The Salvation Army has called on the Government to include Universal Credit Advance Payments in its new Debt Respite Scheme, warning that many could be trapped in a debt spiral if nothing is done to help them manage their repayments. 

The Debt Repite Scheme is being pitched by the Government as a 60-day "breathing space" during which action from creditors will be paused for people with problem debt. However, government loans - including Advance Payments for Universal Credit (UC) claimants - are not included in the scheme. The Salvation Army has said it is concerned because so many rely on these loans in order to make ends meet while their claim is processed and the repayments are automatically deducted later - the group added that many "will have struggled to eat or heat their homes" while repaying it. 

"As unemployment is expected to keep rising, the Government is being urged to act now to protect more UC claimants from this debt trap," the Salvation Army said. Between March and September 2020 over one million UC Advance Payments were made. 

Lorraine Cook, the Salvation Army’s financial development inclusion manager said: “It’s the very vulnerable we are most concerned about. The people queuing outside our foodbanks because they can no longer afford to eat are those most likely to rely on Universal Credit Advance payments to get by. The moment someone has an unexpected payment like a boiler repair or a new pair of trainers for their child, is where repaying this debt can become unmanageable.

“Our debt advice centres have experienced an increase in the number of people seeking our support. The research in our report shows a worsening of people’s debt, which paired with job losses or reduction in income, is putting them at real risk of poverty.

“Banks and credit card companies will be forced to give much needed space to people struggling with debt and yet the Government can continue to take significant portions from people’s income without respite.

“The Government should be less focused on collecting money and instead help people manage their finances by highlighting the professional support available from debt support services”.