People struggling on Universal Credit are being preyed upon by loan sharks, warn Sheffield Council

Loan sharks are increasingly preying on people struggling with Universal Credit and other benefit cuts, officers from Sheffield Council have warned.
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Welfare reform is having a ‘profound impact’ as people fall into debt and poverty in Sheffield.

Rent arrears have increased and care leavers, women caught up in domestic abuse, tenants in private-rented accomodation, people with disabilities and health conditions, carers and black and minority ethnic communities are most likely to suffer.

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The council’s draft budget report says: “The impacts of the government’s programme of welfare reform, including the roll-out of Universal Credit (UC), are having a profound impact on financial insecurity, over-indebtedness and poverty in the city.

Loan sharks are preying upon people on Universal Credit in SheffieldLoan sharks are preying upon people on Universal Credit in Sheffield
Loan sharks are preying upon people on Universal Credit in Sheffield

“Universal Credit represents one of the biggest changes to the welfare system since the 1940s.

Sheffield Council is measuring the impact of UC on the city, both through quantitative measures and the collection of case studies.

“We know for example that, in common with many other parts of the country where it has been rolled out, rent arrears for people on UC has increased.

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“We also have anecdotal evidence that loan sharks are increasingly active in the city. Whilst many people find UC straightforward, our anecdotal evidence shows that there are still people struggling on UC in Sheffield.

“This is particularly those whose lives are more complex or who have vulnerabilities that make managing the system harder.

“It should be noted that UC has been introduced within the context of wider welfare reform changes that have had a significant impact on the city.

“These changes include over-occupancy rules, benefit cap, personal independence payments and council tax support changes.”

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Sheffield Hallam University estimates that, once completed, welfare reforms will lead to the city losing nearly £170m a year in benefits and tax credits – the equivalent to £460 a year for every adult of working age in the city.

Sheffield’s Child Poverty report shows the proportion of children living in families in receipt of out of work benefits, or tax credits, has increased.

There are 35,820 children living in poverty but the figure masks the wide and well-documented variation between different parts of Sheffield.

A Department of Work and Pensions spokesman said people could get information by visiting www.understandinguniversalcredit.gov.uk

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He said: “Many people build up rent arrears and debt in the months before they claim Universal Credit because they put off making a claim, and after they finally apply we actually see arrears fall by a third after four months.

"We encourage people to claim earlier rather than wait until they’re struggling with debt. There’s a huge amount of support with Universal Credit. It can help with housing costs, bills and looking for work."