Citizens Advice Scotland is sounding the alarm that the growing impact of deductions is diminishing how much people get from the social security system. Around 190,000 Scottish households are at risk of seeing their payment increases wiped out entirely due to deductions. This is despite the fact that benefits from the Department for Work and Pensions (DWP) will receive a significant boost in April.
How much are benefit payments being raised by?
As part of his Autumn Statement, Chancellor Jeremy Hunt confirmed the Government would be hiking payments.
With the rise in the cost of living continuing to hurt lower income families, Mr Hunt asserted further support would be available to those who need it.
Most benefit payments from the DWP will see their payments raised by 10.1 percent, which is in line with the Consumer Price Index (CPI) rate of inflation for September.
This is also the rate at which state pensions will be increased with the return of the triple lock.
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What are deductions?
The DWP has the authority to automatically deduct money from people’s benefit payments to help pay off certain debts.
Payments can be removed from claimants for debts owed to the Government, including as overpayments owed to the DWP, Universal Credit Advances and council tax arrears.
How much that can be taken changes depending on the debt and multiple deductions can be taken at the same time.
There is a maximum cap, with people receiving Universal Credit getting a cap of 25 percent.
According to Citizens Advice Scotland, raising DWP payments by inflation will see some people on Universal Credit less than £3.50 a month better off due to the growing impact of deductions.
Overall, the average household on Universal Credit will be £65.49 better off a month a result of the rate rise.
Despite this, around half of all households on Universal are subject to deductions which Citizens Advice Scotland estimate sat around £62 per month on average.
Taking this account, 188,300 households in Scotland are affected by deductions and will not receive the sizable payment boost as promised.
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David Hilferty, the social justice spokesperson for Citizens Advice Scotland, shared his concern for benefit claimants in the months ahead.
He explained: “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 the uprating.
“The Citizens Advice network is already seeing people who are faced with impossible decisions about how to spend limited budgets.”
The benefits expert urged the DWP to provide further support for those most in need amid the ongoing cost of living crisis.
Mr Hilferty added: “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 advance 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.”
The majority of DWP benefit payments, including the state pension, will receive a rate hike in April 2023.