Universal Credit uplift 'could be cancelled out by deductions', Citizens Advice Scotland warns

Universal Credit deductions will leave some Scots struggling despite a promised benefits uplift, a charity has warned.

Citizens Advice Scotland (CAS) welcomed the decision to uprate benefits by 10.1% in April in line with inflation.

The move, announced by the UK Government, could see the average household on Universal Credit some £25.49 better off each month.

However, the charity has warned the uprate could be cancelled out because of deductions, which typically relate to advanced payments – where applicants have to wait a minimum of five weeks for their first payment but can take an advance to get help sooner.

The advance is paid across future payments.

The charity’s analysis of official statistics suggests some Scots could be less than £3.50 a month better off as a result, with deductions estimated at an average monthly cost of £62.

Statistics from the Department of Work and Pensions (DWP) show that around half of the 376,700 Scottish households in receipt of the benefit are liable for deductions – around 188,300.

David Hilferty, the charity’s social justice spokesman, said: “The decision to uprate benefits in line with inflation this coming spring is the right one and should be providing welcome and desperately needed extra help for people.

“However, the deductions system for Universal Credit means there is a risk tens of thousands will see no meaningful increase, as deductions from their payments effectively wipe out the value of uprating.

“The Citizens Advice network is already seeing people who are faced with impossible decisions about how to spend limited budgets. People need help now – and when they do get that support, it is vital that they can keep all of it.

“The Government should consider a pause on all deductions to Universal Credit and reform the advanced payment system, potentially shifting towards a model of non-repayable grants for new claimants rather than loans which just send people into a spiral of debt.”

A DWP spokesperson said: “Deductions help protect claimants from enforcement actions such as eviction, ensure priority debts such as child maintenance are still addressed and help to recover taxpayers’ money.

“We have reduced the standard cap on deductions twice in recent years, to 25% of the Universal Credit standard allowance, doubled the period over which new claim advances can be repaid and stopped utility companies from being able to increase payments automatically.

“We recognise the pressures of the rising cost of living, which is why the Government is offering up to £1,350 of direct help to those most in need in 2023/24 on top of £1,200 to over eight million vulnerable households this financial year.”