Over 1m households get £420 boost from universal credit change

A change to universal credit has come into effect that could help over a million households struggling with debt keep more of their benefit payments.

The fair repayment rate, which was introduced in the Budget last October, limits how much people who owe money can have taken off their benefits to repay their debts.

Previously, the maximum amount that could be taken from a person’s universal credit standard allowance to repay debt was 25%.

But this has now been reduced to 15%.

Change could be worth hundreds of pounds to people on UC

According to government figures, about 2.8 million households have money deducted from their universal credit award to pay off debt each month.

The Department for Work and Pensions (DWP) believes the changes will mean 1.2 million of the poorest households will get a financial boost of £420 a year on average.

This, it said, includes 700,000 households with children, and will help people pay down their debts in a sustainable way.

“We are taking decisive action to ensure working people keep more of the benefits they’re entitled to,” said work and pensions Secretary Liz Kendall.

Chancellor Rachel Reeves added: “This is our plan for change delivering, easing the cost of living and putting more money into the pockets of working people.”

The new fair repayment rate will be applied to all assessment periods that start on or after 30 April.