At its heart, it’s a simple idea that can be broken down into three parts:
- Making sure all benefits are claimed.
- Taking on extra paid work, where possible.
- Selling stuff.
A benefits check is the easiest and quickest fix, but is still often overlooked, especially by non-welfare specialist advisers. The amount of benefits that go unclaimed are staggering: A DWP report released last year showed that up to £4.8 billion of Housing Benefit, up to £2.7 billion of Income Support, up to £3.3 billion of Pension Credit and up to £1.6 billion of Job Seekers Allowance all went unclaimed in the 2015/16 financial year. In all, that’s over £11 billion in income-related benefits going unclaimed in a single year. The figure rises to £20 billion when all benefits are included, yet an online benefits check can be done in minutes through sites like Turn2us or Entitledto.
The reasons for such a massive non-take up of benefits aren’t fully known but Dan Tenor, Professor of Social Inclusion at University of Portsmouth put forward one theory in The Independent at the time the figures were released, saying: ‘Contemporary media narratives on welfare dependency have increased the stigma attached to claimants, especially people of working age. Research suggests this stigmatisation is linked to reductions in take-up and a reluctance to claim among potential beneficiaries.’
An anonymous, transparent benefits check can help to tackle this stigma as well as clearing up confusion over what a claimant is entitled to in relation to changes within the benefit system. With the migration onto Universal Credit, for example, certain benefits are sometimes lost in the change-over. Council Tax Support, for one, is not rolled into Universal Credit, and is instead still claimed from the relevant local authority. A report by Entitled To estimates that around £2.5 billion was left unclaimed in Council Tax Support during 2017 alone. A benefits check shines a light on this kind of issue, meaning more money in the pocket of those who need it most. As well as benefits, there are also a number of local and national grants listed on the online checkers. Turn2us alone awarded 2873 direct grants in 2017/18.
A benefits check is crucial, but should only be the first step in any conversation on income maximisation. Taking on paid work, whenever someone is able to, is just as important.
According to the Office for National Statistics, self-employed workers now make up close to 15% of the workforce in the UK (around 5 million people). This spike in self-employment shows no sign of slowing down, and the booming ‘gig economy’ is one of the biggest factors. A Department for Business, Energy and Industrial Strategy report released in February estimated that there were around 2.8 million people working in the UK gig economy. While there are issues around this kind of work – reduced employee rights, job insecurity and income irregularity - there are benefits, too. The barriers to the gig-economy are minimal in comparison to the hurdles involved in getting back into full-time employment. The lack of a formal recruitment process means people can plug short term financial hardships quickly and effectively. The flexibility of casual work can also be a positive if work needs to be fitted in around childcare or other responsibilities.
For over ten years, Clean Slate Training & Employment has been creating and supporting paid work experience for long-term unemployed people. Service Coordinator, Karina, explains how money may boost the budget but paid work unlocks other doors too: “A short amount of paid work can make all the difference. We offer paid work for jobseekers to help other jobseekers as peer advisers, and we have a distribution enterprise with paid hours – people realise they are employable as soon as an employer takes a chance with them. Last year, we had to close a handyman project because there is such a shortage of tradespeople that jobseekers only did a single shift with us before they found mainstream work. Talk about being a victim of our own success.”
As Karina says, casual work can give people a short term boost to their finances, as well as the confidence to help in building a bridge towards more stable, longer-term employment. One positive aspect of Universal Credit is that people can keep earning while claiming without signing off, and should, in theory, be able to keep more of what they earn. Of course, anyone claiming UC while working needs to be aware of the rules – such as minimum income floors and work tapers. These rules around working on UC are undeniably complex, but help can be found in our Universal Credit Knowledge Bank.
In 2017/18 the Government introduced a Trading Allowance of up to £1000 per tax year that doesn’t have to be declared in certain circumstances. This covers trading or ‘miscellaneous income’ and removes another potential barrier for people who need to make a short term profit but who might be intimidated by tax returns and self-employee status. As Sarah Ghaffari, of the Institute of Chartered Accountants told The Telegraph earlier this year: "These allowances are available to all individuals and can be enjoyed by casual sellers and those looking to make extra cash.”
With this allowance in mind, the internet offers a huge marketplace where we can sell unwanted stuff. Sites like shpock and ebay make it easy to quickly put items on sale, all within a few clicks. Likewise, car boot sales provide another opportunity to sell stuff from around the house and bring in a bit more cash. Many other options exist too. Selling The Big Issue magazine, for example, is now also open to anyone in financial difficulty, not just homeless people
There is some good practice beginning to open up income max as part of the budgeting discussion. One example of this is Local Authorities and housing providers across the UK recruiting income max officers. Other methods have also been trialled, including a pilot in Scotland that has seen income max officers placed in schools with immediate results – just one welfare officer offering advice in a single school cluster increased the income of 47 families by around £150,000.
Overall, the move towards helping more people maximise their income is gathering traction and is something we at QIPRO advocate as a key part of any conversation around budgeting and financial capability. On that note, the latest issue of Quids In! Readers Club is packed full of ideas of how to max the cash, all of which can be found here.