People on these benefits ‘twice as likely’ to have serious debt | Personal Finance | Finance
People receiving disability benefits such as Personal Independence Payments or the Disability Living Allowance are twice as likely to be grappling with severe debts compared to others.
This worrying trend was revealed in an analysis by debt charity StepChange, shedding light on the difficulties faced by some of the most vulnerable groups.
Richard Lane, Chief Client Officer at StepChange Debt Charity, commented: “Our research shows that people who rely on support like PIP to cover the additional costs of disability are more likely to struggle with debt problems.
“PIP is designed to recognise these extra costs, so it’s vital that the government ensures people with disabilities or health conditions can access the financial help they need.”
These insights emerge as the government announced welfare reform changes last month, which included a focus on how certain cuts and limitations to PIP might incentivize more individuals to seek employment.
Yet, Richard pointed out: “Six in ten StepChange clients are in work, highlighting the need for a benefits system that provides genuine security.”
He also noted: “It’s important to remember that moving into work doesn’t always protect people from income shortfalls or problem debt, especially for those with disabilities or health conditions who face additional costs.”
Individuals with disabilities often incur additional and higher expenses than others due to necessities like medication, transport for treatments, the power needed to charge medical devices, and accessibility tools.
Last year, Scope indicated that such a ‘disability price tag’ adds an extra £1,010 monthly to the bills of disabled households compared to non-disabled ones.
Citizens Advice discovered that approximately 643,000 Universal Credit recipients have tax credit subtractions from their payments, while close to 500,000 face deductions owing to overpayments by the Department for Work and Pensions (DWP). Those affected by DWP deductions lose an estimated £500 annually on average.
Richard commented: “Unaffordable debt deductions from benefits also drive real hardship and the government could take further action in this area by limiting deductions for UC advances and overpayments to 5% of the standard allowance. However we need long-term solutions, which is why we are calling for a Minimum Income Commission to provide independent advice on setting benefit levels.”
For those struggling with debts to the DWP or facing financial difficulties, organisations like StepChange offer valuable, free advice. A key piece of advice from the charity is to make sure you’re getting all the benefits you qualify for.
Research by Policy in Practice uncovered that last year, £23 billion in benefits went unclaimed.
The majority of this sum was due to individuals not accessing Universal Credit as well as lesser-known aids like council tax support and social tariffs.
Utilising a benefits calculator can assist you in ensuring you’re receiving all the funds you’re entitled to.
For most online calculators, it’s recommended to have certain documents readily available, such as bank statements and payslips, so you can provide the most accurate responses to the questions.
