £12 per week to spend on food after he has paid council tax, utility bills and other essentials.

Jenny, 24, started claiming Universal Credit after becoming homeless. She borrowed £125 in a budgeting advance, but this was not enough to feed herself and pay her rent.

Now Jenny has budgeting advance loan repayments automatically deducted from her £58 per week standard allowance. She struggles to pay her bills and buy food, let alone pay off the rent arrears she fell into during her assessment period.

 

Media Contact: Oliver Wilson, Head of Communications, Depaul UK, Oliver.Wilson@depaulcharity.org.uk

07823 412127

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