Means-testing benefits reduces take up
In recent weeks there has been a lot of talk about means testing ‘middle class’ benefits as a means to reduce public spending without unfairly penalising those who are already the worst off. But, leaving aside the wider issues of who should be entitled to universal benefits in the first place (and whether support provided to median earners or, for example, tax relief provided to the top 1 per cent, should be the first focus of any drive to reduce the deficit) the importance of benefit take up rates is being missed – universal entitlements have been continually proven to be the best means to ensure that those in the greatest need can access them.
John Hills argues that:
A concequence of means-testing can be that stigamized services or benefits fail to reach all of their targets because of lack of take-up by those entitled. Targeting by means-testing can be efficient in one sense – achieving the result that only those who are the prime focus of the policy benefit – but inefficient in another, if those who are the intended beneficiaries miss out.
And his research shows that they do miss out. In ‘Inequality and the State‘ Hills uses DWP official estimates to show that in 2000-01 while take up for Child Benefit was found to be near to 100 per cent, means-tested benefits showed take-up shortfalls. For example, around 30 per cent of pensioners entitled to the benefit then known as the Minimum Income Guarantee failed to claim, as did at least a fifth of those entitled to Council Tax Benefit and income-based JSA and just under a third of those entitled to Family Credit.
The study also concludes that means testing can increase costs for claimants, and Hills cites evidence which shows that in some cases the costs of filling in forms and organising for claims to be processed can come to between a tenth and a fifth of the cash that recipients actually recieve. Putting it simply, cutting universal benefits would be a guranteed way to reduce support for those in greatest need.