£16 billion remains unclaimed in means tested benefits each year

February 27, 2020 – entitledto
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Today sees the long awaited release of the DWP’s annual stats about the take-up of income-related benefits [1]. It usually releases this data in November each year but this year it was postponed to allow further time for quality assurance and to ensure the data meets the standards for the Code of Practice for Statistics.

Now the numbers have been released we can see why they needed to delay publication, because the way the take-up estimates are produced has been changed for this year’s publication. However, dig a little deeper and you will see the changes have also been applied backwards for last year’s statistics for 2016/17 which explains DWP’s comment that “comparisons to earlier years should be treated with caution as these changes have only been applied to 2016/17 and 2017/18 data.”[2]

We were also hopeful the delay would mean that numbers for Universal Credit would be included for the first time but, the DWP told us that, as in previous years, “Universal Credit take-up rates were unable to be estimated”. However, it also said “this situation is being monitored and changes will be made in future as required”.

This lack of this data is already having an effect on how we compare take-up rates from one year to the next for the benefits it replaces, and the result is that they show an incomplete picture. We expect Universal Credit take-up to be relatively low, as the people who are moving on to it (people with a change of circumstance or making a new benefit claim) are from groups who usually have the lowest take-up. But until we get the full picture, showing both Universal Credit and ‘legacy’ benefits, it will be difficult to give an accurate overall picture of trends in benefit take-up. We really hope this situation is resolved for the next batch of stats.

HMRC, usually the slightly slower of the two departments to publish its numbers, released its Child Benefit, Child Tax Credit and Working Tax Credit take-up rates back in December [3], as per its usual schedule. Alongside today’s number from the DWP this means, as the true take-up figure fans we are, we’re now in the position to merge the headline figures from both departments to provide an overall picture of unclaimed benefits across the UK.

Sadly, as usual, it’s not the story we want to hear. Millions of low income households are still not getting the help they are entitled to and billions of pounds are going unclaimed by some of our poorest families each year. £16 billion in fact.

£16 billion is indeed high but if you compare it to last year’s figure of £21 billion it looks like a boon for benefits being claimed – a huge drop of 25%. But those methodological changes we mentioned above have a lot to answer for here.

The biggest effect of the new methodology is on Pension Credit take-up. The new methodology means that better account is taken of income from non-means-tested benefits, including the state pension. This in turn means the number of people failing to claim a benefit, as well as the amount unclaimed, are lower than estimates under the previous methodology and this has the effect of reducing DWP’s estimate for the amount of money lost through low take-up.

However, they do not necessarily mean that the problem is getting better. We actually expect the effective cost of not taking up a Pension Credit entitlement to increase when the BBC licence fee is linked to Pension Credit receipt for over 75s. But I’m sure we will have more to say about that in a future blog.

Where the total £16 billion figure comes from: 

 

Benefit name Number of entitled families not claiming in 2017/18 Amount unclaimed
Child Tax Credit 670,000 £2,490,000,000
Working Tax Credit 950,000 £2,540,000,000
Pension Credit 1,060,000 £2,160,000,000
Housing Benefit 920,000 £2,680,000,000
Job Seekers Allowance (Income Based) (a) 410,000 £1,380000,000
Income Support / Employment and Support Allowance (Income Related) 300,000 £1,240,000,000
Council Tax Support 2,770,000 (b) £2,595,000,000 (c)
Child Benefit 513,000 £825,000,000
Universal Credit Figures not available Figures not available
Total 7,593,000 (d) £15,910,000,000
All figures are based on central estimate figures for entitled non-recipients for 2017/18 unless noted below:
(a) Figures for 2015/16 - the most recent data for this benefit. DWP stated “At this point in the UC rollout schedule, there is no practical way to distinguish between JSA and UC at entitlement level for the purposes of estimating take-up statistics. Therefore, the JSA data are not of a suitable quality to be published."[4]
(b) Figures based on the last available take-up statistics for support to pay Council Tax from the financial year 2009/10.
(c) Using the mid-point of the total amount of Council Tax Benefit unclaimed in 2009/10 (between £1.7 billion and £2.42 billion [5]) this figure has been inflated to 2018 prices using the Bank of England Inflation Calculator.
(d) Not unique families as some may be entitled to more than one benefit.

 

It’s not as simple as dividing the number of entitled non-recipient families by the total amount unclaimed, as many families could be entitled to more than one benefit, but if we did over simplify the system in this way it would mean a typical amount of £2,000 a year should be in these families pockets. And eventually being spent in their local shops or on their local services all serving to boost their local, and ultimately our national economy.

Help us encourage everyone to check if they are entitled, now!

Even for those with no knowledge of the benefits system – and let’s face it the complex rules and regulations are enough to put many off - our free tools help people quickly work out what they may be entitled to. Please share them with friends and family to see what help they may be able to claim.

 

Sources:

[1] https://www.gov.uk/government/statistics/announcements/income-related-benefits-estimates-of-take-up-financial-year-2017-to-2018

[2] https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/867983/income-related-benefits-background-information-and-methodology-2017-2018.pdf

[3] https://www.gov.uk/government/statistics/announcements/child-benefit-child-tax-credit-ctc-and-working-tax-credit-wtc-take-up-rates-2017-to-2018

[4] https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/867983/income-related-benefits-background-information-and-methodology-2017-2018.pdf

[5] https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/222914/tkup_first_release_0910.pdf

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