UK poverty crisis laid bare as 500,000 children living in families trapped in benefits debt cycle
Stark figures show number of UK households stuck in benefits loan trap
- More than 800,000 households on Universal Credit are repaying loans taken to cover the five-week wait for their first payment, affecting more than 500,000 children.
- These advance payments are deducted from subsequent Universal Credit payments, leading to financial hardship and debt for many families.
- An estimated £143 million was recovered from families last year through these loan repayments, according to data obtained by Citizens Advice.
- Charities and politicians are urging Chancellor Rachel Reeves to convert these loans into grants in the upcoming Budget to prevent families from falling into a debt trap.
- The Department for Work and Pensions (DWP) states these are interest-free advances and is reviewing Universal Credit to better support claimants during the initial assessment period.