Food bank figures show Universal Credit “clearly failing”, says Labour

Labour has warned that Universal Credit is “clearly failing” as new figures show half of all households visiting food banks have struggled to afford essential goods as a result of repaying debt accrued through the benefit.

The party responded to data published by the Trussell Trust this morning that revealed deductions from claimants’ payments, in most cases to repay the Universal Credit advanced loan, could reduce household incomes by up to a third.

Jonathan Reynolds said: “It cannot be right that people are turning to food banks because the government is taking money from those who can least afford it. The Universal Credit system is clearly failing these families when they cannot afford essentials.”

The Shadow Work and Pensions Secretary added: “Labour called on the government to end the five-week wait and pay advances as grants not loans to stop this spiral of debt and support Britain’s struggling families through this crisis.”

Claimants can apply for a Universal Credit loan to see them through the five-week waiting period for the benefit payments to begin. But this is repayable through deductions to the subsequent payments an applicant receives.

The number of people on the benefit has more than doubled over the course of the pandemic, with 5.7 million people in receipt of Universal Credit in October. Around 1.3 million claimants were issued with loans between March and June.

Labour urged the government to make five changes to the benefit earlier this year, including scrapping the five-week wait. The Trussell Trust has called on ministers to freeze deductions to payments to help families struggling in the pandemic.

Trussell Trust chief executive Emma Revie said: “Our welfare system should increase people’s security, not suffering. But right now the government is taking money from the benefit payments of many people using food banks.

“Taking money off payments to repay these debts makes it much harder for people to afford the essentials and can impact on people’s mental health – this isn’t OK.

“With the pandemic continuing to hit people’s incomes, the government must pause taking money from benefit payments over the winter months until a more responsible and just system that offers security and support is in place.

“This would help people on the lowest incomes to keep every penny of their benefits to help afford the absolute essentials, instead of needing to turn to a food bank for help.”

Labour has also called on the government to renew the £20 uplift in the benefit, which it instituted in March as an emergency measure, and last month called on it to “see sense” on the planned reinstatement of the minimum income floor.