Means Testing - Public Accounts Committee Contents

1  Responsibilities and coordination

1.  Means testing is applied to many benefit programmes in order to direct support to those most in need. The Government spent £87 billion (13% of total public spending) on means-tested benefits in 2009-10, which the poorest fifth of households rely on for a third of their income.[2] Responsibility for means testing is currently dispersed across departments.[3] The Department for Work and Pensions (DWP) administers several large means-tested benefits, including Income Support and Jobseeker's Allowance, while HM Revenue & Customs (HMRC) administers Working Tax Credit and Child Tax Credit. Other departments and local authorities are responsible for a wide range of means-tested benefits including free school meals and free prescriptions.[4]

2.  There is a balance to be struck between means testing and other ways of providing support, for example, achieving similar objectives through the introduction of a living wage or increased minimum wage.[5] Means testing can help to keep total benefit spending at a lower level, but it may create disincentives to work and can deter those in need from claiming support.[6] Departments face important choices that require them to balance competing needs and priorities.[7]

3.  It is not clear who should be responsible for the benefit system as a whole, and there is no clear accountability for interactions between means-tested benefits.[8] For example, no cross-departmental group currently exists to examine the effects of means testing across different departments.[9] The witnesses from Age UK, Child Poverty Action Group and LSE were concerned that decisions have been taken on a one off basis and lack a 'big picture' perspective, particularly in the context of the current reforms.[10]

4.  Departments do coordinate in some areas, for instance in their strategies to reduce fraud and error, but such coordination is typically on an ad hoc basis, with important issues sometimes falling through the gaps.[11] Departments recognised that no single body was in charge of means testing in the round, and that their focus was on immediate priorities such as delivering reforms.[12] DWP and HM Treasury told us that departments who administer programmes should be responsible for making sure their own means-tested benefits work well.[13] DWP told us that it works with other departments where required, for example, to tackle issues relating to the delivery of Universal Credit.[14] No single body has taken overall responsibility for considering how individual decisions about programmes fit together.[15]

5.  In the future an increasing amount of means-tested benefits are going to be locally determined and administered. Local authorities are being given powers to set Council Tax Benefit rates while at the same time needing to achieve 10% cuts in support, while universities are setting up bursary systems to support students under the higher fee arrangements.[16] In both cases many different bodies will be involved, potentially increasing the complexity of the benefit system and creating circumstances where disincentives to work could be high for some people.[17]

6.  None of our departmental witnesses felt that coordination between all government departments or with local authorities was their responsibility. DWP told us that bilateral discussions are currently used to resolve issues where programmes interact and operational issues need to be addressed.[18] When asked about improving coordination with reforms to Council Tax Benefit, HM Treasury stated that it should be DCLG's responsibility to ensure that local authorities implement means testing in a way that is consistent with other reforms.[19]

2   C&AG's Report, para 1. Back

3   Q 29 Back

4   C&AG's Report, Appendix Two Back

5   Qq 1, 3 Back

6   Qq 8, 21-22, 77 Back

7   Qq 3, 16 Back

8   C&AG's Report, para 12. Back

9   Qq 35-36 Back

10   Qq 11-12 Back

11   C&AG's Report, para 4.13. Back

12   Qq 39, 54 Back

13   Qq 34, 40 Back

14   Q 44 Back

15   Qq 29-30, 34 Back

16   Q 12 Back

17   Qq 4-5, 55 Back

18   Q 41 Back

19   Q 40 Back

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© Parliamentary copyright 2012
Prepared 12 January 2012