The report is based on analysis of budget data of clients on Universal Credit with an overpayment debt. Assessing how appropriate the current DWP deduction rates are – 15% for out of work claimants and 25% for those in-work earning more than £60 a month.
We found that these rates were completely misaligned with the real budgets of our clients, with claimants out of work and on the lowest income in severe financial difficulty.
- 49% of clients with a tax credit or benefit overpayment debt and no earned income have a negative budget (meaning they do not have sufficient income to meet expenses after budget counselling), with an average monthly budget deficit of -£55.
- Even for UC recipients with some income from employment, deductions have a high risk of causing hardship: 38% of clients with earnings below the work allowance had a negative budget.