It’s well-known that some people are entitled to benefits but don’t take them up – three-quarters of British people agree that ‘large numbers of people who are eligible for benefits these days fail to claim them’ (BSA2010). The Government estimates that all these unclaimed benefits and tax credits add up to £11-18bn, which puts the £4.5bn overpaid due to fraud and customer error into some kind of perspective.
But these figures are at risk. The Department of Work and Pensions (DWP) are consulting on a proposal to abolish these estimates to save money. This therefore seemed a good time to take a closer look at the figures, and why they’re important.
Benefits take-up in Britain
The full set of official take-up statistics for 2009/10 are shown below (this is a table taken from the very draft version of the report on benefits stigma that I’m working on with Kate Bell and Declan Gaffney); the benefit estimates come from DWP, while the tax credit ones from Her Majesty’s Revenue & Customs (HMRC).
Put simply, this shows that the non-take-up of benefits is an issue for every benefit apart from the most universal (Child Benefit and the Basic State Pension). Take up rates are around 80% for some income-related benefits, and only around 65% for others. Take-up rates are higher as a share of the total value of benefits that people are entitled to; this simply reflects that people with small entitlements are less likely to claim. But sizeable amounts of some benefits are not being claimed, particularly Pension Credit, Council Tax Benefit and Jobseeker’s Allowance.
What is more, the take-up of most benefits has gone down over time. The latest DWP report puts together the trends for as far back as they can go – noting that there are huge amounts of uncertainty around these (see below). I’ve already spoken about the drop in take-up rates for unemployment benefits on the blog here, but strikingly we can see these for nearly every benefit for which the DWP provide data: income support/incapacity benefit, housing benefit, and council tax benefit; the housing benefit graph is shown below.
Trends in the take-up of Housing Benefit in Britain
Source: DWP 2012, p91.
Yet this is not true for all benefits, for two have seen rises in take-up: means-tested pensioner benefits (which have risen by nearly 10 percentage points from a low in 2001-02), and low-income working families with children, which are shown below (data is from HMRC).
Trends in the take-up of benefits for low-income working families with kids
Why the DWP should continue the series
This is what the data show, then – but why does it matter? Creating robust estimates of take-up is actually pretty time-consuming; you have to try and guess if people who have never applied for benefits would be entitled to them, and the eligibility criteria for benefits are fiendishly complex. (We still don’t have take-up rates for some disability benefits, for example, although the DWP under Labour was making moves in this direction). The DWP also notes that some of the estimates are based on small sample sizes.
Futhermore, creating the trends above is even more difficult; benefits eligibility is constantly changing and the benefits themselves are being regularly overhauled; the data underlying the trends keeps changing; and the trends above are full of caveats about their unreliability. The DWP’s consultation says that scrapping this series would save the equivalent of two people’s salaries each year, even if we still collected all the raw data on which the trends are based (!).
Yet despite all this, high-quality take-up statistics are hugely important. This isn’t just in allowing us to put the non-take-up amounts next to the fraud/error statistics. The OECD (p9) argues that such figures are critical as (i) non-take-up is a sign that benefits are not achieving their goals; (ii) involuntary non-take-up (either ignorance or stigma) is simply unfair; and (iii) knowing about take-up helps us estimate the impact of changes to the benefits system (these are the same strengths that Paul Spicker describes in his response to the DWP consultation) .
But few governments bother to collect such figures. The OECD describes Britain as a ‘notable exception’ (p10), and the DWP can be justly proud to be an international leader in this. (I’m resisting the temptation to say anything about ‘gold medals’…).
The consultation closes on 4th October 2012. Reply as detailed here if you can.