More than one million households struggling with debt will get to keep an average of £420 more of their benefits each year, under a change to Universal Credit coming into force today.
The Fair Repayment Rate limits the amount that can be deducted from Universal Credit payments to repay debt, reducing the maximum from 25% to 15%.
This change will provide an average of £420 extra annually for 1.2 million of the poorest households, including 700,000 households with children, helping them to pay down their debts sustainably. It is part of the Government’s Plan for Change to boost living standards and marks the first step in a wider review of Universal Credit.
Introduced by the Chancellor at the Autumn Budget, the Fair Repayment Rate is designed to ensure money is repaid while allowing people to cover their day-to-day needs. With 2.8 million households seeing deductions made to their Universal Credit each month, this new rate aims to balance debt repayment with financial stability.
Liz Kendall, Work and Pensions Secretary, said:
“As part of our Plan for Change, we are taking decisive action to ensure working people keep more of the benefits they’re entitled to - which will boost financial security and improve living standards up and down the country.
“We’re delivering meaningful change to ensure everyone has a fair chance, the support they need, and real hope for the future.”
The Fair Repayment Rate is one of several measures in the Government’s Plan for Change to kickstart growth and spread prosperity. The Get Britain Working White Paper outlines plans to achieve an 80% employment rate by overhauling Jobcentres, introducing a new jobs and careers service, and launching a youth guarantee. Additionally, the Household Support Fund has been extended for another year, backed by £742 million, to support low-income households with essential costs.
The Government is also tackling child poverty by rolling out free breakfast clubs in all primary schools in England, ensuring every child has the best start in life.
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