Housing Benefit Fraud

I've taken the piss out of NCC's anti-benefit fraud measures before but with new figures available it's time to have another go.

Again, the report before the Audit Committee is the source of our interest here. On page 8 we are told that, during 2012/3, NCC detected 178 Housing/Council Tax benefit fraud, worth a total of £586,490. Even without any help from a responsible adult, I have worked out that is an average of £3295 per case.

The Midlands and East of England average is 332 cases, totaling £698,296, an average of £2103 per case.

I don't think we can make too much of the lower than average number of cases, that average is clearly elevated by one LA (Birmingham?) with 3500 or so cases. But NCC's higher value per case could be said to imply that frauds are not caught as early, which is not a good thing in fraud detection circles. There are probably other potential explanations as well.

But hello, what have we here? (word document) It's a Freedom of Info request asking about how much NCC spends on anti benefit fraud activities. It says that, in 2012/3 NCC spent £586,000 on such work, the money going on

...cost of the fraud staff in wages and then a percentage of all other costs based on fraud staff as a percentage of total benefits staff. Other costs include such things as IT, accommodation, central charges etc.

That's pretty clear, the question was unambiguous and the explanation of the costs makes it plain that the cost of the activity hasn't been confused with, say the amount of fraud detected...

Because the two figures are rather similar aren't they? It seems an extraordinary coincidence that, for a spend of £560,000 anti-fraud activity you detect fraud worth a total of £560,490.

Unless of course you've been a bit lazy and, rather than come up with a system to estimate the worth of each fraud case you catch and collating the results annually, you simply record as the 'cost' of detected fraud as how much how much was spent on the wages, IT and paperclips of your crack fraud detecting team. And in the FoI response linked, they DID say they didn't have an estimate of the value of fraud committed.

If it wasn't for the fact that NCC's housing benefit service has a long track record of pisspoor management information systems (largely due to having pisspoor management) I would find this explanation impossible to believe.

The alternative of course is that NCC's benefits fraud team saves the council the grand total of less than £500/year. Before anybody says that any saving is worthwhile you must remember that many people are investigated for fraud and found to have done nothing wrong. It is always a stressful, sometimes terrifying experience. I sincerely hope it is the 'crap management information' explanation that turns out to be correct because a saving of £490 is not worth a single person being wrongly accused and investigated.

Benefit Fraud - Because You're Worth It

I've occasionally made the odd comment about NCC's record on pursuing benefit fraud which hasn't been super complementary. No doubt there are people within certain circles who think that means that I'm against any form of sanction against benefit fraudsters and thing there should be a free-for-all.

Not true. I accept and in many cases positively encourage the proportionate pursuit and prosecution of people who defraud the benefits system. The key word there is 'proportionate'. I also strongly object to constant government sponsored propaganda on the subject which simply serves to demonise benefit claimants and put people off making legitimate claims. It is also an outrage that nothing like the same effort is made against those who defraud the tax system.

Another issue to consider is that anti-fraud action does have a cost and it should justify itself in value for money terms like anything else. Well, I've just stumbled across a bit of information which makes me wonder whether NCC manages to do that.

In 2009 I wrote about the fact that NCC boasted in a press release that it had reclaimed around £300k from benefit fraud. presumably it will have increased since then but it's likely to be in the same ballpark. At the time this amounted to 0.24% of total benefit expenditure, about 10% of comparable rates of recovery nationally.

Here's the new bit. In an aside in a report to the Audit Committee it is said that the benefit fraud team has 10 officers, so that gives us a vague idea of the cost of the council's expenditure on anti-fraud measures. I say vague because we don't know if those 10 officers comprise the entire team including admin and management/team leaders but let's presume it does. At a very conservative estimate I reckon a team that size is going to cost approx £300k in employee costs alone. The officers concerned will be relatively senior because they must have 'authorised officer' status (see s.109A of the SSAA 1992) allowing them to investigate people, including getting info from banks, utility companies and stuff (you did know they can do that when investigating you for fraud didn't you?). You will presumably have significant travel expenses because fraud inspectors spend a lot of time sitting outside people's houses watching for illicit visitors. And of course, if a prosecution does occur this will mean shedloads more money spent on legal services.

So on this basis I think we are in a fairly strong position to question whether NCC is getting value for money from it's anti fraud measures.

Questions the 'Post' Should Have Asked NCC About Benefit Fraud

The Nottingham Post has published an article about Housing Benefit Fraud committed against Nottingham City Council. Unfortunately it actually tells us very little and merely provides an excuse to run the 'BENEFITS FRAUD INCREASING SHOCK HORROR' meme again. It's a classic case of not asking the right questions or, if they did, not putting the answers to them in your article.

The headline is that benefit fraud prosecutions have increased by 39% and Graham Chapman says that the tough economic climate is to blame. He may well be right of course but we can't tell that from the article.

You see, as the article does explain, prosecution is not the only option open to councils when dealing with benefit fraud. There is the administrative penalty (a kind of bribe/blackmail designed to persuade you to 'fess up, pay a chunk of extra money you haven't got so you don't have to go to court), cautions and simply requiring the money to be repaid. There are arguments in favour of all these options depending on the individual situation. In short therefore, an increase in court prosecutions could simply be down to a change in prosecution policy, formal or otherwise*. In fairness the Post does say that NCC is resorting to prosecution more often but I can't tell from the article whether that was Chapman expressing NCC's declared policy or whether this is simply the Post reporter's conclusion.

Taking the article at face value then, NCC's response to increasing financial woes is to make things worse for those most affected by prosecuting more often when desperate times force poor decision making. I'm not sure that reflects too well on NCC.

It would have been helpful if the Post had asked NCC whether detected fraud had also increased as this would at least help answer the 'changed/not changed prosecution policy' question i.e. if greater detected fraud occurred along with more prosecutions then we could conclude 'no change'. On the other hand, if you assume that any organisation would get better at finding fraud over time** (practice makes perfect and all that) then if there isn't an increase in fraud then it may not be unreasonable to conclude that NCC has merely toughened its stance. It has to be said that NCC doesn't seem to actually find much benefit fraud, managing to find fraud worth only 0.24% of total benefit expenditure in 2009, about 10% of the national rate. This means that the margin of error is larger and any claim of an increase is less significant. The fact that we're talking about an increase in prosecutions from 31 to 43 in a six month period reinforces this concern.

We know that actual Housing Benefit expenditure has increased by nearly 20% in only two years (I think that's known as 'rocketing' in the trade) and that is without doubt down to the worsening economic conditions. Would we also expect that fraud as a proportion of this expenditure would also increase? It would be worthwhile knowing if that is what is happening.

If we had been given the figures for fraud I'd also want to be sure that they really were actual fraud as opposed to 'fraud and error' which is what tends to be reported in order to amplify the alarm bells further, the 'error' of course tending to combine official and customer error and leaving the general public to assume it's all down to claimants. I've previously uncovered evidence of a perverse incentive for NCC to try and reclassify their own errors as customer error, combine this with clear evidence of the Benefits Service's standards slipping in general and you've got a bit of a mess brewing.

Ok, so I've gone further than you might expect a local newspaper to go writing an article afresh but the information for Post reporters to use has been up here for a while and all the links to sources are still fully functional. There may well be a big story here but, unfortunately somebody somewhere still has a lot of work to do to find out.

* I'm getting indications that quite a bit of high level decision-making is being done 'off-minutes' so to speak, almost certainly to evade Freedom of Information requests.

** Naive I know.

Nottingham City Council Guilty of Benefit Fraud?

Perhaps not, technically, as they (probably) didn't do it deliberately* and to be prosecuted for fraud there needs to be some intent as far as I know. But anyway, what actually happened?

Again, I missed the opportunity of scooping the 'Post'. On Saturday they reported on the Audit Commission's findings that NCC had messed up its claims to central government for Housing Benefit subsidy in 2008/9 and as a result had been paid £2m more than it was entitled to.

You see, councils are only responsible for administering Housing Benefits on behalf of the Dept for Work and Pensions, the actual money is paid back to them by central government, rather than it actually coming from local taxes.

Anyway, I did some digging around and found that the Audit Commission's report had been put before the council's Audit Committee meeting on 28 May, so had been available online for a few weeks but, as usual, I missed it. It will be interesting to see the minutes of that meeting when they come out. But what is clear is that Lisa Black has fucked it up again.

The specific issues that the Commission reported on were -

• incorrect application of start dates for benefit claims. I have to say this happened to me when I first claimed Council Tax Benefit.
• incorrect assessment of Tax Credits' effect on claims
• level of errors much higher than 20078
• high level of errors means more audidt activity required with resultant costs implications (and this DOES come out of our Council Tax, boys and girls)
• no quality control activity in 2008/9 being the likely cause of errors
• no quality control activity in 2009/10 means likely to be similar level of error in that year

These last two points deserve some further analysis. Firstly, and quite alarmingly, NCC's excuse for the lack of any quality control was that the people who would normally do this were engaged in training staff in 'New Systems Thinking'. This is very much the baby of my old muckers Helen Spencer (Shipway as was) and Lisa Black and means that the blame for this mess can be placed squarely with them. Secondly, I think the Commission's view that a similar level of errors will be found for 2009/10 is optimistic. In my experience, if there is no system of monitoring, as time goes on those operating the system tend to relax and not worry so much about errors because they're not going to be picked up, resulting in more errors. Such an approach is exacerbated if management are concentrating on speed rather than accuracy (more on this in a bit). This is simply human nature. I therefore predict a higher level of errors when the Commission comes to look at this next year.

It is also worth having a look into the context that these issues arise in. Last March I wrote about NCC's internal audit service finding that accuracy of claims was very poor, although part of the problem was that NCC was using external service providers for some of its claims processing. I also wrote about the publicly available performance data and its relationship to the now defunct Comprehensive Performance Assessment. I found that, while NCC was getting consistently high ratings for speed of processing it was actually the worst council in the East Midlands for its record of accuracy. What was that I said about management prioritising speed over accuracy? I should also point out that those figures are from 2007/8 i.e. before they stopped quality control in favour of training in 'New Systems Thinking'.

So, in a nutshell, Lisa Black decided to halt quality control in order to carry out training in managementspeak, despite the fact that there were warnings aplenty of the service's already appalling record on accuracy. As a result, the council is likely to have to repay £2m in subsidy that it shouldn't have received (likely? ConDem government, Labour council. I reckon it's a dead cert). Why is this woman still in her job?

Going back to the benefit fraud analogy, I remember that NCC was very proud to have found £33k of benefit fraud by claimants in a year and keen to point out that there was 'no hiding place'. And yet the Audit Commission finds NCC wrongly claiming over £2m! Lock 'em all up I say.

*It's worth pointing out that a benefit claimant can be prosecuted for a criminal offence even if they had no intention to defraud but had simply failed to provide information in relation to their claim without reasonable excuse. You can bet any figures that this relates to will get lumped in with all the tabloid 'benefit fraudsters' figures you hear. Sauce for the goose is sauce for the gander I say.