Means testing : sixty-second report of session 2010-12, report, together with formal minutes, oral and written evidence

The Government uses means testing to distribute at least GBP87 billion of benefits to claimants each year, around 13% of total public spending.

The poorest fifth of households rely on means-tested benefits for a third of their net income.

The planned introduction of a new means-tested Universal Credit will replace 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 design of benefits 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 DWP's priority is to focus on the effective delivery of these reforms. However, success will also depend on proper coordination between Universal Credit and other means-tested benefits.

In addition, DWP and HMRC are designing a real-time information (RTI) 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.