The Fair Repayment Rate places a limit on how much people in debt can have taken off their benefits to pay what they owe.
The maximum amount that can be taken from someone’s Universal Credit standard allowance payment to repay debt has been 25% up until now – but this has been reduced to 15%.
According to the Government, the change means that about 1.2 million of the poorest households – including 700,000 with children – will keep an extra £420 per year on average.
The change forms part of the Government’s Plan for Change and marks the Government’s first step in a wider review of Universal Credit.
Rachel Reeves, Chancellor of the Exchequer, said: “As announced at the Budget, from today, 1.2 million households will keep more of their Universal Credit and will be on average £420 better off a year. This is our plan for change delivering, easing the cost of living and putting more money into the pockets of working people.
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“With as many as 2.8 million households seeing deductions made to their Universal Credit award to pay off debt each month, the new rate is designed to ensure money is repaid where it is owed, and people can still cover their day-to-day needs.”
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.”
