Means and asset testing

The means test is getting a lot of attention on both sides of the Atlantic.

In the UK, the Liberal Democrats have been suggesting that benefits for pensioners, like the winter fuel allowance, should be means tested and there is  a storm brewing over the introduction of the new ‘Universal Credit’ which some people think is a disaster waiting to happen.

In the US there is a nasty and racially tinged debate about whether or not President Obama has ‘gutted’ the work requirements included in means tested welfare benefits as well as the outrage over Romney’s claim that people who claim the Earned Income Tax Credit are not taking responsibility for their lives.

Means testing is when you ask people how much money they have to help you decide whether or not they qualify for some particular benefit or support. There are many good reasons to be against it.

For example, means testing can be degrading and disempowering for the claimant  it can create perverse incentives like when people deliberately do not save so that they can qualify and it creates a stigma over benefits.

However, it looks like, in some guises or other, the means test is here to stay. Here is a simple proposal for improving it; instead of solely assessing people’s means, the state or charity that is doing the means test should also assess the claimant’s assets and help them make a plan.

In practice this would mean that as well as asking people, for example, what their income is, you would also ask them the following three questions;

  1. What are your goals?
  2. Who do you know that could be useful in achieving these goals?
  3. What skills and experience do you have that could be useful in achieving these goals?

On the basis of these three questions and the traditional means test questions the claimant and the worker could jointly agree a plan and a package of support for this plan.

This might not just be money. In fact, it might be less money that using the means test.

There are several radical implications of this approach.

Firstly, it would mean giving more power and training to the worker doing the assessment. They would need to know about other projects and schemes that are out there (not solely government schemes) and be able to recommend these to the claimant.

Secondly, it would mean changing the terms of the relationship between the claimant and the worker. It would become less transactional and more relational. The worker would actually listen to the claimant and then they would jointly come up with a plan. The worker would probably also have some responsibility for checking on how the plan has progressed and encouraging the claimant.

Thirdly, it would mean the experience being quite different for the claimant. The current system asks claimants to prove that they are in need. This proposal would mean that the claimant would need to prove that they have goals but that they need support to achieve these goals. They wouldn’t feel like a failure but as someone with aspirations and some of the tools needed to achieve these aspirations.

Overall, I think adding three questions about assets and drawing up a plan would significantly improve the means test. This approach could be used in housing allocations, benefits assessments, adult social care assessments and so on and so on.

P.S. I should say that this blogpost was partly inspired by Alex Fox’s excellent post on Joint Strategic Needs and Asset Assessments