DEDUCTIONS to Universal Credit are having an ever larger impact thanks to the cost-of-living crisis.
Inflation is set to soar to 11%, and the energy price cap could push up bills to around £3,000 in the autumn too.
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Research from StepChange suggests the impact of rising costs make deductions for Government debts a major risk for households on low incomes.
Universal Credit was designed to replace six previous benefits – a move to help encourage people to find work.
But the Department of Work and Pensions can automatically deduct money from your allowance to pay off some of your debts.
StepChange clients on Universal Credit are set to face an average monthly budget deficit of £77 come October – even with the Government cost of living payments support.
In the meantime, here’s FIVE of the biggest reasons why your Universal Credit payments could be cut.
Benefit overpayments
Some households are suffering after being initially overpaid benefits.
One mum was hit with the sanction even though the error was not her fault.
An admin error meant that she’d been paid £738 more than she should have been.
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And other Brits around the country are facing a similar predicament by having to repay the debt at the worst possible time.
Due to deductions, one woman said she was struggling to live off £143 a week with deductions scaling back her allowance.
If you’ve been overpaid benefits you can be asked to pay the money back, or it may be taken from future payments, even if it’s not your fault.
The DWP can charge a £50 civil penalty if it thinks you have been negligent or aren’t cooperating.
You can appeal an overpayment within one month by asking for a mandatory reconsideration.
If your appeal is rejected you can take the DWP to an independent tribunal within one month.
The DWP will then have 28 days to respond and explain its reasoning for the tribunal to consider.
Advance loans
Those struggling during the wait for Universal Credit payment may have taken out an advance loan.
There is a significant gap between applying for your first UC payment and receiving money.
It’s this waiting period that plunges vulnerable Brits further into debt.
It can take up to five weeks before you are enrolled on the Universal Credit system, and in the meantime any existing benefits you receive will stop altogether too.
But while the loan is interest free and can help you cover the gap, you do need to pay the cash back.
Repayments will be automatically deducted from your future Universal Credit pay out.
The loan is repaid over a period of 24 months, so your monthly UC payments will be reduced for this length of time.
Budgeting loans
Struggling Brits on Universal Credit can get a budgeting loan to cover unexpected costs.
But while claimants can apply for the money worth up to £812 – you will have to plan for paying it back over the coming 12 months.
You can borrow from as little as £100 and up to £812 if you’re a household with kids, but you should only apply to borrow what you need.
While this can help you cover larger costs in the short term if you don’t have savings to fall back on, you will still be expected to pay the money back in the long term.
The Department for Work and Pensions (DWP) deduct an amount from your Universal Credit payment every month, starting with your first one.
Sanctions
Another reason why your Universal Credit payments could be reduced or stopped altogether is if you’re sanctioned.
This happens when commitments you agree to, like applying for jobs to get you back into employment, are not done.
Universal Credit claimants are expected to accept jobs they have been offered it as long as it’s within reason.
If your Jobcentre work coach doesn’t feel you’re doing enough to get back into work you can be sanctioned.
Quitting your job without a good reason could see you sanctioned too.
If you think you’ve been sanctioned unfairly you can contact the DWP and ask for a “mandatory reconsideration”.
You have one month from when you were notified about the sanction to do so.
If you’ve been sanctioned unfairly, the first thing you must do is check the level of sanction and for how long your money has been reduced.
You’ll then need to contact the DWP for a mandatory reconsideration if you think they’ve made the wrong decision.
Citizens Advice says you should have been told:
- Why you’ve received a sanction
- The level of sanction you’ve been given
- How long the sanction will last
- How much money will be taken away from your Universal Credit payment
- The date the sanction decision was made
For most benefits, you have one month from when you were notified about the sanction to apply for a mandatory reconsideration.
However, it is still worth applying for one should you have missed the deadline for a good reason, such as being in hospital.
