Universal Credit: Deductions
The question
To ask the Secretary of State for Work and Pensions, what assessment he has made of the potential impact of the decision to reduce the maximum UC deduction rate on a) public sector net borrowing, b) public sector net debt, c) public sector net cash requirement, d) annually managed expenditure and e) total managed expenditure in each financial year for which data are available.
Answered by Sir Stephen Timms
The Department has considered the potential fiscal impacts of the decision to reduce the maximum Universal Credit deduction rate.
(a) No separate assessment has identified an impact on public sector net borrowing, as any effects are already reflected in the Government’s existing fiscal forecasts.
(b) and c) Please see paragraph 5.134 on page 138 in this link for published information:
(d) No additional impact has been quantified on Annually Managed Expenditure.
(e) No additional impact has been quantified on Total Managed Expenditure.
The Fair Repayment Rate was announced in the 2024 Autumn Budget, and reduced deductions from Universal Credit from 25% to 15%. This measure helped around 1.2 million Universal Credit households with deductions retain more of their Universal Credit award, on average £420 a year, supporting the Government’s wider objectives to raise living standards, reduce poverty, and respond to ongoing cost‑of‑living pressures.
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