One in six adults claims Universal Credit, but who relies on it most? New data for local authorities

Around 8.6 million UK adults claim Universal Credit, the main means-tested benefit. Despite persistent perceptions that means-tested benefits like Universal Credit are paid only to those not in work, Department for Work and Pensions (DWP) statistics show that over a third of Universal Credit recipients are in employment. For a significant proportion of the population, social security payments are critical to supplementing low incomes and meeting the cost-of-living.

And with food inflation set to hit 10% by December 2026 and the energy price cap estimated to rise by £200 from July, local authorities charged with administering certain benefits and discretionary support schemes need data to understand where to target that support.

In addition, government departments and policy makers need better evidence on the impact of welfare policy changes as well as how benefits income interacts with income from employment and pensions. DWP’s approach has recently changed to link survey data from responses to the Family Resources Survey with administrative data on benefit claims, improving on solely survey based data, but this is a moment in time snapshot and does not show how things are changing month to month.

Smart Data Foundry's new Benefits Reliance Indicator provides a new lens on the role benefits play in economic wellbeing and enables more rapid, granular insight into economic and welfare policy changes.

Understanding Benefits Reliance

With income data from 5 million consumer bank accounts, broken down by categories such as income from benefits, income from employment, income from pensions and other income sources we are able to gain a new insight into the total make-up of people's incomes at a granular geographic level.

Being able to combine these categories into a single measure provides a more accurate view of the role means-tested benefits play in supporting people’s living standards.

Smart Data Foundry’s Economic Wellbeing Explorer now features a new Benefits Reliance Indicator, showing the proportion of people in a specified area for whom benefits income makes-up 20% or more of their total income. And because the data is updated every month, users can see historic trends in benefits reliance as well as emerging changes in response to policy and broader economic events.

A companion aggregated research dataset will also be made available in MyFoundry, our secure data portal.

The latest benefits reliance data shows:

Over the last two years, there has been a rising proportion of people for whom benefits from Universal Credit, Housing Credit and Tax Credit make up 20% or more of their income across England, Scotland and Wales. Scotland has seen the biggest increase, at 1.83 percentage points over the past 2 years, with benefits reliance in Wales increasing by 1.7% percentage points and in England by 1.25% percentage points.

Within this overall increase, there are strong regional variations and trends emerging:

• Wales has the overall highest rate of benefits reliance, with South East Wales at 9.36% - a 2.11 percentage point increase over the last two years. Whilst North Wales has the lowest proportion of reliance at 6.64%, it has also seen a rise in benefits reliance over the last 2 years, as has Mid and South-West Wales - rising from 6.05% in March 2024 to 7.59% in March 2026.

• In Scotland, overall reliance is lower than in Wales and whilst there is an upward
  trend, it is much less steep. However, in recent months Eastern Scotland has
  seen a rise of 4.82 percentage points to 7.37% of our sample in that region with incomes consisting of 20% or more from Universal Credit, Housing Credit and Tax Credit. West Central Scotland has seen a similar rise, with a 2.42 percentage point increase over two years and 8.38% of our sample now showing benefits reliance. North East Central and the Highlands and Islands have shown the smallest increases, both under 1 percentage points.

• In England, the area with the highest rate of benefits reliance is North East England, at 9.49% of our sample. North East England is also the region with the biggest growth (1.6 percentage points), followed by Yorkshire and the Humber (1.51 percentage points and North West England (1.42 percentage points).

• As we travel south, benefits reliance becomes less prevalent; the South East has the lowest proportion at 4.85%, but similarly to Scotland and Wales all English regions are seeing a growing reliance on benefits. London is an outlier in the south, with 7.75% of our sample showing benefits reliance.

Note: the data is available as a rolling average to 29 March 2026, from the end of May 2026 data will be available to end of April 2026 and will show early effects of uprated benefits as well as uprated National Living Wage. 

Want to understand trends in benefits reliance for your local authority? Get in touch for a personalised walk through. 

Why the 20% threshold matters

The proportion of income from benefits is a crucial metric for evaluating economic inequality, financial stability and the effectiveness of welfare policy. It indicates how heavily people rely on state support versus private income to meet their living standards, and can act as a bellwether for changing economic conditions – e.g. local employers cutting back on hours, leading to claimants’ income mix changing.

This indicator has been developed with local authority stakeholders, and 20% is the threshold at which benefits constitute a meaningful proportion of income and can potentially act as a signal of vulnerability.

Why smart financial data provides a different picture

Smart financial data is created by everyday interactions with banking providers. Our unique dataset of 5 million accounts is a representative sample of Great Britain’s banking population across age, income and geography. It captures income and expenditure across a range of categories, enabling us to understand financial dynamics in near real time.

• Understand income composition: Our data captures all income into the account from wages, benefits and tax credits, pensions and investment income. This differs from survey-based data which relies on what participants report their income is, and which is a static snapshot. These self-reported snapshots can fail to capture the nuances of income from gig economy or seasonal jobs, and are subject to participant error. Additionally, survey-based datasets are small and can lack representativeness.

• Understand changes in near real-time: Data is received weekly, and updated into the Economic Wellbeing Explorer monthly, providing a more real-time view of economic wellbeing. This is particularly important when evaluating seasonal changes and the impact of economic shocks. This also helps to understand the role of irregular employment income alongside benefits reliance, particularly for sectors such as hospitality and agriculture.

• Understand geographical differences: The data is segmented by Local Authority District (LAD) in Scotland and Massive Super Output Area (MSOA) in England and Wales, meaning users can see how changes to economic conditions or welfare policy affect different areas within a local authority over time.

Use cases for the Benefits Reliance data

• Identifying emerging hardship: a rising proportion of accounts crossing the 20% threshold in an LAD or MSOA can be an early signal of financial stress, before it shows up in crisis referrals or presentation at advice clinics.

• Targeting interventions: understanding where benefit reliance is highest - and whether it's growing or shrinking - helps direct support and interventions more precisely

• Policy and evaluation: monthly data updates allow users to monitor whether local labour market changes, welfare reforms or cost-of-living pressures are shifting income composition in the target area

• Complementing existing data: sits alongside administrative data on benefit claimant counts to add a dimension those datasets can't provide; what share of total income benefits actually represent and where are people most reliant?

Access Benefits Reliance Data

The Benefits Reliance Indicator is available to all users of the Economic Wellbeing Explorer, as a new indicator within the platform. The Economic Wellbeing Explorer is free to access at national and regional level, with local level data (MSOA/Intermediate Zone) being available via subscription.

On 26th May we will be hosting a webinar to launch this latest update. Attendees will get insights from the Benefits Reliance data and we will explore use cases for targeting interventions and tackling poverty.

Register now on our events page.

A note on methodology

Benefits Reliance is an aggregate measure of the preceding 13 weeks. It is created by summing the income from universal credit, housing credit and tax credit benefits and summing the total income per account, dividing the benefits income by the total income, then counting the proportion of accounts that exceed 20% of income from benefits.

The 13-week rolling average smooths out volatility (e.g. irregular pay cycles, benefit payment timing) and gives a more stable, reliable picture of underlying financial patterns.

Data is effectively anonymised at source, and our demographic and location-based aggregations within the Economic Wellbeing Explorer are designed to prevent re-identification. It is also important to note that this data is for individuals, not households, and it is not possible to identify individuals in the same household within the dataset. The dataset is from one banking group and does not account for multiple accounts held across different banking groups.