This week has seen a series of deeply worrying statistics that underline the cost of living catastrophe many UK households face.
Soaring inflation figures do not yet reflect April’s 54 per cent increase to the energy price cap. The 3.1 per cent uprating of benefits this month covers less than half of the growing gap and wages are going backwards in real terms.
In these desperate times, there is one statistic the government should be especially ashamed of. When so many are struggling, why is it that an estimated £ 15bn worth of means-tested benefits go unclaimed in the UK every year?
This figure is the best guess of analysts at the website Entitled To which bemoans the woeful lack of government-published data on benefits uptake, particularly for universal credit.
Every year, more than 4m people use its online benefits checker to see what help they might be entitled to receive. It’s a similar story at Turn2us, a charity offering a benefits calculator that takes just 10 minutes to complete, but could make a world of financial difference to low-income families. Its latest figures show over 232,000 people a year claimed new benefits after using its services, averaging £ 5,320 per person.
These free services are such a popular and straightforward way of navigating the confusing morass of the benefits system, that links to them now appear on the government official gov.uk website.
But if we are relying on the goodwill of charities to raise awareness and ensure the benefits system works as it was intended, I’d argue this is a sign of a broken model in urgent need of fixing.
Charities tell me the biggest obstacle is that our benefits 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 top-up for those on prepayment meters, routinely help their users access benefits checkers to find out what other support is out there.
Turn2us says one of the most chronically overlooked benefits is pension credit, with £ 1.7bn going unclaimed by an estimated 850,000 households. Pensioners eligible for this top-up could receive more than £ 3,300 per year, and as pension credit is a “gateway benefit”, even a small award could entitle claimants to help with energy bills, council tax discounts 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 claims hotline – the number to call is 0800 99 1234.
But this highlights the second biggest problem with our benefits system – digital exclusion. It is very challenging to get the information and support you need to claim benefits if you’re offline, but being online is expensive, and the pandemic has accelerated the digital divide.
Percentage of digitally excluded over-65s
Communications watchdog Ofcom estimates that 6 per cent of UK households are not online, but this rises to 11 per cent for lower income households, and 18 per cent for the over-65s.
At the same time, cuts to local authority funding have forced the closure of libraries and drop-in centers at local council offices. Providing face-to-face services is expensive – just look at the extent of bank branch closures – but they are a lifeline for the poorest customers.
I’ve written here before about how digital literacy is part and parcel of financial literacy, but charity leaders fear the cost of living crisis will force more consumers to disconnect.
“There is already a significant swath of people who do not have online access, but as more people struggle to pay their energy bills, I fear we will see rising numbers who will be unable to afford a phone or internet connection – and then how will they claim? ” says Thomas Lawson, chief executive of Turn2us.
Charities are already distributing free Sim cards for people who have a phone, but can not afford the data costs of applying for benefits online.
However, Ofcom estimates 4.2m households on means-tested benefits could halve their broadband costs by switching to a “social tariff” costing as little as £ 10 or £ 15 per month, but in February, only 55,000 customers were on them.
Ofcom’s campaign for providers to raise awareness is bearing fruit, with Sky and Now launching new low-cost deals this week.
This could all help people file benefits applications and reduce the estimated £ 15bn going unclaimed, especially when you consider universal credit is an “online first” benefit. While it’s possible to claim over the phone, charities say it’s so much more difficult and time consuming, this is undoubtedly a barrier to greater uptake.
And then there’s the educational penalty. Ofcom says around one in five children do not have consistent access to a suitable device for online home learning, increasing to 27 per cent of children from households classified as most financially vulnerable.
Turn2ss has a searchable database of charities providing grants to cover the cost of computer equipment. If you have old phones, laptops or tablets you no longer need, consider donating them to charities, including The Restart Project, which refurbish devices and give them to those in need.
Online access will be vital for lower-income families to get help with rising energy bills. I spoke to a caller on LBC radio 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 at the Spring Statement, not to mention the £ 144mn pot of funding for those not eligible for the £ 150 council tax rebate.
Every council will have a different method of distributing this support, but not being online presents a huge barrier for the poorest.
What other steps could be taken?
Donate to the Financial Literacy & Inclusion Campaign here
Charities praise the Scottish government’s monitoring of benefits take-up, setting targets to make sure people claim what they are entitled to. It has recently shaken up the design of its benefits system and conducts outreach work to identify and target groups that could be missing out.
Turn2us says that those for whom English is a second language find the benefits system particularly impenetrable.
One of the saddest facts I uncovered? Although finding out that you are entitled to more help makes an enormous difference to people’s financial lives, charities say this is often tinged with regret as benefits claims can rarely be backdated.
This is why raising awareness – especially in times like these – is of the utmost importance. As part of the FT’s Financial Literacy and Inclusion Campaign, this article has been made free to read.
I’d urge readers to share it with anyone who could benefit from the support I’ve signedposted above, as well as writing to your local MP and asking what they are personally doing to ensure more of the unclaimed £ 15bn gets to those who most sorely need it.
Claer Barrett is the FT’s consumer editor: firstname.lastname@example.org; Twitter @Claerb; Instagram @Claerb