More than 500,000 children live in families in debt to the Department for Work and Pensions (DWP), according to new figures revealing the scale of the benefit trap.
At least 800,000 households on Universal Credit are seeing money deducted from their monthly payments to repay loans that helped them survive the five-week wait for their first benefit to arrive, data obtained by Citizens Advice shows.
The figures, released under freedom of information laws, show that 13 percent of all universal credit households have been 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 paying back loans to the government, with an estimated £143 million recovered last year.
Along with campaigners and politicians, the charity has called on Chancellor Rachel Reeves to convert the loans into grants for her upcoming budget to end the “debt trap”.
Tina, from Kent, has been waiting for UC for four weeks after migrating from Employment Allowance (ESA). The experience was “terrible”, she said, leaving her with just £3.75 and deteriorating mental health.
“Before the debt gets too high, I want to pay off the bills that are coming in. I want to get fresh food in. I want to put some money on my gas and electricity. But I can't,” she said.
“I'm sitting here one evening and I'm thinking, 'No, I'm not turning on the light.' Even my phone won't last much longer, but I don't have the money to even order a new cable. I have €13 for my electricity. How long will that take me?”
More than 500,000 children live in families with debts to the DWP (PA Wire)
Tina, who did not want her surname used, is now £240 in debt and relies on a community cafe for food and support. She is receiving advice from a debt coach from Christians Against Poverty (CAP), with the charity calling the five-week delay on the first universal credit payments “devastating”.
Under current rules, applicants are offered the loan by job coaches to cover every five weeks until the first payment. The size of the loan is usually the full value of the person's universal credit entitlement.
If they agree, it will later be deducted from their monthly Universal Credit payments – leaving many families struggling to meet their most basic living costs on the lower payments.
Labor MP for Liverpool Riverside, Kim Johnson MP, who has campaigned for the abolition of the two-child benefit limit, said: “We are once again seeing the Government shifting the costs of its broken welfare system onto the very families who can least afford it.
“Forcing people to take out loans just to survive the five-week wait for universal credit is pushing hundreds of thousands of children into poverty, pushing parents into debt and using food banks. These loans must be turned into grants in the autumn budget. Ministers can no longer ignore the human cost of this policy.”
Dame Clare Moriarty, chief executive of Citizens Advice, said: “The five-week wait for universal credit forces many families into debt to the government before they even receive their first payment. In doing so, we are helping parents who rely on food banks. Universal credit was intended to provide a safety net, not trap people in debt from day one.”
She urged Ms Reeves to use her upcoming autumn budget to “replace these damaging loans with grants”, adding: “No family should have to borrow money just to eat while they wait for support they are entitled to.”
Labor MP Kim Johnson pictured at a protest in London in 2024 (PA)
Children's Commissioner Dame Rachel de Souza said: “As families struggle with rising costs, these statistics show that many are being forced to make difficult decisions to care for their children, leaving almost a million households trapped in what can feel like a brutal cycle of debt as they wait five weeks for their first universal credit payment.”
She urged the government to “be ambitious” in its new child poverty strategy and backed calls to end the two-child benefit limit.
Stewart McCulloch, director of charity Christians Against Poverty (CAP), backed the call to convert the loans into grants. He said: “This five-week waiting period is not a bug: it is built into the system and forces new claimants to survive for more than a month without income or start their claim with debt.”
The most recent Freedom of Information data is from February 2025, but the figures remain roughly the same every month, meaning they are representative of the current number of households in debt.
A DWP spokesperson said: “Advances are not a loan so no interest will be charged or enforcement action will be taken. They are available to new and existing customers who need urgent support.
“We are reviewing Universal Credit to ensure it does what we want. We are committed to thinking about how we can support people through the initial assessment period, known as the five-week waiting period, before they receive their first payment as part of the assessment. We will provide an update in due course.”
