The Government have taken a number of steps to reduce the risk of problem debt, including capping payday lending costs and promoting savings.
Within universal credit, we also have interest-free advances and a system of priority deductions to help claimants who have got into arrears.
The Government’s own data shows that rising numbers on universal credit are falling into rent arrears, and many claimants in my constituency are going to food banks or approaching payday lenders. Although an advance is available, this is a loan, which is to be repaid at 40% of the standard allowance. Another 40% can be deducted to repay creditors—for example, utilities. That is a total of 80%. Can the Minister reassure me that 80% of the individual allowance cannot be deducted, and that affordability checks, like those that all payday lenders have to do, are carried out before any deductions are actioned?
Of course the hon. Lady is absolutely right to highlight that we want to make sure we help those who are in arrears. She will know that research done by the National Federation of ALMOs—arm’s length management organisations—has reported that three quarters of tenants were in rent arrears already before they moved into universal credit. She talks about deductions; the percentage is 40%. However, I am happy to meet her to discuss this matter further.
It is a genuine pleasure to welcome the Minister to his place and, through him, to thank his Parliamentary Private Secretary for arranging a visit for me to see universal credit working in his constituency this Friday. Further to the question, will my hon. Friend outline the steps being taken to ensure that organisations on the ground help vulnerable people access 100% of universal credit advances rather than get into debt?
Yes, I can confirm that work coaches and those who perform the interviews at jobcentres make people aware that they can access 100% advances, which are of course interest free, as I said. The other aspect that is available is personal budgeting support, which individuals who need it can also receive.