Universal Credit claimants 'forced into debt' to cover household costs

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Universal Credit claimants 'forced into debt' to cover household costs

The UK Government is under pressure to provide a financial “lifeline” to families on Universal Credit with studies suggesting around two thirds have been forced into debt during the coronavirus lockdown.

The Joseph Rowntree Foundation and Save the Children surveyed 3,105 parents of children under 18 claiming either Universal Credit or Child Tax Credit during late May and early June.

It revealed 60 per cent of families receiving the benefits had reverted to payday loans or credit cards to borrow money.

The survey also showed 86 per cent of families have faced extra household costs as a result of Covid-19, with half saying they were behind with rent or other bills. Some 70 per cent of families said they have cut back on food and other essentials.

The findings come after the Government was forced to perform a U-turn to provide free school meal vouchers to eligible pupils over the summer holidays following a high-profile campaign by England footballer Marcus Rashford.

Prime Minister Boris Johnson has been privately criticised by some Tory backbenchers for the time taken to announce the policy change on free school meals, and is under growing pressure to reduce the two-metre social distancing rule to help revive the economy.

He said “watch this space” in response to pressure to ease the rule, which businesses including shops, bars and restaurants say limit their ability to reopen.

The call for action to support the economy was backed by official figures which showed a sharp drop in the number of paid employees – down by 2.1 per cent or 612,000 in May compared with March – and a huge increase in benefit claims.

Although the UK jobless rate remained mainly unchanged quarter-on-quarter at 3.9 per cent in the three months to April, with unemployment at 1.34 million, there are fears that more redundancies could follow as Government support is withdrawn.

The Work and Pensions Select Committee of MPs will hear evidence on the problems experienced by Universal Credit claimants on Wednesday as part of its inquiry into the five-week wait for a first payment.

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