Households on Universal Credit are being warned of a cut to income from October.

Despite cost-of-living support from the Department of Work and Pensions, everyone on Universal Credit is expected to experience a household cash deficit of £77.

Campaigners at charity StepChange are warning the support will not be enough to keep up with soaring prices as the cost-of-living crisis continues to worsen.

The charity is calling on the Government to suspend deductions from Universal Credit, BirminghamLive reports.

They say pausing the average deduction of £50 to repay advance payments and cover any overpayments would help fill the gap of a £77 deficit.

StepChange's director of external affairs Richard Lane said: "The principle that debts owed to Government should be repaid when it’s affordable for people to do so is not in question, but now is a time for a pragmatic pause. Among our clients, around half of those relying on Universal Credit and subject to deductions for overpayments are unable to make ends meet.

"The Government has an opportunity to plug the support gap for over a million households by putting these deductions on hold until benefits are uprated, and taking the opportunity created by the pause to rework deductions into an affordability framework that fits better with best practice in debt advice.

"We think that’s a sensible response to mitigate how the cost of living crisis is playing out among low-income households reliant on Universal Credit."

A DWP spokesperson said: "We carefully balance our duty to the taxpayer to recover overpayments with our support for claimants and safeguards are in place to ensure deductions are manageable."

£650 cost-of-living payment

A £650 cost of living payment will be paid to those receiving Universal Credit in two payments, beginning next month.

The UK Government has announced the first £325 payment to Universal Credit claimants will be paid in July.

It will also be paid to those on pension credit and those in receipt of legacy benefits.

The exact payment date has not been confirmed and could depend on when the individual receives their benefit payment.

A second £325 lump sum will be paid in August, taking the total contributions to £650.

The money will be tax-free and will not count towards the benefit cap.

Advance payment

For those who are newly claiming Universal Credit, the Department of Work and Pensions can provide backdated or advance payment.

The support is there to help you get by until your first payment but it will have to be paid back to the Government.

Hardship payment

Hardship payment is available for people struggling to pay for everyday essentials. It generally applies to people who have had their benefits stopped or reduced.

It will usually be around 60% of your usual Universal Credit payment and you will need to repay the money through your usual UC payments.