Last month, the Department for Work and Pensions announced an additional £22 million would be put towards the ‘Help to Claim’ scheme, which offers support to those applying for Universal Credit (UC).
According to new research from the personal finance experts at money.co.uk savings, this increased demand for UC means local authorities are facing an average 15% increase in their total payouts, totalling an additional £6 billion.
To discover which local authorities’ communities are facing the most increased demand for government help, money.co.uk savings experts used government figures to forecast UC payouts for 2023. Using the average claim payment, the number of household claimants, and the percentage of households in the area making claims, money.co.uk savings calculated which local authorities were facing the greatest payout increase in 2023.
Of the five local authorities forecast for the greatest monetary increase in Universal Credit payouts in 2023, only one is from outside England; Glasgow City in Scotland is expected to face a £90 million increase in payouts. The average forecasted payout increase for the top five local authorities is £112 million. Meanwhile, the combined increase for the five areas is £562 million – just under 10% of the total £6 billion increase across Great Britain (9.21%).
Birmingham is set to face the greatest increase in Universal Credit payouts, increasing by £187 million to a total £1.3 billion in 2023. This is £71 million more than the local authority in the second spot, Manchester (£116 million). With almost three in ten (29%) Birmingham households claiming UC, the city is the only authority to exceed £1 billion in UC payments.
The London Borough of Newham is forecast to face the fifth-highest payout increase in 2023, at an additional £84 million. Newham has the highest number of claimants as a proportion of the area’s total households. Just under a third (31%) of all homes in Newham claim Universal Credit, more than double the 15% average across Britain.
Four out of the five local authorities forecast to have the smallest Universal Credit payout increase are in England, with only the Orkney Islands in Scotland from the rest of Britain. The average forecasted payout increase for the bottom five local authorities is £1.4million.
The City of London is the only authority forecast for an increase under £1 million. The area also has the fifth lowest proportion of households on Universal Credit, at 7.2%. Despite this, the £800,000 extra to be paid out in this local authority is a 22% increase in UC payouts, 7% higher than the British average (15%).
Lucinda O’Brien, personal finance editor at money.co.uk savings, shares guidance on managing your finances on a low income:
“The cost of living crisis is putting a strain on many people’s wallets. If you’re struggling to control your finances, there are governmental and not-for-profit schemes to help you handle your money confidently.
Help to Save: If you’re on a low income and are looking to increase your savings, you may qualify for the government’s Help to Save scheme. This is an incentive scheme for people who receive Working Tax Credit, Child Tax Credit, or Universal Credit – if you are on UC you must earn over a certain threshold from paid work.
The scheme allows you to open an account for four years, in which you can save between £1 and £50 each month. At the end of the second and fourth years the government will add 50p for every £1 you have saved – this is known as a ‘bonus’. As this is government-backed, all savings in the scheme are secure.
Debt advice: There are several not-for-profit organisations that will listen to your worries, judgement free. These organisations will consider your personal circumstances and offer you free, bespoke financial advice. StepChange, National Debtline, or the Debt Advice Foundation are all dependable examples. You can also visit your local Citizens Advice service if you would prefer to chat in-person.”