Investigation
3.204 We looked at how Thanet investigates and manages the investigation of fraud that has entered the benefits system. A good LA would show a number of the characteristics described in Appendix A as well as the following characteristics:
- a suitably resourced investigation unit with trained and experienced staff
- good liaison with appropriate organisations
- a solid and well defined procedural and administrative base
- clearly defined operational framework and responsibilities, including written guidance, performance and quality targets against which effectiveness is monitored
- the ability to analyse fraud risk and to target resources accordingly, ensuring that all areas of exposure are investigated.
3.205 Thanet has 7.5 full time equivalent staff reporting to the investigation and control manager. Originally Challenge Funding supported 2 of these (in 1997/98). Subsequently these staff were retained and are funded by the council. This demonstrates a commitment to counter-fraud work, which we commend. The investigation unit will cost some £133,000 in 1998/99. In 1997/98, in terms of WBS alone, the unit showed a return of £16.40 for each pound invested. WBS achieved per fraud officer is significantly higher than the national average for Great Britain.
3.206 We found well motivated and experienced staff in the investigation unit. The following table shows the level of experience available.
| Fig. 3.12: Experience levels of Thanet investigation unit staff | |||
Less than 1 year |
1 to 2 years |
2 to 5 years |
Over 5 years |
0 |
2 |
2 |
3.5 |
Source: BFI inspection
3.207 All staff have received some specialist training and some staff have also received training in broader benefit-related matters. Thanet accepts that training is an area where it can improve and plans to develop a comprehensive induction and refresher training programme which will include fraud training.
3.208 Investigative work can create opportunities for staff to commit internal fraud. We looked at how Thanet guards against this possibility. We are pleased to note that Thanet stringently vets all investigation staff before employing them. Investigation staff are also bound by Thanet’s code of staff conduct and policy on fraud and corruption. Staff are well managed and there are procedures in place to ensure that management is aware of any unsupervised absences from the office and workload.
3.209 We looked at the numbers and types of investigation cases Thanet undertakes. We have split these into cases related to NCVs and ‘others’, which comprises all other types of fraud investigation. The following table summarises the caseload for 1996/97 and compares it with that for 1997/98.
| Fig. 3.13: Summary of investigation caseload 1996 to 1998 | ||||||
Year |
Total |
New claim visits |
Other |
|||
| 1996/97 | 5,255 |
100% |
2,308 |
45% |
2,947 |
55% |
| 1997/98 | 8,842 |
100% |
5,241 |
59% |
3,601 |
40% |
Source: BFI inspection
3.210 The table shows that the caseload between 1996/97 and 1997/98 went up by over a third, but the proportion of NCVs increased to 59% of the total caseload. Doubling the investigation caseload should have some impact on the number of frauds detected. The most obvious measures of such an impact are prosecutions made and WBS claimed.
3.211 The number of prosecutions has remained fairly constant over the past 3 years, which is surprising given Thanet’s commitment to prosecuting and a doubled fraud caseload. The number of WBS claims in relation to NCV work increased between 1996/97 and 1997/98, but the rate of return (the number of WBS as a proportion of visits made) decreased slightly. With regard to other fraud cases, the number of WBS claims has decreased by about 16% whilst the rate of return (the number of WBS claimed as a proportion of cases investigated) has decreased by about 65%. Examination of a sample of investigations shows that most cases (about 96%) are cleared in less than 5 weeks.
3.212 These figures seem to indicate that Thanet has been focusing on investigations with a short turnaround and steady rate of return. We feel that this may be distracting investigative effort from more complex and time-consuming types of investigation.
3.213 A significant proportion of Thanet’s claimed WBS has been derived from ‘gone aways’. These are cases where a DFO has determined that a person is not resident at the property from which they are claiming, but has not established any fraudulent intent. This does not meet the conditions for claiming WBS, as originally laid down in the Subsidy Order. However, because many LAs erroneously claimed WBS for this category of case, the Subsidy Order was retrospectively amended to validate such WBS claims for the financial year 1997/98 and previously. It has also provided that WBS claims can be made for such cases for 1998/99, but at a lower rate of WBS. This will have a significant impact on Thanet’s WBS receipts and necessitate a significant change in working practices to maintain the income level Thanet has claimed in recent years.
3.214 The deterrent effect of the NCV programme is valuable and should be maintained. Thanet may be able to maintain this deterrent effect by targeting and phasing visits more effectively. This would also free up investigative resource for more complex and time-consuming investigations.
3.215 We looked at the liaison arrangements Thanet has established to assist in investigative work and found that they are generally good and in some areas quite innovative.
3.216 We have already commented on Thanet’s excellent relationship with the police and good relationship with BFIS. In addition it has established effective working relationships with a number of other organisations.
3.217 Thanet has established good relationships with landlords and local cheque cashing shops, which allows it to adopt a strong policy on the reported loss, theft or non-receipt of HB and CTB cheques. Thanet offers a cheque cashing facility for certain categories of claimant who cannot be paid by crossed cheque.
3.218 Cheque cashing shops charge a commission for their services and as a result, genuine claimants probably use them rarely. There are 2 such shops in Thanet’s area. Members of the investigation section have visited both. XXXX XX XXXXX XXXXXX XXX XXX XXXX XXXXXXX XXXXX XXXX XXXXXXX XXXXXX XXXX XXXXX XXX XXXX XXXXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXXXX XXXX XXXX X XXXXXXXX XXX XXXX X XXXXXXX XXXX XXX This is a good practice and an example of proactive counter-fraud work. We commend Thanet for taking this initiative.
3.219 When a claimant reports that a cheque is missing there is some pressure on the issuing council to replace it immediately to prevent the risk of eviction. Thanet insists that the claimant makes a report to the local police and obtains a crime reference number. This policy in itself may deter opportunistic fraudsters. Because of the good relationship Thanet has established with landlords, it can contact them on behalf of the claimant to explain the circumstances of the loss and the action that is being taken. This ensures that claimants are not threatened with eviction for non-payment of rent in the short term. This procedure allows Thanet to operate a robust investigation and replacement policy on ‘missing’ cheques, and we consider this to be good practice.
Investigation and visiting procedures
3.221 Investigation staff occasionally encounter situations where their safety is threatened, particularly if they make a lot of home visits. Investigation staff make all HB and CTB-related home visits for the council. Thanet has developed and implemented procedures to ensure the safety of staff making home visits. This is good practice. These procedures are based on the use of radios and are comprehensively described in the Procedure manual.
3.223 We looked at the guidance available on investigation procedures and found it to be inadequate, as it does not contain comprehensive advice on how to investigate different types of fraud. The terms of reference for the investigation unit are the detailed job descriptions of its manager and staff. It would be helpful for Thanet to clearly document the role of the investigation unit, including a description of the areas of responsibility. Thanet plans to include sections on investigation techniques in the Procedure manual, but these are not yet available. The manual is available to all HB and CTB staff. Thanet should ensure that the manual does not include details of techniques which non-investigative staff do not need to know. This may require the production of a discrete manual for use by investigation staff only.
3.224 There is good advice in the Procedure manual on prosecution cases. This advice makes it clear to staff the type and quality of evidence required to support prosecutions under various items of legislation. Thanet should ensure that any relevant changes to the law are monitored and required changes made to the manual. The CPS, perhaps via the police, may be able to help with this.
Investigation filework
3.225 It is important that investigation work is carried out professionally and is fully documented. Keeping a comprehensive audit trail of investigation activity is good practice in itself, but it is also in the wider interests of the council. If an alleged fraudster sues the council following an investigation, a fully documented history of the case and, in particular, of any evidence or information to support the contested actions or decisions would be vital to the defence of the action.
3.226 We examined a sample of Thanet’s investigation casework. In April 1998 Thanet introduced 100% quality checks on all investigation files, with the result that the quality of casework has improved since then. Although investigation staff have no difficulty in locating relevant files, the papers relating to investigations are not kept together and may be spread throughout a file. This makes it difficult to obtain a quick and accurate view of the progress of an investigation for both internal and external users and auditors (including fraud staff and management).
3.227 Investigation papers should ideally be held together, separate from other benefit related paperwork. This could be within the same file (for example in a coloured plastic wallet) or in completely separate investigation files containing copies of relevant benefit related papers. We are aware of the space constraints imposed by the size and nature of Thanet benefits section’s accommodation, but the present situation must be reviewed as it has an inevitable impact on the efficiency of this area of work. We discuss this in more detail at Appendix S.
3.228 Thanet also uses some good practices for recording the progress of investigations. Investigators keep a notebook (a QB50) in which they record their daily activity. This includes visits, interviews and observations. To some extent this makes up for the shortfall in the quality of file narrative, helps management to monitor activity and provides evidence to support WBS claims. This is good practice, but it does not negate the need to maintain good quality files as well.
3.229 The management of investigation work is supported by FIMs. This is run on Dataease software and could be a useful management tool. We examined the way it is used in the management of investigations. Although the system contains a great deal of useful information, it produces only a limited number of reports. The current level of available reporting does not provide enough management information to ensure that investigation activity is run in the most efficient way.
3.230 FIMs is the only mechanism for capturing sources of referrals, but it does not produce reports that would allow management to analyse the sources, types and effectiveness of referrals. Dataease is a flexible software package and could be used to produce various analyses to help to target investigation work. Unless there are contractual or commercial constraints on the use of the system it would be a sound investment to train management to format and produce their own reports. Further detail on the use of FIMs is at Appendix S.
3.231 Thanet has produced a business plan for the fraud section, but it is at a strategic rather than operational level and does not set targets in terms of cases, savings or prosecutions. We believe that Thanet could improve an already good performance by:
- undertaking a structured analysis of the areas of fraud risk (using available information more efficiently)
- setting SMART (Salient, Measurable, Achievable, Realistic and Timeous) targets accordingly
- directing investigative resource at a balance of high risk and high reward areas
- developing a mechanism for monitoring performance against these targets.
3.232 We believe that Thanet has a good base for a more structured and co-ordinated approach to security and counter-fraud activity. If it adopts this approach, Thanet will have greater assurance of its ability to protect against financial and other risks associated with the payment of benefits.
* Highlighted parts of this report are omitted from the published version as they may assist fraudsters or may contain confidential commercial information.