Nearly 50% of households in Scotland claiming Universal Credit from the Department for Work and Pensions (DWP) are having £10 million in "poverty tax" each month deducted from their benefits.
In a single month alone in 2021, around 180,000 homes in Scotland had on average £60 taken from their social security payments, according to official data.
As reported exclusively by our sister site the Daily Record, the large figure — from November — was primarily to pay back loans that were issued by the DWP for the five-week wait period at the start of a new Universal Credit claim.
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Glasgow South West SNP MP Chris Stephens — who is a member of Commons DWP Committee — uncovered the data from ministers during parliamentary questions, revealing that £286,000 was deducted from his constituents.
He said: “This is essentially a Poverty Tax on people who are struggling to heat their homes and put food on the table.
“Universal Credit is meant to be a subsistence benefit that covers basic living costs. If £60 a month is being taken away from it, when living costs are rising rapidly, how are people meant to subsist?
“The upfront loans should be replaced by upfront grants, recovery of tax credit overpayments should be capped at a lower level, and debts that have not been pursued for more than six years should be written off entirely, in line with the approach taken in the private sector.”
In a total of ten constituencies in Scotland, more than half of claimants are having money from their benefits deducted, with the average monthly sum ranging from £57 to £62 per household.
Around 44% of the deductions are to pay back Universal Credit advance payments made while claimants waited for their benefit to be processed, while 17% are to repay historic tax credit overpayments.
Beginning in April 2021, the DWP lowered the standard maximum rate of Universal Credit deductions from 40% to 25% of a claimant's Standard Allowance.
However, director of Feeding Britain — which runs the Threehills Community Supermarket in Glasgow — stated that this was insufficient.
He said: “The DWP moved in the right direction last year by lowering the cap on deductions and doubling the length of time people had to repay those upfront loans.
“But these figures show that additional action is required – especially now that £20 a week has been cut from the basic rate of Universal Credit, as well as the fact that this basic rate looks set to fall even further behind the cost of living in April.”
In his response to Stephens, DWP Minister David Rutley said the government sought to “balance recovery of debt against not causing hardship for claimants and their families”.
The Minister stated: “Processes are in place to ensure deductions are manageable, and customers can contact DWP Debt Management if they are experiencing financial hardship, to discuss a reduction in their rate of repayment or a temporary suspension, depending on their financial circumstances.”
He added: “Advances are a claimant’s benefit entitlement paid early, allowing claimants to access 100 per cent of their estimated Universal Credit payment upfront, resulting in 25 payments over a 24-month period. This is not a debt.
The hardest hit parts of Scotland with deductions in one month
Glasgow East, £315,000
Kirkcaldy and Cowdenbeath, £302,000
Glasgow North East, £290,000
Glasgow South West, £286,000
Dundee West, £281,000
Glenrothes, £276,000
Motherwell and Wishaw, £272,000
Rutherglen and Hamilton West, £271,000
Linlithgow and East Falkirk, £267,000
Kilmarnock and Loudoun, £262,000
