Over half million children trapped in UK's universal credit debt, new figures reveal

In the United Kingdom, more than 500,000 children are living in families trapped in debt to the Department for Work and Pensions (DWP), as new data highlights the scale of hardship caused by the five-week wait for Universal Credit (UC) payments.

Figures obtained by Citizens Advice through a Freedom of Information (FOI) request reveal that over 800,000 households are currently repaying loans to the DWP, The Independent writes.

These advances are typically offered to claimants to help them survive the mandatory wait before their first UC payment. The deductions are then automatically taken from future monthly benefits, pushing many families deeper into financial distress.

Citizens Advice analysis found that 13% of all Universal Credit households have been forced to take out these loans. The charity estimates that more than £143 million was clawed back from struggling families last year alone.

Campaigners, charities, and MPs are now calling on Chancellor Rachel Reeves to convert these loans into non-repayable grants in the upcoming Autumn Budget, warning that the current system is trapping vulnerable families in a cycle of poverty.

Tina, from Kent, is four weeks into her wait for Universal Credit after moving from Employment Support Allowance (ESA). She described the experience as “horrible”, saying it has left her with just £3.75 and has severely impacted her mental health.

Now £240 in debt, Tina is relying on a local community café and receiving help from a debt coach at the charity Christians Against Poverty (CAP), which has labelled the five-week wait as “devastating”.

Under current rules, new UC claimants are offered an advance loan equal to their estimated benefit amount. While the DWP stresses these loans are interest-free and not subject to enforcement action, the repayments reduce recipients’ already stretched monthly benefits, leaving many unable to meet basic living costs.

Labour MP for Liverpool Riverside, Kim Johnson, who has previously campaigned for an end to the two-child benefit cap, criticised the government for burdening families with debt.

“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," she said.

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. 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 urged the Chancellor to “replace these damaging loans with grants,” adding: “No family should have to borrow money just to eat while waiting for support they’re entitled to.”

Children’s Commissioner Dame Rachel de Souza echoed the concerns, warning that rising living costs were exacerbating the issue.

“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 said.

She also backed calls to scrap the two-child benefit limit, urging the government “to be ambitious” in its new child poverty strategy.

Responding to the data, a DWP spokesperson said: “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.

“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.”

The FOI figures, dated February 2025, are considered broadly representative of current trends, with little month-to-month fluctuation. Campaigners argue that urgent reform is needed to prevent more families from falling into debt due to delays in accessing support.

By Sabina Mammadli