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Means-tested benefits need better co-ordination, say MPs

By Nick Mann | 12 January 2012

One body should be given responsibility for ensuring the different parts of the welfare system work together effectively and do not unintentionally penalise claimants, MPs said today.

The government spends £87bn a year on meant-tested benefits Photo: iStock

In a report on the £87bn spent every year on means-tested benefits, the Commons Public Accounts Committee found that no department had overall responsibility. Instead, nine government departments and 152 local authorities administer 30 different means-tested benefits, which together account for around 13% of total public spending.

MPs also found that the ‘sheer complexity’ of the current benefits system placed a heavy burden on claimants, with those claiming multiple benefits having to deal with several different bodies.

PAC chair Margaret Hodge said: ‘This can be confusing and potentially discourage legitimate applications. Departments responsible for means testing must work together to get a better understanding of the burdens placed on claimants.’

She added: ‘There needs to be a single body responsible for overseeing the interaction between different benefits, means tested or not, and ensuring consistency and value for money.’

Welfare reform, and in particular the introduction of a single Universal Credit, aimed to simplify the system and improve the incentive for claimants to work, the committee noted.

But for this to happen, a better understanding was needed of the impact some means-tested benefits had on claimants’ incentive to work, the MPs said. They also found a lack of understanding of how incentives to work interacted with other reforms being introduced by government.

As an example, the committee cited the potential impact a university bursary award would have on a family claiming means-tested benefits.

Hodge said: ‘The government spends at least £87bn a year on means-tested benefits, and the poorest households rely on them for a third of their income. So it is crucial that government gets the design and implementation of means-tested benefits right, to protect vulnerable claimants as well as the taxpayer.

‘If its fundamental reforms of the benefits system are to work, the government must learn from past experience and co-ordinate benefits more effectively.’

Responding to the committee’s conclusions, the Department for Work and Pensions said the Universal Credit would strike the ‘right balance’ between getting support to those most in need and encouraging work, as well as protecting the system from fraud and error.

A spokesman for the department said: ‘This report highlights exactly why we need Universal Credit. It has been designed across departments with the benefits and challenges raised by the PAC in mind. It will mean more people getting the money they are entitled to whilst reducing complexity and fraud in the system.’

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