Missing out 2024: £23 billion of support is unclaimed each year
Rachael Walker Published on 18th April 2024
Policy in Practice estimates that the total amount of unclaimed income related benefits and social tariffs across Great Britain is now £22.7 billion a year. This represents a 21% increase on earlier estimates, driven by uprating and improved estimates which show more people are missing out.
The links between poverty, health, and public services are well established. Maximising income through the take up of benefits is essential to help both people on low incomes and public services cope in the face of rising living costs and increasing demand. Understanding levels of unclaimed benefits is also crucial to addressing unmet needs and structural gaps in the welfare system.
Read the report: Missing out 2024: £23 billion of support is unclaimed each year
This is not just about the money, it’s about the profound impact on people’s lives. Support from the social security system is a right. The failure to deliver support to people who are entitled to it directly affects education, health outcomes and social participation for millions of people. We can’t afford not to close the unclaimed support gap.
Deven Ghelani, Director and founder, Policy in Practice
Chart 1: £23 billion in unclaimed benefits and support
As more than 400,000 working age households migrate to Universal Credit in 2024, and as we approach a general election where an incoming government will face limited budgets and rising demand for public services, Missing Out 2024 examines what we know about unclaimed benefits, and how we can maximise income locally, regionally, and nationally.
Unclaimed benefits have increased by £4 billion since 2023
In the first of our Missing Out reports we identified £18.7 billion in unclaimed means tested benefits. Since then we have continued to work with government, housing providers, and utility companies to address unmet needs proactively. In spite of this success, we find £4 billion in additional unclaimed benefits in 2024, bringing the total of unclaimed support to £23 billion a year.
Chart 2: Unclaimed benefits have increased by £4 billion since 2023
Much of the £4 billion increase can be attributed to inflation linked uprating of benefits for working and pension age claimants and the unfreezing of Local Housing Allowance rates to the 30th percentile of local rents, the first such increase since 2020.
The rollout of Universal Credit also has an impact. This is because we have excluded legacy benefits from our estimates as they can no longer be claimed, so as more people become eligible for Universal Credit, the number of people missing out increases too. The DWP’s own estimates show a fall in take up of Universal Credit as people are migrated across from legacy benefits. We have also seen lower take up estimates published by the DWP for Pension Credit and Housing Benefit for pensioners this year.
Living with financial stress is impacting our communities, and tackling the gap will improve outcomes for people across the UK by improving education and health outcomes for children, widening social participation, and reducing the burden on the national health and social care system.
Why are benefits going unclaimed?
1. Lack of awareness
Perhaps the clearest reason why benefits might go unclaimed is that people are simply unaware of what, and how they can claim. Our recent analysis estimated that people of pension age could be missing out on up to £5.2 billion in Attendance Allowance due to a lack of knowledge about the benefit and who can claim it.
People may also be unaware that they need to apply separately for social tariffs and local support such as Council Tax Reduction. Universal Credit brings many nationally administered benefits together, but there is still room to increase public awareness of what benefits are available to them.
2. Administrative complexity and increasing fragmentation of support
The UK’s social security system has evolved significantly over time and is a complex system for potential claimants to navigate. The existence of multiple application methods, different administering bodies, and varying eligibility criteria and conditionality regimes create an administrative obstacle course for claimants.
People experiencing poverty are more likely to be under extreme stress, which can be worsened by their efforts to navigate the system. The move towards digital application and administration systems for benefits can also serve as a barrier in this regard, with an estimated 8.5 million adults in the UK lacking the essential digital skills necessary to even access the online world.
Perceived gaps in the existing means tested benefits system have led to a web of locally administered discretionary schemes. These schemes frequently differ by availability and generosity depending on location, creating a postcode lottery of provision as seen in the case of locally administered Council Tax Reduction. The means tested social tariffs offered by utility companies often suffer from the same problem.
3. Stigma
Benefits continue to be associated with a sense of stigma and shame by many individuals, who disengage with the social security system as a result. Benefits claimants are often cast as being ‘undeserving’, and surveys have found that up to a quarter of respondents eligible for but not claiming Universal Credit cited ‘benefits stigma’ as their main reason for not making a claim.
Negative media reporting on benefits can increase stigma. A recent campaign by Policy in Practice focussing on increasing take up of Pension Credit amongst older Londoners found stigma to be a powerful barrier to claiming the benefit.
Deliberate barriers in the social security system like conditionality and threats of sanctions can also deter eligible claimants from engaging with the system.
How can we close the £23 billion unclaimed benefits gap?
Universal Credit was brought in to simplify the social security system, but more needs to be done to ensure the safety net is not left with holes in it, and to make the benefit system easier to navigate.
1. Reduce complexity: Address the system as a whole
Technology is outpacing policy, creating a stagnant infrastructure. Better use of data can bring benefits to claimants and efficiencies to taxpayers alike. These can include greater sharing of data across government, enabling data to be used to link entitlements and passport claims, joining up application routes, and allowing claimants to give their consent for data to flow between organisations. The system is not yet greater than the sum of its parts, but it can be.
2. Raise awareness: Change the messaging around benefits
The DWP has a responsibility to ensure that the right people are paid the right benefits at the right time. While there needs to be a focus on ensuring that fraudulent payments are not made, this shouldn’t be at the expense of support going unclaimed or underclaimed.
Targets should be set by DWP to maximise take up of support through Job Centres and local authorities. Simple actions such as encouraging people to claim and ensuring that benefit entitlement checks are performed at contact could make a big difference.
The DWP should also encourage people to use one of the benefit calculators on GOV.UK and allow data on a successful assessment to be shared to enable access to other support.
3. Be proactive: Share data across the social security system
We already see the benefits of sharing information systemically. For example, real time information on earnings is passed from HMRC to DWP to support the assessment of Universal Credit without placing the onus on the applicant to update their income every month.
But more data can be shared between organisations, and more can be done to act upon the information. For benefits such as social tariffs or Free School Meals, unlocking the proactive power of data to consolidate applications can be transformative, easing the burden for applicants whilst streamlining administration.
Smarter use of data is the key to unlocking the unclaimed benefits gap
Since we launched our Missing Out analysis in 2023, 270,000 households are better off by £260 million a year as a direct result of our work with partners using the LIFT platform. For many, this means the difference between struggling to get by or not. Our work is also helping our local authority clients to reduce arrears by around £12 million each year.
Organisations that use our Better Off Calculator have helped over half a million people to claim nearly half a billion pounds a year. Every day around 10,000 people use the Better Off Calculator through our clients or via GOV.UK to check their eligibility for benefits. Many get direct access to support schemes with a single click through our Apply Once capabilities.
Meanwhile, we continue to call for greater transparency over claimed and unclaimed support levels across the spectrum of benefits available for working age and pension age households. We also urge the government and its partners to improve the flow of data across the welfare system to further unlock the potential of administrative data and proactively deliver a more efficient, streamlined social security system.
Read the report: Missing out 2024: £23 billion of support is unclaimed each year
Media enquiries
Report authors Deven Ghelani, Director and founder, and Rachael Walker, Director of Policy and Research, are available for interview. Please contact:
Deven Ghelani, Director and Founder, Policy in Practice
07863 560 677
deven.ghelani@policyinpractice.co.uk
@Deven_Ghelani
