Cost of living: Are you missing out on unclaimed universal credit?

As she guides struggling families in Blackpool through their financial choices, Jill Kerr is fully aware of the seriousness of their situation.

"They are living hand-to-mouth, but when the hand gets to the mouth, it is empty," says Ms Kerr, advice services manager at Blackpool Citizens Advice.

It is not only people on the breadline who come in for benefits checks and debt advice, as the cost of living soars.

Working parents with a mortgage and an annual income of £40,000 are also seeking help, she says. So are pensioners, eager to check whether they are claiming all the money to which they are entitled.

"Older people used not to talk about that. They used to come in about consumer issues," she explains.

Many, however, are still too proud to claim, unsure of taking what they perceive to be a handout. The reality is that many have a legitimate claim for pension credit, which tops-up the state pension and is a crucial gateway to the government's cost of living payments and other discounts.

One charity's rough estimate is that £15bn of benefits are unclaimed each year - an income that would help ease the burden of rising grocery and domestic energy bills.

The government's welfare bill is well over £200bn a year, but the system is complex and interconnected. While most benefits need to be claimed by individuals, others are paid automatically to those who are eligible.

• Guide to benefits. when you qualify and what to do if something goes wrong, from the independent MoneyHelper website, backed by government
• Check benefits calculators run by Policy in Practice and charities Entitledto and Turn2us

People who are working and on a low income, or are out of work, are most likely to be claiming universal credit. Universal credit is an overarching payment that replaces individual benefits, such as housing benefit and income support. These are now known as legacy benefits.

Anyone who wants to claim a benefit for the first time will need to apply for universal credit. Internet search interest about universal credit is as high now as it was at the start of the pandemic.

Citizens Advice points out that lockdowns created the biggest surge ever seen in universal credit claims, so the rising cost of living could be having a similar impact. Anyone who receives universal credit is automatically entitled to an extra £650 in government payments, to help pay rising energy bills.

The government has said that technical issues are preventing it from making estimates about how much universal credit is unclaimed. The switch over from legacy benefits means the calculations have been put on hold.

However, the charity Entitledto says that billions of pounds will not be claimed, but it is impossible to give an accurate figure on how much.

More accurate estimates do exist for pension credit, which is a benefit paid to those on low incomes who are above state pension age. It is designed to help with living costs by guaranteeing them a minimum income.

That equates to a top-up on weekly incomes to £182.60 for those who are single, or a joint weekly income of £278.70 for couples. Significantly, it can also lead to the automatic payment of additional support, including the cost of living payments, housing benefit, a council tax discount, help with NHS dental treatment, glasses and transport costs, and a free TV licence for those aged 75 and over.

• How will I get the cost-of-living payments?
• Five charts that explain the cost of living crisis
• Cost of living: Share your experiences

It goes to 1.4 million pensioners, but an estimated 850,000 pensioner households are failing to claim a total of £1.7bn, according to the Department for Work and Pensions.

It is possible to claim online, on the phone or by post, and charities can also help for free. Ms Kerr, from Citizens Advice, stresses that this is a benefit to be claimed, not a handout taken in desperation.

Ms Kerr says other common enquiries include:

• Carer's Allowance - worth £69.70 a week if you care for someone at least 35 hours a week. There are many "hidden" carers, who help family, friends and neighbours, but who do not claim. It can also lead to other support
• Disability benefits - which often do not depend on income, but may involve disability assessments
• Council tax reduction - a scheme run by councils, which can reduce or even cancel a council tax bill for people on low incomes or who claim benefits. There is a separate scheme in Northern Ireland

These benefits can help, and the knock-on effects can be significant. Somebody on disability benefits, for example, will be exempt from the benefits cap which limits how much an individual can receive even if their entitlement is higher.

The interaction between different benefits can affect how much money people receive.

Ultimately, the benefits system is extremely complex. People should have all their financial details, and personal circumstances, available to check their entitlement on benefits calculators.

Many people may then need to get free advice from charities to make sure they are not missing out.

Even after claiming everything they are entitled to, some of Ms Kerr's clients still have a negative budget. This means their budget is in the red, with income failing to cover daily living costs, even before paying bills such as credit card repayments.

In May, the charity said the proportion of clients in this situation was rising. The fastest increase was among those who did not receive, or perhaps had not claimed, benefits.

The result was more demand for food and fuel vouchers. Some people, she says, are "clutching at straws".

But even when a solution is not immediately obvious, the first step is to check every penny they are entitled to is being claimed.