Resolution Foundation reports that over 1/3 of Universal Credit claimants have seen debts mount during lockdown

A report published by the thinktank Resolution Foundation earlier this week suggests some concerning figures on the UK’s household debt crisis.

The report suggests that more than three in ten people who began claiming Universal Credit during the pandemic have either acquired new debts or seen their existing debts grow in the past year. This report comes as the rate of Universal Credit is set to fall to pre-pandemic levels next month, as the chancellor removes the £20/week uplift to the benefit put in place last year. This would leave basic unemployment benefits at their lowest level in real terms since 1990-1.

The findings about steep rises in household debt are coupled with a surge in claims of Universal Credit. Half of all single parents are now in receipt of UC, and four in ten claiming Universal Credit are actually also in work – suggesting a scarcity of well-paid work with secure hours during the pandemic.

Rising debt among UC claimants doesn’t just mean that the basic rate is too low, and that the proposed cut of the £20 uplift is likely to exacerbate the debt crisis. The crisis is already here: this report also shows that one in five are already behind on essential bills. And it’s only set to worsen unless extraordinary measures are introduced.

The UK Government have rightly announced a series of lockdowns over the past year to protect public health and safeguard the most medically vulnerable in our society. But what about the most financially vulnerable? It’s these same lockdown policies which have had an unequal effect, and have driven many to claim Universal Credit for the first time, and in turn have led to mounting household debts.

The Government was rightly quick to protect the medically vulnerable. Now we’re demanding that they extend the same level of protection to the financially vulnerable.

Keeping the uplift to Universal Credit is crucial to provide this protection. But at Reset the Debt, we’re also calling for a radical rethink of the way we handle household debt. Let’s shoulder the burden as a society, rather than placing all of the rising debts onto individuals already struggling to cope.

You can read the full report from the Resolution Foundation here.

You can read more about why it’s time to #ResetTheDebt here.


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