"As government prepares for the introduction of major
proposed reforms in several programmes, it is vital that
departments seek to understand some of the impacts of means testing
that we have identified. They must then share this knowledge in
order to learn from past experiences, so that risk to the taxpayer
is minimized and benefits get to those who need them."
Amyas Morse, head of the National Audit Office,
14 September 2011
It will be difficult for government
departments to achieve value for money from means-tested benefits
unless government understands the impacts of means testing, learns
from past experience and improves coordination between different
benefits, the National Audit Office has reported today.
It is clear that means testing will be used
extensively for the foreseeable future as it helps target state
support at the people that need it most, but it can have many other
important consequences. For example, there can be disincentives for
recipients of means-tested benefits to return to work. Means
testing also makes the administration of benefits more complex and
is associated with higher costs as well as increased rates of fraud
and error.
In light of proposed and ongoing reforms to
benefits and related programmes, the NAO notes the importance of
departments sharing good practice and learning from past
experiences in the design of means tests. For example, HM Revenue
and Customs has struggled in the past with unexpectedly large
overpayments of tax credits (£9 billion between 2003-04 and
2009-10) because of the way that payments are determined under the
legislation. In spite of changes to the design of tax credits,
overpayments continue to be significant.
Departments do not systematically consider or
measure all of the impacts of means testing: for example, the
burden on claimants, such as difficulty with completing forms and
the cost of requesting advice. Issues associated with means
testing, such as incorrect declarations of earnings and errors by
officials in calculating entitlements, accounted for over half of
all fraud and error in benefits and tax credits.
There is a lack of coordination of, and
overall accountability for, means testing across government.
Departments are responsible for their own means-tested benefits and
their impacts, but because means-tested benefits interact with each
other it is important that there is coordination. For example, no
one body has responsibility for looking at how the impact of
university fees will be influenced by wider means testing. This is
important as some households could be financially worse off if they
work more and their child is no longer eligible for a bursary to
help towards tuition fees.
Publication details:
HC: 1464, 2010-2012
ISBN: 9780102976700