Whitehall needs to better understand the impact of means-testing benefits if it is to achieve value for money from them, the National Audit Office says today.
The government also needs to learn from past experience and improve co-ordination between different benefits, according to the study.
Means testing notes that difficult trade-offs have to be made between the savings from means testing benefits, rather than distributing them universally, and the administration costs involved.
The process also carries with it many unintended consequences, the NAO says. In some cases, means-tested benefits create disincentives to work and in others the bureaucracy puts people off claiming.
In 2009/10, the government spent £87bn on means-tested benefits, which accounts for 13% of total public spending. But the NAO found that Whitehall departments did ‘not systematically consider or measure all of the impactsof means testing, particularly the burden on claimants’.
There was also little co-ordination across government, so if one department imposed a means test, the effects on another’s spending might not be known.
‘There is no overall accountability for interactions across programmes administered by different departments [or] for looking at the wider system of means testing,’ it says.
This made it difficult to secure overall value for money. ‘The Treasury could ensure that departments have systematically considered the impacts of means testing across government when changing or developing means-tested benefits,’ the NAO suggests.
NAO head Amyas Morse said that with major welfare reforms due to come in, it was ‘vital’ that departments tried to understand some of the impacts of means testing.
‘They must then share this knowledge, so that risk to the taxpayer is minimised and benefits get to those who need them,’ he said.
Margaret Hodge, chair of the Public Accounts Committee, said it would follow up on the report to ‘understand how better value for money can be secured by looking at the benefit traps’.
