Benefit loans trap 500,000 children in cycle of poverty

Families borrow cash as they wait weeks for first payment

- ALBERT TOTH HOLLY BANCROFT

More than 500,000 children are living in families in debt to the Department for Work and Pensions (DWP), according to new figures which lay bare the scale of the benefits loan trap.

At least 800,000 households on universal credit are having money deducted from their monthly payments to repay loans that helped them survive the five-week wait until their first benefits came in, data obtained by Citizens Advice shows.

The figures, released under freedom of information laws, show that 13 per cent of all universal credit households are forced to take out loans from the DWP to make ends meet.

Analysis from Citizens Advice shows that more than 500,000 children are in families repaying loans to the government, with an estimated £143m clawed back from them last year.

Joined by campaigners and politicians, the charity has called on chancellor Rachel Reeves to turn the loans into grants at her upcoming Budget to bring an end to the “debt trap”.

Tina, from Kent, is four weeks into her wait for UC, having migrated from employment support allowance (ESA). The experience has been “horrible”, she said, leaving her with just £3.75 and worsening mental health.

“Before the debt gets too high, I want to pay the bills off that are coming in. I want to get fresh food in. I want to put some money on my gas and electric. But I can’t,” she said.