Universal Credit families get longer to repay debt – but not everyone is helped

Millions of Universal Credit claimants will be handed a lifeline after ministers bowed to pressure and gave them more time to repay their debt.

People on the benefit will have two years to pay back "advances" – double the current 12 months.

But there's little respite for current claimants – because the move will only be introduced in October 2021.

People are forced to take out an advance against their future benefits if they want to bridge the five-week wait for Universal Credit . But that means their later payments are cut, with Brits claimants losing £50million to advance repayments in a single month last year.

SNP MP Chris Stephens, who has warned advance repayments are pushing vulnerable families into poverty, said the Budget move did not go far enough.

The Work and Pensions Committee member told the Mirror: "The first payment in Universal Credit should be the first payment. It shouldn't have to be after five weeks.

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"The advance payment could be the first payment people get – rather than it being a loan."

The 12-month repayment time was already set to be extended to 16 months in October 2021 but that will now be 24 months, the small print of Wednesday's Budget revealed.

In another climbdown, welfare officials will only be able to deduct 25% of a Universal Credit payment to rake back people's advances, not 30% as they can now.

Figures obtained by Mr Stephens show more than 50,000 claimants had over 30% of their Universal Credit taken away in deductions for various reasons in November 2019.

But again, the changes – expected to cost the Treasury £365million in total by March 2025 – will only be introduced in October 2021. 

It came days after Department for Work and Pensions (DWP) Minister Will Quince said he wanted to extend the repayment period for adVances.

He said he was "pleased to have secured agreement from the Chancellor to extend the repayment of interest free Universal Credit advances from 12 to 24 months, and reduce the maximum deductions from 30% to 25%, from October 2021.

"This Government is listening and improving Universal Credit."

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