Two-thirds of British benefit recipients with debts ‘go without food’

Two-thirds of indebted benefit claimants have been unable to buy food, according to a damning official report that Labor says was suppressed by the previous government.

The Department for Work and Pensions report states that some people have fallen into debt because they have not been able to access benefits, and that 81% of universal credit claimants in debt will run out of money before their next payment “always” or “ most” of the time”.

The study also found that UC claimants with debt were less likely to find work or a higher-paying job because they couldn’t afford to travel. Some feared being locked into financial instability forever.

One in five had debts of at least £10,000.

The report is one of 31 documents that Liz Kendall, the Work and Pensions Secretary, ordered published last week, telling MPs they had been “dealt with by the previous government”.

Some reports date back to 2018 and none of the four work and pensions secretaries from that period – Amber Rudd, Thérèse Coffey, Chloe Smith and Mel Stride – chose to publish them.

When he chaired the Work and Pensions Committee, Stephen Timms, now Social Security Secretary, confronted Coffey about her decision not to publish some of the reports.

Kendall said the government would “always be open and honest” about the challenges it faced.

“This is a new era for DWP and we are committed to being open and transparent,” she told the newspaper Observer. “The public needs to know where their money is spent and how policy is made.”

Whitehall insiders say it is not clear why many of the reports were not released, as they were politically uncontroversial. Yet some posed a challenge to the policies of the Sunak, Truss and Johnson governments, which focused on a crackdown on benefits and the introduction of UC.

Claimants wait at least five weeks for their first payment and often require an advance to be repaid, reducing their income. Charities say the monthly payment of £393.45 for an adult over 25 is not enough to survive.

One of the reports, Impact of foreign debt on indebted Universal Credit claimantswas based on a survey of 3,899 claimants who had borrowed with credit cards, personal loans or from moneylenders, family and friends or loan sharks.

It was carried out in 2022 and shows that DWP officials were aware of the heavy toll taken on the poorest benefit recipients.

It says some people fall into debt because of lifelong money problems, while others find themselves in financial crisis because of health problems such as cancer or relationship breakdowns.

One person interviewed for the report, a 50-year-old self-employed builder, was diagnosed with cancer while building his own house. He used his savings and owed “tens of thousands” to his family and on credit cards. He was no longer able to perform manual labor due to the effects of chemotherapy and was entitled to several health-related benefits.

He told DWP investigators: “If (those benefits) were there from the start, I wouldn’t be in debt in the first place.”

People interviewed by DWP investigators said they were unable to save money and so could not cope with emergencies such as a broken fridge-freezer or washing machine, or the need for a new baby bottle or school uniforms.

“Where participants felt they had no hope of improving their financial situation, the mental health impact was particularly devastating,” the DWP report said.

“Some felt so helpless to change their situation that they considered suicide, and some reported that they no longer cared what happened to them.”

Only one in 20 UC claimants with debt said their financial situation had no impact on their mental health.

The difficulty of juggling bills meant that indebted benefit recipients faced additional costs, such as late payment penalties.

There was a “constant shortage”, the report said, as indebted claimants had to spend their entire income on daily costs.

More than 80% of UC claimants said having debt had affected their employment opportunities, including “limiting the catchment area for work opportunities due to transportation costs and limiting the type/variety of work that could be applied for.”

Rachelle Earwaker, a senior economist at the Joseph Rowntree Foundation, said: “One of the key things the report shows is that universal credit claimants, especially those burdened by deductions, are facing quite serious levels of financial hardship. (They have) really, really limited options of where they can go to access credit.

Universal credit must rise by £30 a week to cover the cost of essentials, Earwaker said, and housing benefit must also rise to cover rental costs.