Over £2 billion of support is unclaimed in Wales each year

Building on our work to calculate the £23 billion shortfall in benefit and support claims nationally, Policy in Practice finds that over £2 billion of the national amount is unclaimed in Wales alone.

Today BBC Wales featured our latest analysis revealing that hundreds of thousands of households could maximise their income by claiming benefits and support they are eligible for

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.

As the last of the 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.

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 in Wales?

In addition to broad, entrenched barriers to claiming support exist, such as administrative complexity, lack of awareness, and stigma, Wales has some unique challenges that can affect benefit take up.

1. Wales has higher levels of poverty and income inequality

Wales has higher levels of poverty and economic deprivation compared to other parts of the UK. Economic disparities can lead to lower levels of education and digital literacy, both of which are important for navigating the benefits system.

According to the Wales Centre for Public Policy, nearly a quarter of the Welsh population lives in poverty, with child poverty rates being particularly high at nearly 1 in every 3 children living in poverty. Wales has some of the lowest income levels in the UK, with significant regional variations that exacerbate inequality. Areas such as Blaenau Gwent, Merthyr Tydfil, and Rhondda Cynon Taf are among the most deprived, with residents facing multiple barriers to economic participation and access to services.

These economic challenges are compounded by high levels of unemployment and underemployment in certain areas. The Welsh Government’s Labour Market Statistics show that while there has been some improvement in employment rates, many jobs are low-paid and insecure, contributing to financial instability and making it harder for individuals to break out of the poverty cycle. Crucially, employment rates are lower than UK averages, bringing more people into benefit entitlement.

Economic inequality in Wales is reflected in health inequalities, with poorer health outcomes prevalent in deprived areas. Poor health can limit an individual’s ability to work and their need to claim benefits, yet navigating the system can be particularly challenging for those already facing economic and health disadvantages.

2. Rural, isolated communities face barriers to advice and support

At more than 35%, Wales has a significant rural population, with many people living in isolated communities. For comparison, around 17% of England’s population live in rural areas.

Living rurally can make access to information and support services more difficult. Transport links in rural areas can be limited, making it harder for individuals to attend appointments or seek advice in person. Energy costs are higher in rural areas, and children face higher rates of deprivation.

Transport links in rural Wales can be limited and unreliable, making it difficult for individuals to attend appointments, seek advice in person, or access essential services. A report by the Sustrans Cymru highlights that rural areas in Wales often suffer from infrequent public transport services, and higher costs for car transportation which exacerbates social exclusion and makes it harder for people to engage with the benefits system.

3. 170,000 households in Wales are not online

Digital connectivity is another significant challenge. Many rural areas in Wales have limited access to high-speed internet, which is crucial for online benefit applications and accessing digital resources. With 7% of people in Wales not online, and with more than 40% of people over 75 digitally excluded, take up of benefits suffers, especially as more services are moved online to cut costs.

While digital exclusion is a UK-wide issue, it is particularly pronounced in certain parts of Wales where internet infrastructure is less developed. Poor digital connectivity can hinder online applications and access to information.

How can we close the £2 billion gap in Wales?

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.

Smarter use of data is the key to unlocking the unclaimed benefits gap

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.

Our work with the Bevan Foundation recommended exactly this: a common approach to Welsh benefits, and we are delighted to share that many of our recommendations have either been adopted or accepted and are moving towards consultation.

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.