Better understanding of means-tested benefits required
Summary
As ‘Means Testing’ (HC 1627) reports, the poorest households rely heavily on means-tested benefits, making it imperative that the system is fully understood and payments distributed appropriately by Government departments.
The Government must ensure that departments fully understand how the new Universal Credit will work, as it replaces a number of existing means-tested benefits.
Currently 30 different means-tested benefits are managed by nine departments and 152 local authorities in England but Departments have a limited understanding of how their system affects incentives for employment, the burden on claimants, take-up and administrative costs.
Departments need to improve their understanding of how all benefits interact and how changes to eligibility rules can affect claimants.
Complexity increases the burden on claimants which can harm take-up, and is likely to disadvantage the most vulnerable members of society in particular.
The Government expects Universal Credit reforms to simplify the system and improve incentives to find work.
The priority for the Department for Work and Pensions (DWP) is to focus on the effective delivery of these reforms. However, success will also depend on proper co-ordination between Universal Credit and other means-tested benefits.
In addition, DWP and HM Revenue and Customs (HMRC) are designing a real-time information system for Universal Credit to reduce the risk of overpayments, with benefits being recalculated as soon as circumstances change.
Both DWP and HMRC need to understand how the introduction of this system will impact on small businesses and the self-employed who may not have the necessary IT to administer it.
At least £87 billion of means-tested benefits are made to claimants each year, accumulating to 13% of total public spending.
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