Report highlights debt problems for people on Universal Credit

Over three-in-ten people who have started claiming Universal Credit during the pandemic have either acquired new debts, or seen their existing debts grow, according to new Resolution Foundation research.

The Foundation says over three million people started claiming Universal Credit since the pandemic began.

The new research finds that, even with the vital £20 a week uplift to UC, 45% have reported seeing their income fall by at least a quarter, while 34 per cent reported seeing their income fall by at least 40 per cent.

The result, says the Foundation, is that 31 per cent of new UC families have either acquired new debts or seen their existing debts grow, while 21 per cent have fallen behind on paying essential (non-housing) bills.

With the £20 a week uplift due to end in April,  61 per cent of UC families say they will struggle to keep up or will fall behind on bills, around twice the proportion of families across the economy as a whole.

The Foundation says that the uplift to UC has been essential for protecting family incomes during the pandemic and will continue to be so in the coming months as more people claim UC off the back of rising unemployment.

Karl Handscomb, Senior Economist at the Resolution Foundation, said: “The Chancellor was right to raise Universal Credit to support families through tough economic times. And with tough times set to continue as unemployment rises through 2021, this vital boost to family incomes must be maintained.

“Cutting the incomes of six million families in just two months’ time, when public health restrictions are still likely to be widespread, makes no sense politically, economically, or in terms of raising people’s living standards.”

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