New data reveals that over 500,000 children in the UK live in families in debt to the Department for Work and Pensions (DWP) due to loans taken out to cover the five-week wait for their first universal credit payments. Citizens Advice obtained the figures under freedom of information laws, showing that around 800,000 households on universal credit face deductions from their monthly payments to repay these loans. This means that 13 percent of all universal credit households are forced into borrowing just to survive, with an estimated £143 million reclaimed by the government from families last year.
For many families, the financial strain is severe and immediate. Claimants like Tina from Kent report living on extremely limited funds, struggling to afford essentials such as electricity, food, and phone credit. Tina, for example, has accrued £240 in debt and relies on community support to meet her family’s basic needs. Citizens Advice and other charities stress that the five-week delay and resulting loans have serious repercussions on mental health and well-being, pushing families deeper into poverty.
Under current rules, job coaches offer claimants a loan equivalent to their full universal credit entitlement to cover the initial waiting period. The amount is later deducted from subsequent payments, leaving families with reduced income for essential expenses. Critics argue this system forces households into debt from the very start, with many unable to meet basic living costs while repaying the loan.
Politicians and campaigners are calling on the government to address the issue. Labour MP Kim Johnson highlighted that forcing families into loans perpetuates child poverty and drives reliance on food banks. Citizens Advice chief executive Dame Clare Moriarty urged Chancellor Rachel Reeves to replace these loans with grants in the upcoming Autumn Budget, emphasizing that universal credit should provide a safety net, not a debt trap.
Children’s Commissioner Dame Rachel de Souza echoed these concerns, stressing that nearly a million households are caught in a relentless cycle of debt due to the five-week wait. Charities such as Christians Against Poverty argue that the system is deliberately structured to force claimants into borrowing, calling for urgent reform. The February 2025 data indicates that these figures are representative of the ongoing crisis affecting families across the UK.
