UK (Parliament Politics Magazine) – More than 500,000 UK children are affected as families repay loans from Universal Credit, pushing them into debt and poverty.
As reported by The Independent, new figures show that more than half a million children in Britain are in families owing money to the Department for Work and Pensions, highlighting the scale of the benefits loan trap.
Citizens Advice’s views on the UC loan impact on children
Data from Citizens Advice shows that over 800,000 Universal Credit households have money taken from their monthly payments. These deductions are used to repay loans taken during the five-week wait for their first benefits.
Data shows that 13% of Universal Credit families take loans from the DWP to pay their everyday bills.
Citizens Advice revealed that over 500,000 children are affected as families repay DWP loans, with around £143m reclaimed last year.
The charity, supported by campaigners and politicians, asked the government to change Universal Credit loans into grants in the next Budget to stop families falling into debt.
The most recent FOI data from February 2025 shows family debt figures remain consistent, offering a clear view of the current situation.
Kim Johnson’s views on the Universal Credit loans and child poverty
Kim Johnson, Labour MP for Liverpool Riverside, who advocates ending the two-child benefit limit, said,
“Once again, we see the government pushing the cost of its broken welfare system onto the very families who can least afford it.”
She added,
“Forcing people to take out loans just to survive the five-week wait for universal credit is trapping hundreds of thousands of children in poverty and pushing parents into debt and using food banks. These loans must be turned into grants in the Autumn Budget. Ministers cannot ignore the human cost of this policy any longer.”
Clare Moriarty’s stance on the Universal Credit loans and family debt
Dame Clare Moriarty, CEO of Citizens Advice, stated,
“The five-week wait for universal credit is forcing many families into debt to the government before they’ve even received their first payment. We’re helping parents relying on food banks because of it. universal credit was meant to provide a safety net, not trap people in debt from day one.”
She called on Rachel Reeves to turn these loans into grants in the Autumn Budget, ensuring families can access the support they are entitled to without borrowing.
Rachel de Souza’s stance on families trapped in the UC debt
Children’s commissioner, Dame Rachel de Souza, said,
“As families struggle with rising costs, these statistics show that many are being forced to make difficult decisions to provide for their children, leaving almost a million households trapped in what can feel like a relentless cycle of debt, as they wait five weeks for their first universal credit payment.”
She urged the government to adopt a strong child poverty strategy and backed ending the two-child benefit limit.
Stewart McCulloch’s stance on the Universal Credit five-week wait
Stewart McCulloch, CEO of Christians Against Poverty, supported calls to convert Universal Credit loans into grants.
He added,
“This five-week wait isn’t a glitch: it’s built into the system, forcing new claimants to survive more than a month with no income or to begin their claim in debt.”
DWP’s views on support during the Universal Credit 5-week wait
A DWP spokesperson stated,
“Advances are not a loan and so no interest is charged, nor any enforcement action taken. They are available for new and existing customers that urgently need support.”
They added,
“We are reviewing universal credit to make sure it is doing the job we want it to. We are committed to considering how we can support people during the initial assessment period, often referred to as the 5-week wait, before they receive their first payment as part of the review and will provide an update in due course.”
How is the 5-week Universal Credit wait affecting families like Tina’s?
Tim, who moved from ESA to Universal Credit, said the four-week wait has been “horrible,” leaving her with just £3.75 and affecting her mental health.
She stated,
“Before the debt gets too high, I want to pay the bills off that are coming in. I want to get fresh food in. I want to put some money on my gas and electric. But I can’t.”
Tina added, “I sit here on an evening and think, ‘No, I won’t put the lights on.’ Even my phone isn’t going to last much longer, but I haven’t got the money to even order a new cable. I’ve got £13 to put on my electric. How long is that going to last me?”
Tina, withholding her surname, is £240 in debt and depends on a community café for food, receiving guidance from a CAP debt coach.
Purpose of Universal Credit
Universal Credit is a UK government benefit payment to help with living costs for people who are on a low income or unable to work.
It combines six older benefits, like Housing Benefit, Child Tax Credit, and Jobseeker’s Allowance, into one monthly payment, which can include extra help for children, housing, disability, or caregiving.
UK plans to tackle poverty
The UK government plans to help parents find secure jobs and make childcare easier and cheaper, so families can earn more money.
The government will help families handle debt and save money. It will also improve local support for children’s health and education to give them a better start.