Warning over benefits work impact
Government departments do not fully understand the overall impact of an array of different means-tested benefits on incentives to work, a cross-party committee of MPs has warned.
The Public Accounts Committee (PAC) said a single body needed to take responsibility for ensuring the £87 billion of income-related allowances did not discourage people from working. There are currently 30 different means-tested benefits handled by nine Whitehall departments and 152 local authorities.
The new Universal Credit is designed to make the welfare system simpler and more effective, but the PAC urged that it must take account of other means-tested awards such as council tax benefit and higher education bursaries.
"It is not clear what effect some means-tested benefits have on claimants' incentives to work," the committee said. "Improving incentives to work is a key objective of Universal Credit. At present there is no clear picture of how the entire benefit system affects claimants' incentives to work."
It said that departments focused their attention on benefits from the Department for Work and Pensions (DWP) and HM Revenue and Customs (HMRC) without looking at the wider impact of benefits such as, for example, free school meals. "We expect departments to do more to understand what impact multiple benefits have on an individual," it said. "In particular, HM Treasury and DWP should ensure they understand how the wider benefit system affects incentives when they assess the impact of a policy change."
While the Treasury had overall responsibility for ensuring means-testing was applied consistently across the Government, it "does not intend to take the direct lead", the PAC said. That responsibility should be allocated to a single department or agency which can be held accountable for the interaction between different benefits, it added.
Labour MP Margaret Hodge, chair of the PAC, said: "At present, there are nine central government departments and 152 local authorities administering 30 different means-tested benefits, yet there is no one body responsible for co-ordinating means-testing across government.
"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. Many claimants receive multiple benefits and departments need to understand how incentives are affected by the system as a whole.
"The Government also needs to think through the impact on work incentives of reforms in other areas; for example, reforms to higher education and the resultant bursaries provided by universities."
A DWP spokesman said: "Universal Credit will strike the right balance between getting financial support to those that need it the most and making sure we incentivise work and better protect the benefits system from fraud and error."