This week has seen a series of deeply worrying statistics that underscore the cost of living disaster facing many UK households.
The surge in inflation figures does not yet reflect the 54% increase in the energy price cap in April. The 3.1% increase in benefits this month covers less than half of the growing gap and wages are falling in real terms.
In these desperate times, there is one statistic the government should be especially ashamed of. With so many people struggling, why is it that around £15billion in means-tested benefits go unclaimed in the UK every year?
That figure is the best estimate of analysts at the Entitled To website, which bemoans the severe lack of published government data on benefit usage, particularly for Universal Credit.
Every year, more than 4 million people use its online benefits checker to see what help they might be eligible for. It’s a similar story at Turn2us, a charity offering a benefits calculator that takes just 10 minutes to complete, but could make all the difference financially for low-income families. Its latest figures show that more than 232,000 people a year have claimed new benefits after using its services, at an average of £5,320 per person.
These free services are such a popular and simple way to navigate the confusing quagmire of the benefits system, that links to them now appear on the official government website gov.uk.
But if we’re relying on the goodwill of charities to raise awareness and ensure the benefit system is working as intended, I’d say it’s a sign of a broken model that is in dire need of repair.
Charities tell me that the biggest obstacle is that our benefit system is too complicated. Large groups of people are simply unaware that help exists.
Often an interaction with another charity is the catalyst. Food banks and the growing number of fuel banks providing refills for those using prepaid meters regularly help their users access benefit checkers to find out what other help is available.
Turn2us says one of the most chronically overlooked benefits is pension credit, with £1.7billion unclaimed by around 850,000 households. Pensioners eligible for this top-up could receive over £3,300 a year, and as pension credit is a ‘gateway benefit’, even a small reward could allow claimants to help with energy bills, reductions of municipal taxes and a free TV license for over -75s.
This month the DWP launched a pension credit awareness campaign (no, I hadn’t noticed either) and a complaints hotline – the number to call is 0800 99 1234.
But it highlights the second biggest problem with our benefits system – digital exclusion. It is very difficult to get the information and assistance you need to apply for benefits if you are offline, but being online is expensive and the pandemic has accelerated the digital divide.
Percentage of people over 65 excluded from digital
Communications watchdog Ofcom estimates that 6% of UK households are offline, but that figure rises to 11% for low-income households and 18% for those over 65.
At the same time, cuts to local authority funding have forced the closure of libraries and visitor centers in local council offices. Providing face-to-face services is expensive – just look at the scale of bank branch closures – but they are a lifeline for poorer customers.
I’ve written here before about how digital literacy is an integral part of financial literacy, but charity leaders fear the cost-of-living crisis will force more consumers to go offline.
“There are already a significant number of people without internet access, but as more and more people struggle to pay their energy bills, I fear we will see an increasing number of people unable to afford a phone or an internet connection – and then how do they pretend?, says Thomas Lawson, Managing Director of Turn2us.
Charities are already handing out free SIM cards to people who have a phone but cannot afford the data costs of applying for benefits online.
However, Ofcom estimates that 4.2 million means-tested households could halve their broadband costs by switching to a “social rate” costing as little as £10 or £15 a month, but in February, only 55,000 customers were there.
Ofcom’s outreach campaign to providers is bearing fruit, with Sky and Now launching new low-cost offers this week.
All of this could help people make claims for benefits and reduce the unclaimed £15billion, especially when you consider Universal Credit to be an ‘online-first’ benefit. While it’s possible to claim over the phone, charities say it’s so much more difficult and time-consuming, it’s definitely a barrier to greater uptake.
And then there is the school penalty. Ofcom says around one in five children do not have consistent access to an appropriate device for online learning at home, rising to 27% of children from households classified as the most financially vulnerable.
Turn2ss has a searchable database of charities offering grants to cover the cost of computer hardware. If you have old phones, laptops, or tablets that you no longer need, consider donating them to charities, including The Restart Project, which refurbish devices and donate them to those in need.
Online access will be vital for low-income families to get help with rising energy bills. I spoke to an LBC radio caller last week who could not afford a smartphone and was desperate to find out how he could access the Household Support Fund for Local Councils mentioned in the spring statement , not to mention the £144m funding pot. for those not eligible for the £150 council tax refund.
Each council will have a different method of distributing this support, but not being online presents a huge barrier for the poorest.
What other measures could be taken?
Donate to the Financial Education and Inclusion Campaign here
Charities praise the Scottish government’s oversight of benefit pick-up, setting targets to ensure people claim what they are entitled to. It recently overhauled the design of its benefit system and is carrying out advocacy work to identify and target groups that may be missing out.
Turn2us says those for whom English is a second language find the benefits system particularly impenetrable.
One of the saddest facts I’ve discovered? While finding out you’re entitled to more help makes a huge difference to people’s financial lives, charities say it’s often tinged with regret because claims for benefits can rarely be backdated.
That’s why awareness – especially in times like these – is of the utmost importance. As part of the FT’s Financial Education and Inclusion campaign, this article has been made free to read.
I urge readers to share it with anyone who could benefit from the support I have listed above, as well as write to your local MP and ask what they are personally doing to ensure that more of the unclaimed £15billion is reaching those who need it most.