New analysis by Policy in Practice finds that the total amount of unclaimed income-related benefits and social tariffs is now £18.7 billion a year. We estimate that £7.5 billion of Universal Credit is unclaimed by 1.2 million eligible households and £2.9 billion of Council Tax Support is unclaimed by over 2.7 million eligible households each year.
- £7.5 billion of Universal Credit goes unclaimed by 1.2 million eligible households. Caseload take up varies between 70% and 90% for national means tested benefits
- Take up is lower for locally administered benefits. Council Tax Support is the most underclaimed, with 2.7 million people missing out on £2.8 billion of support
- Social tariffs are also significantly underclaimed. Broadband social tariffs have the lowest take up, with 97% of eligible households missing out on the tariffs. People on means tested benefits should check for eligibility with their utility providers.
Read the full report: Missing out: £19 billion of support goes unclaimed every year
Millions of households need extra financial support to stay afloat
In 2021 Your Housing Group helped an elderly gentleman who had recently lost his wife. He was only receiving his State Pension and was not in receipt of any other benefit. At the time, he was not aware of what additional support was available to him.
Using Policy in Practice’s Better Off Calculator, Laura Beetham, Money Advice Triage Officer, assessed his eligibility for benefits.
Together, they discovered that he wasn’t receiving Housing Benefit, Council Tax Support and Pension Credit that he was eligible for. He went on to successfully apply for each of these benefits and saw his annual income increase by around £1,320.
His testimony speaks for itself when he said:
I really wouldn’t have had a clue without your help. I am really grateful for everything you have done for me and I am over the moon.
Laura Beetham, Money Advice Triage Officer, Your Housing Group
There are many other people in a similar position. We estimate that one in four low-income households will not have enough money for basic household costs.
Maximising income through the benefit system is a simple way to support households through the cost of living crisis and improve lives.
New analysis reveals the level of unclaimed benefits each year
Policy in Practice estimates the value of unclaimed benefits and the number of households that are missing out. The methodology for our calculations is available in the full report.
Universal Credit and Council Tax Support are the most underclaimed benefits each year
Universal Credit
We estimate that £7.5 billion of Universal Credit goes unclaimed by 1.2 million eligible households. This is the largest pot of money left unclaimed out of any of the benefits.
Accessing this support can be life changing. But many families, especially those in work, do not apply because they believe that Universal Credit only covers people who are out of work or on very low incomes.
Our previous publication on Universal Credit highlighted that up to 300,000 higher-rate taxpayers may be eligible for Universal Credit. For instance, a household earning a maximum annual gross income of well over £100,000 with rental and childcare costs could be eligible for Universal Credit.
Council Tax Support
We estimate that £2.9 billion of Council Tax Support is left on the table by over 2.7 million eligible households.
Many households may not claim Council Tax Support because they do not know that this support exists. Some local authorities may not widely publicise their scheme.
There is also a concerning drop off in take-up of Council Tax Support as households migrate to Universal Credit from legacy benefits. A household on Universal credit must trigger a separate claim for Council Tax Support. This had previously been assessed automatically alongside claims for Housing Benefit.
This two step process creates friction in the journey to claiming Council Tax Support and may hinder households from accessing this support.
Four reasons why benefits are going unclaimed
Benefits go unclaimed because of a complex interaction of factors. These include:
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Administrative complexity
The sheer complexity of multiple application mechanisms, administering organisations, eligibility criteria and conditionality create a barrier for many people who are trying to navigate the system and access support. Dealing with this complexity ratchets up pressure on people in poverty, exacerbating the stress that goes hand-in-hand with not having enough money
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A lack of awareness
Many claimants are simply unaware that they can claim support given their circumstances or income. This research was partly inspired by recent analysis on benefit entitlements for clients in the financial services and utilities sectors. That work resulted in first time claimants gaining over £4,000 a year and existing claimants typically gaining over £1,500 a year
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Increasing fragmentation of support
The inadequacy of means-tested benefits is driving a growing patchwork of discretionary and other support schemes. Help generally goes to those who already know about the schemes and can navigate often complicated application processes, rather than those most in need. Also, local funding drives geographical differences in provision. This creates postcode lotteries for available support, and unequal conditions to access it
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Stigma
Negative perceptions around claiming benefits may discourage eligible people from engaging in the benefit system. A related factor behind the non-take up of benefits is the deliberate barriers in the system that act as gatekeepers to access, such as the threat of sanctions, and in-work search conditionality. Whilst these measures are intended to ensure people do not receive what they are not eligible for, they can also deter eligible households from claiming benefits altogether
How to boost benefit take-up and reduce the £19 billion of unclaimed benefits
People need to be protected from the rising cost of living. We have recommendations for how policymakers, local authorities and third party organisations, and households can help to reduce the £19 billion of benefits that go unclaimed each year.
Three actions for policymakers
- Address the insufficiency of main social security benefits: Inadequate benefit levels have a hand in growing the complex web support. New support schemes often fill the gaps in the main system. It is crucial that benefits cover the basic needs of a household
- Reduce complexity and increase awareness of local and national benefits: The DWP should be made responsible for increasing take-up of support. Data sharing can streamline access to support and raise awareness of benefits at all points of contact with the household
- Change the messaging around benefits: Government messaging is critical to ensuring that all those that are eligible access support. We urge the government to adopt a supportive approach towards claimants by lessening conditionality
Two actions for local authorities and other organisations
- Identify residents in need using data analytics and contact them on the benefits they are missing out on. Leading councils use our Low Income Family Tracker analytics platform to launch benefits take up campaigns. For instance, our ongoing data-led Pension Credit across London will encourage over 8,500 eligible pensioner households to take up Pension Credit worth £3,700 per year, This campaign will have a return on investment of £200 for every £1
- Third party organisations and firms should also check for eligibility on behalf of their customers. Many households do not know that they are eligible for benefits. Our work in the utilities and finance sectors continues to find that many more customers are eligible for benefits
One action for families
- Check to see if they are missing out on any of the £19 billion of unclaimed benefits using a free benefits calculator as shown on GOV.UK.
Further information
Read the full report and our methodology: Missing out: £19 billion of support goes unclaimed every year
