Millions of Universal Credit recipients are losing an average of more than £700 a year because of automatic deductions from their payments.

The New Economics Foundation have warned that the deductions, meant to repay debts including emergency advance payments and previous overpayments from the Department for Work and Pensions (DWP), have cut basic Universal Credit payments by 8 per cent.

Each month the average claimant loses out on £63, £756 over the course of the year, which equates to £1 for every £13 they are due.

Connor Lawlor, a benefits expert at charity Turn2us, told the Sun: “These debts can accrue in several ways, including for Universal Credit and other benefit overpayments (even if the overpayment was made in error by DWP), benefit advances and recovering hardship payments.

"The DWP can also deduct on behalf of third parties if a claimant is in debt to them, including for rent and service charge arrears, council tax arrears, court fines, child maintenance, and for utilities like electricity, gas and water."

Nearly one million households lost money to pay back budgetary advances from the DWP to cover previous emergency costs, while 730,000 households paid back an advance from DWP to cover the five-week wait for their first Universal Credit payment.

A further 640,000 households lost money to pay back tax credits previously overpaid by HMRC.

Hundreds of thousands more claimants lost out on money as a result of other deductions.

Turn2us recommends seeking debt advice as soon as possible before you dispute or accept any deductions from the DWP.

Mr Lawlor explained: “The benefit office should write to give reasons why deductions are taking place.

"If not, the claimant should request this.

"For example, it is possible to dispute an overpayment, but a claimant should be able to provide the necessary evidence to prove why they think they haven't been overpaid a benefit or don't owe a debt."