According to the social policy company Policy in Practice, £19 billion in benefits go unclaimed in the UK each year. The cost of living crisis will likely result in this number growing yet further, as the government has moved to supplement the incomes of benefit claimants.
With food, gas and electricity prices rising over 17% in the year to June 2023, and inflation and rising interest rates eating away at household savings, these benefits would make a big difference in helping to meet the basic needs for vulnerable households.
Why aren’t households claiming these benefits?
Why, in such a tough economic climate, are those in financially vulnerable circumstances forgoing an opportunity to significantly boost their income? One reason is that many people aren’t aware of which benefits and grants are available, including for those in full or part-time employment. Others assume they are not eligible to receive them or they are not recognised as a substitute for other financial services such as credit cards. When individuals do have an idea of the benefits and grants they are eligible for, they are discouraged by complicated application processes and perceived stigma. See an in depth study of barriers to benefits uptake here.
How can benefits calculators and grant portals help?
A promising set of tools in addressing these barriers are benefits calculators and grants portals.
Benefit calculators enable users to enter simple information about their circumstances and in return receive an accurate estimation of their specific benefits entitlement. Grant portals are similar, but instead show eligibility for grants offered by charities, local authorities, and housing associations, usually for a specific need. These tools therefore help overcome a lack of awareness and the belief individuals have that they are not eligible.
Increasing the usage of these tools is a key way of increasing the uptake of benefits and grants. The Behavioural Insights Team (BIT) was commissioned by Fair4All Finance to use behavioural insights to ensure as many individuals as possible complete these journeys and go on to apply for benefits and grants. To do this, BIT worked with the benefits calculators Inbest and Policy in Practice and the grants portal Lightning Reach. Fair4All Finance has funded the integration of these tools into lender and debt advice provider customer journeys, and the integration of Lightning Reach grants checker with benefits calculators. A key learning from these projects has been the complexity of the landscape, for example benefits calculator providers have to recode their calculations annually to adapt to adjustments in benefits. The projects also highlighted the postcode lottery of grant support provision.
We have seen that the use of benefit calculator tools, on average, deliver c£450 a month of unclaimed benefits to customers in vulnerable circumstances when integrated in lending journeys. The total amount awarded can be very significant and may clear someone’s outstanding debts – transforming their financial resilience.
What did our research find?
As there is no substitute for talking to people when developing policy solutions, the main part of our research consisted of over 50 hours of interviews with current and potential benefits and grants recipients. Many interviewees were enthusiastic about the calculators and portal, noting that:
1: The journey to finding out their results was generally easy, and wouldn’t take them too long if they were using the calculator on their own.
“It is very easy, it is very straightforward and it doesn’t ask for information which most people won’t have to hand” – Interview participant who is financially squeezed
2: The results were comprehensive, and motivated interviewees to explore their options further.
“I feel like this will assist so many people. Having everything in one place makes things so much easier…[without having to] individually have to search all things. The government website can be quite overwhelming […] This would have definitely been beneficial for when I did apply [for benefits].” – Interview participant who is financially squeezed
A large majority of interviewees across the two calculators and portal also said they would recommend them to people they know.
“[I would recommend it to] people who are struggling financially – it is always good to put everything into one system to find out how much you’re entitled to – it can help budget.” – Disabled interview participant who is struggling financially
Alongside such positive feedback, our user interviews also helped identify areas for improvement. These findings helped BIT develop recommendations, many of which have since been integrated by providers. Some of the recommendations which applied to all three platforms included:
|Key area for improvement||Recommendation|
|Interviewees experienced difficulties completing the calculation because they needed additional documentation||Introduce checklists at the start of the calculation indicating which documents will be useful to have to hand. Some of these documents include: wage slips, benefit statements, and utility bills.|
|Interviewees found the results page overwhelming, and were sometimes unsure what to do next.||Where users are matched with lots of support, introduce drop down menus to help the user digest the information more easily. Enable users to ‘star’ support matches of interest to narrow down potential next steps.|
|Tooltips provide users with vital additional information to help them answer specific questions, but sometimes went unnoticed by interviewees or were difficult to understand||Prompt users at the start of the journey to look out for tooltips and make them stand out (for example, place them directly underneath the question and use different colours). Simplify the language, chunk text using bullet points, and use clear prompts.|
While these improvements have increased the usability of these platforms, a key piece of the puzzle is awareness of the calculators and portals themselves.
This is where responsible community finance lenders come in. Community finance lenders are likely to provide excellent touchpoints for promoting the use of benefits calculators and grants portals because:
- These are already places where individuals manage and think about their money
- Community lenders are trusted messengers, so their endorsement of these tools is valuable
- Loan application outcomes and prompts to save are timely moments to promote steps to maximise income by using these tools
Community finance lenders are likely to have many other ideas of how they can signpost to these tools. They can play a key role in helping users boost their incomes with missing grants and benefits by integrating these tools into their customer journeys.
Other applications and utilisation of these tools
Currently, most mainstream financial services providers offer these tools to customers when they see signs of financial distress; a key part of the implementation of providers’ response to the Consumer Duty. These tools could also be used to support customers to recognise their entitlement before they are in distress, for example through using open banking data to identify these customers, increasing their financial resilience overall.
Helping support action
Financial services providers, who have benefits calculators integrated into their customer journeys, should proactively follow up with customers if they don’t act on their identified eligibility for benefits by using open banking data.