UK poverty crisis laid bare as 500,000 children living in families trapped in benefits debt cycle
More than 500,000 children live in families indebted to the Department for Work and Pensions (DWP), according to new figures that reveal the extent of the welfare loan trap.
At least 800,000 universal credit households A deduction is made from their monthly payments to pay it back. loans Data obtained by Citizens Advice shows it helped them survive the five-week wait until first aid was provided.
Figures released under freedom of information laws show that 13 percent of all respondents universal credit households they have to take it off loans from the DWP to make ends meet.
Analysis by Citizens Advice shows more than 500,000 children are in families repaying loans to the government, with an estimated £143 million recovered from them last year.
Charity joined by campaigners and politicians appeal to Chancellor Rachel Reeves It plans to convert loans into grants in the upcoming budget to end the “debt trap”.
Tina, from Kent, has four weeks left to wait for UC having migrated from employment support allowance (ESA). He said the experience was “terrifying”, leaving him with just £3.75 and his mental health deteriorating.
“I want to pay the bills before the debt becomes too much. I want to buy fresh food. I want to pay some money for my gas and electricity. But I can’t,” he said.
“I sit here in the evenings and think, ‘No, I’m not going to turn the lights on’. Even my phone won’t last long but I don’t even have the money to order a new cable. I’ve got £13 to plug in my electricity. How long will this last me?”
More than 500,000 children live in families owed money to DWP (PA Wire)
Tina, who did not want to use her surname, is now £240 in debt and relies on a social café for food and support. Christians Against Poverty (CAP) seeks advice from debt coach as charity calls for five-week reprieve in first instance universal credit payments are “devastating.”
Under current rules, claimants are offered credit by job coaches to cover five weeks until the first payment. The loan size is usually the full value of a person’s universal credit entitlement.
If they accept, this amount is then deducted from their monthly universal credit payment; This leaves many families struggling to cover the most basic living expenses with reduced payments.
Kim Johnson MP, Labor MP for Liverpool Riverside A campaign was carried out to remove the two-child benefit limitHe said: “Once again we see the government pushing the cost of a broken welfare system onto the families who can least afford it.
“Forcing people to take out loans to survive the five-week wait for universal credit means pushing hundreds of thousands of children into poverty, leaving parents in debt and using food banks. These loans need to be turned into grants in the Autumn Budget. Ministers can no longer ignore the human cost of this policy.”
Dame Clare Moriarty, chief executive of Citizens Advice, said: “The five-week wait for universal credit is forcing many families into debt to the government before they’ve even received their first payment. That’s why we’re helping parents who depend on food banks. The purpose of universal credit was to provide a safety net, not to trap people in debt from day one.”
encouraged Ms. reeves He said he would use the upcoming Autumn Budget to “replace these damaging loans with grants”, adding: “No family should have to borrow just to eat while waiting for the support they are entitled to.”
Labor MP Kim Johnson photographed at a protest in London in 2024 (PA)
Children’s commissioner Dame Rachel de Souza said: “As families struggle with rising costs, these statistics show many people are being forced to make difficult decisions to provide for their children, with almost a million households trapped in a relentless cycle of debt as they wait five weeks for their first universal credit payment.”
He called on the government to be “ambitious” in its new child poverty strategy and backed the calls. Removal of the two-child benefit limit.
Stewart McCulloch, chief executive of the charity Christians Against Poverty (CAP), backed the call for the loans to be converted into grants. He said: “This five-week wait is not a glitch: it is built into the system, forcing new claimants to survive more than a month without income or start taking out loans.”
The latest freedom of information data is from February 2025, but the figures remain roughly the same each month; This means they represent the current number of debtor families.
A DWP spokesman said: “Advances are not a loan and as such no interest is charged or any sanctions imposed. They are available for new and existing customers who need support urgently.
“We are reviewing universal credit to make sure it does the job we want it to do. As part of the review we are committed to considering how we can support people during the initial assessment period before they receive their first payment, often referred to as the 5-week waiting period, and will provide an update in due course.”
