At Depaul UK, we believe that Rishi Sunak should use his Budget next month to show the government is serious about its Manifesto pledge to, ‘do more to make sure that Universal Credit works for the most vulnerable’.
We work with young people who have been or are at risk of becoming homeless. They have often fallen through the welfare safety net. Listening to their experiences of claiming Universal Credit is an effective way to identify the most urgently needed improvements to the benefits system.
One of the most pressing issues for young people now is the way in which money is taken out of Universal Credit payments before they are made, through so-called automatic deductions. This really matters for people aged under 25 as, before any deductions are made, they receive £15 less Universal Credit per week than older claimants
Currently up to 30 per cent of young people’s £58 a week Universal Credit standard allowance can be automatically deducted for things like rent arrears, debt owed to utility companies, court fines and Universal Credit advances. This means people under-25 can be left with just £41 after deductions.
More than a million Universal Credit claimants are paying back around £100 million a month through deductions. Most of this is to repay advances. The cruel five week wait for first Universal Credit payments often leaves people with no money whatsoever for over a month. People in this situation can access an advance from the government, which has to be paid back from future Universal Credit payments, or face destitution while they wait for their first payment.
I very much hope that the new Chancellor would agree that a system designed to leave young people with just £41 a week to meet all of their living costs, apart from rent, is badly in need in reform. George, a young person we’ve been working with at Depaul, very kindly shared his weekly budget with us:
|Item||Allocation in weekly budget (Based on £58 UC Standard Allowance)|
|Gas and electricity||£11|
|Three days travel, including to Jobcentre and volunteering||£10|
|Everything else – including clothing, toiletries, household supplies.||£13|
It shows just how hard it is to get by on £58 a week. Surviving on less than that, once deductions have been taken, is often impossible without using foodbanks, asking for handouts or borrowing money. Young people using Depaul’s services have been pushed into doing all of the above because of automatic deductions.
The government is going to increase Universal Credit standard allowance by 1.7 per cent in April. This small rise clearly will not solve the problem. It will leave young people subject to maximum deductions with just £42 a week.
By the time the Chancellor sits down after delivering his first budget, I hope that we’ll have heard the government is scrapping the five week wait. The Government should also reduce the maximum deduction rate for under 25s, so that they are never left with less standard allowance than older claimants who a subject to maximum deductions.
You can read about this in more detail in Depaul UK’s budget submission below, in which we also call for government to increase local housing allowance to match rents and invest in homelessness prevention.