Findings (continued)

Keeping it right

2.116  Keeping it right means ensuring payments are adjusted as circumstances change. The expectation is that the effort here builds on work done to secure the gateway and there are effective safeguards to keep payments right for as long as they continue to be made.

2.117  There are 4 crucial areas:

• designing operational procedures that make it as hard as possible for fraud and error to happen. Where possible they should be simple and understandable.
• focusing the resources on areas where the system is weakness by targeting checks on a regular basis, designed to keep payments right
• continuing contact is important—payments will no longer be made without regular contact
• learning lessons from experience and combining them with existing data and information to enable inconsistencies to be spotted and ensure all available information is used intelligently.

Conclusions

2.118  Barnet has developed operational procedures to reduce the level of fraud and error in the system. However, Barnet has not introduced adequate preventative and deterrent measures and cannot therefore ensure the security of the procedures.

2.119  It is not possible for us to form an exact view of the level of fraud in the system in Barnet because:

• BAFIS do not have sufficient resources to determine the amount of fraud
• the lack of effective management and robust procedures does not support the inexperienced investigators
• there is evidence that WBS claimed is invalid
• insufficient IA resources are applied to HB and CTB
• no risk assessments have been made
• management information is limited
• the Fraud Investigators Management System (FIMS) is not being fully used
• there is a lack of effective management controls.

2.120  However, while we cannot be specific about the amount of fraud, we know that these weaknesses tend to allow fraud and error to enter the system. We must therefore conclude that the level of fraud in Barnet is likely to be high.

2.121  Barnet does not consistently apply tailored benefit periods. By failing to do this Barnet makes itself vulnerable to fraud.

2.122  Barnet does not collect or monitor management information about change of circumstances cases. We are concerned that this prevents fraud investigations from focusing on a known risk group.

2.123  We consider that the former use of shortened renewal forms, coupled with the weeding of HB and CTB files, has increased the risk of undetected fraud remaining in the system for longer than is necessary. We are concerned at the lack of management information on this issue.

2.124  While Barnet has stopped using the shortened renewal form, the decision to do so was not based on a review of the form, or an evaluation of its impact. This will make it very difficult for Barnet to rectify the problems created by use of the form and indicates a failure to learn from experience.

Findings

Notices of determination

2.125  Barnet’s notice of determination does not fully comply with the law.

2.126  The notice is given in a letter that offers a basic explanation of entitlement and of the award calculation. Information about the rights and duties of claimants and landlords, and the obligation to report changes of circumstances, is printed on the reverse of the letter.

2.127  We would argue that some of the material to be found on the reverse, such as the right of review, should in fact form part of the notice of determination. In any event, we question whether the claimant will see such material in its current position or will appreciate its significance.

2.128  Paragraph 2 of Schedule 6 to the Housing Benefit (General) Regulations 1992 provides that a person can ask the LA for a written statement of the reasons for an award determination, provided that the request is in writing and is signed by that person.

2.129  Barnet’s notice of determination does not explain this clearly. In discussing the point, we were concerned to find that Barnet was not aware of the claimant’s rights in this area, believing an explanation of benefit calculation to be adequate.

2.130  Paragraphs 9(c) and 10(a) of Schedule 6 to the Housing Benefit Regulations 1992 deal with private tenants who have a deduction for fuel in their RA calculation. The provisions require that where a standard fuel charge has been used in the calculation, the claimant should be made aware that the fuel charge could vary if alternative evidence of fuel payments is provided.

2.131  Barnet’s notice of determination states the amount of the fuel charge, but not that it can vary. However the reverse of the letter does state that "deductions may be amended if you are able to supply evidence of the amount of the charge."

2.132  We looked at the information design quality of the notice of determination in addition to the legal aspect.

2.133  The various reference numbers on the notice could confuse the claimant and should be reviewed. The NINO needs no explanation, but "CT account number" should read "Council Tax account number" and it would be helpful to explain the third, unnamed, reference number, if indeed it is needed. There is yet another (rent) reference number in HB cases.

2.134  Visual effect is an important part of information design. The text in Barnet’s letters appears to be justified across the page. Poorly applied justification stretches or compresses text to the extent that it becomes very difficult to read, and we therefore recommend that it is aligned to the left.

2.135  The text is also set with very tight leading (the amount of horizontal space between lines). We recommend that Barnet increases margins and leading to improve the appearance of the letters, and varies the typefaces used for headings.

2.136  Barnet states its commitment to plain language on the reverse of the notice of determination, but does not reflect it in the notice itself or in the explanatory notes. For example, the phrase "your attention is drawn to section C of the notes overleaf" is over-formal and off-putting for claimants, and would be better expressed as "Please read section C of the notes on the back of this letter".

2.137  The notes themselves are difficult to understand, and inconsistency of language adds to the general confusion. For example, overpaid is also shown as over-paid, and claimants are told to write to us but landlords should notify me.

We recommend that Barnet improves the layout and content of its notice of determination to make sure that it is consistent, user-friendly and complies with the law.

Identifying high risk claims

2.138  Neither the Benefits section nor BAFIS uses formal risk analysis to identify high-risk claims. The PVT has not used analysis to identify and assess groups and types of claimant who represent highest risk. Such analysis would help Barnet to:

• focus resources effectively
• gather information and intelligence which could be shared with BAFIS, BA and CBFIS
• reduce the opportunity for fraud and error to enter the system
• offer a level of assurance on the integrity and security of claims in payment.

Benefit periods

2.139  Barnet has a rolling programme of renewals. There are 12 end of benefit period dates in each year, or one every 4 weeks excluding March which is the year-end. Benefit processors use standard criteria for deciding the relevant date:

• IS, JSA(IB), Retirement Pension: 60 weeks (without non-dependants)
• IS, non-IS, Retirement Pension: 30 weeks (with non-dependants).

We sampled 28 live claims to test compliance with the criteria. The results are shown in Figure 2.18.

Fig. 2.18: Live load sample benefit periods

Type of claim	Number of claims	Range of benefit periods set (weeks)
IS/JSA(IB)	18	26 - 60
Earned income	6*	26 - 28
Other income	1	60
Capital and/or savings	2	26 - 52
Income unknown	1	60
Total	28	-

*In 2 cases the renewal was not complete and the benefit period was not known.

Source: BFI sample analysis

2.140  The sample showed that the use of benefit periods is not consistent. For example, there were 18 claims based on IS/JSA(IB), yet the benefit periods allocated ranged from 26 to 60 weeks. The findings of this sample reflected those of our new claims sample.

2.141  Barnet introduced VF risk categories into its system in February 1999. If a benefit processor fails to enter an end date, the system will automatically enter the benefit end date applicable to the relevant VF risk category. This appears to be for administrative convenience rather than for securing the gateway.

We recommend that as a priority Barnet uses the IT system to set all benefit period end dates, to minimise the impact that introduction of VF might have on performance. To ensure its effectiveness, processors should be trained on why and how the VF risk system was devised and how it applies to claimants.

BAFIS visiting

2.142  The NHBAR estimates the level of confirmed fraud as between 1.3% and 2.6% of caseload. The majority of fraud results from claimants failing to report changes of circumstances, most commonly on issues of residency and earnings. With this in mind, LAs should analyse the local types and levels of risk and target visiting resources accordingly.

2.143  BAFIS currently targets its visiting programme at 18-30 year old males. This decision was not based on any statistical analysis. There was no risk assessment, nor has there been a review to evaluate the success of this initiative. In conjunction with the BA, Barnet has targeted bed and breakfast properties with a potentially high risk of fraudulent claims.

2.144  BAFIS has not been able to use FIMS, its computerised case management system, so does not hold information from past investigations that could inform decision making on future initiatives and proactive work.

2.145  BAFIS does not use VF-specified risk groups when deciding which cases to visit.

We recommend that BAFIS uses the VF risk groups with a view to extending its visiting programme to other claimant groups. The results of the visits should be evaluated to determine the effectiveness of using
the VF.

Changes of circumstances

2.146  Barnet has a leaflet called Housing and Council Tax Benefit Explained which gives examples of changes of circumstances that should be reported.

2.147  Barnet also issues a form to all claimants (except pensioners) mid-way through the benefit period reminding them to report any change of circumstances since the last claim was made. Claimants need only reply if there has been a change. We commend Barnet for issuing the reminder form, but we suggest that Barnet could improve this process by asking claimants to reply in all cases, even to confirm that there has been no change.

2.148  On reply, the SBO will consider whether the reported change could affect the rate of benefit. If it can, it is allocated to a benefit processor for urgent action. Barnet does not record the number of reported changes of circumstances.

2.149  The Benefits section is analysing the costs and benefits of a database to monitor reminders and identify those not returned for follow-up. Barnet is undertaking this project with other authorities and would contribute £3,000 to the total cost of £27,000.

We recommend that Barnet improves its initiative of issuing reminders to claimants by asking claimants to make nil returns.

Renewal forms

2.150  Barnet stopped using shortened IS renewal forms in August 1999. We support this decision, but are concerned that no review has been carried out to identify claims that may need investigation.

2.151  XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XX

2.152  Barnet does not record the number of returned renewal forms nor those forms returned where the claimant is no longer entitled to benefit.

2.153  If a renewal form is not returned, the procedure is that:

• the Benefits section issues a written reminder 4 weeks before expiry date
• the Council Tax inspector makes a visit one week before the expiry date
• if there is still no response, a referral is made to BAFIS for investigation.

However, BAFIS told us that no such referrals have been received.

2.154  It is good practice to follow up failed renewals and to refer appropriate cases to BAFIS, but we consider the use of Council Tax inspectors to be inappropriate because:

• they are not trained in HB legislation
• they are sent to all case types, not just those where CTB is in payment
• it increases the risk of breaches of confidentiality
• they are not trained to deal with such enquiries.

The Council Tax Inspectors followed up 366 cases in 1997/98 and 658 in 1998/99.

Management checks

2.155  Every working day, Barnet makes management checks on quality, security and accuracy across 10% of all determinations, including new claims, renewals, changes of circumstances and overpayments.

2.156  SBOs check high value payments. Team 1 checks payments over £600, while Team 2 checks payments over £800 because rent levels are higher in its area. Both SBOs check all non-dependant cases and the work of new staff. Details of checks made and errors detected in the last 3 years are given in Figure 2.19.

Fig. 2.19: Management checks on quality and accuracy of determinations

Year	Number of checks	Number of errors detected	Error rate (%)
1996/97	8,298	406	4.9
1997/98	6,825	440	6.4
1998/99	6,505	277	4.3

Source: Barnet

2.157  SBO management checks are recorded and reported to senior managers, but not to Members. Team leaders then examine 10% of the SBO checks to give greater assurance of the process. The results are used to identify training needs, to modify current procedures and to develop new procedures.

2.158  We examined 20 claims that had been subject to a management check and found only one case where a minor error had been missed.

2.159  The 10% check includes overpayment calculations and classifications. Management also makes a general check of recovery cases to confirm that the right action is being taken. This involves a check of the clerical papers, system printouts and a tagging system which is used by the sections to identify various stages of the recovery process.

2.160  We commend Barnet for making regular management checks and for recording the results. XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXX

• XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX X
• XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX X
• XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX X
• XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXX
• XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XX
• XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XX XXXXX XXXXX X

2.161  There are no effective management checks within BAFIS.

We strongly recommend that effective management checks are applied to BAFIS activities as a matter of urgency, and that Barnet reviews the depth of the management checks in the Benefits section.

Identifying the correctness of payments

2.162  In 1998, EA recommended that:

• Bank Automated Clearing System (BACS) payments be made to landlords
• the period of validity of cheques should be restricted to one month.

2.163  At the time of our on-site work, Barnet had started to implement the first recommendation, but not the second.

2.164  Where appropriate, Barnet has stopped direct payments to counter a problem of delay (and sometimes obstruction) by some of its larger landlords in refunding overpayments. This includes the case of a major Housing Association which is now negotiating to resolve the outstanding issues.

We recommend that as a priority Barnet implements the EA recommendation to restrict the period of validity of cheques to one month.

WBS claim

2.165  We were concerned about the quality of BAFIS investigations and the validity of WBS claimed. Our sampling showed that most overpayments resulting from fraud investigations were classed as claimant error rather than as fraudulent. One of the criteria to claim standard WBS is that a fraudulent overpayment has occurred, or would have occurred had the claim been in payment.

2.166  We examined a random sample of 30 cases where WBS had been claimed in 1998/99 and 11 such cases from 1999/2000. We also examined 30 fraud referrals from the Benefits section, including 4 where WBS was claimed (3 in 1998/99 and one in 1999/2000). The results of our tests on the 33 1998/99 cases are shown in Figure 2.20.

Fig. 2.20: WBS sample results for 1998/99

Description	1998/99
	Number	Value £	%
WBS valid and correctly claimed	9	21,083	24.1
WBS invalid – insufficient evidence	9	21,581	24.7
WBS invalid – no fraudulent overpayment	7	26,074	29.9
WBS not valid as standard (gone away)	7	18,476	21.2
Incorrect amount of WBS claimed	1	80	0.1
Total	33	87,294	100

Source: BFI analysis

2.167  This shows that the claimed WBS was valid in only 9 of the 33 cases. This is poor, and results from the poor quality of investigations and the lack of management checks and controls within BAFIS. Checks would have ensured that:

• issues were identified early enough for remedial action to be taken
• there was adequate evidence to support a WBS claim
• overpayments were correctly classified and WBS claimed was valid
• accuracy of WBS records would have been assured.

2.168  The WBS results for the 1999/2000 sample are shown below:

Fig. 2.21: WBS sample results for 1999/2000

Description	1999/2000
	Number	Value £	%
WBS valid and correctly claimed	0	0	0
WBS invalid – insufficient evidence	6	13,675	49.2
WBS invalid – no fraudulent overpayment	5	11,749	42.2
WBS not valid as standard (gone away)	0	0	0
Duplicate WBS claimed	1	2,382	8.6
Total	12	27,806	100

Source: BFI analysis

2.169  There were no valid WBS cases in our sample, which represented a third of WBS claimed for the first quarter of 1999/2000. The results show no improvement from the previous year, despite a new manager and new procedures, indicating that the main problem lies in the quality of investigations.

2.170  The total value of invalid WBS cases in our 1998/99 sample is £66,211. If the WBS subsidy claim for 1998/99 were to be reduced by this amount, Barnet’s WBS claim would fall to 70% of the threshold, a reduction in subsidy of £70,006.

2.171  If this level of validity applies across all of Barnet’s WBS cases, it will have achieved only £241,704 valid WBS in 1998/99. To avoid a reduction in subsidy for 1998/99, Barnet must achieve 75% (£1,006,715) of its threshold for the year of £1,342,287, meaning that Barnet would face a reduction in subsidy of £765,011.

We recommend that Barnet develops and implements management checks on BAFIS performance and activity.

We strongly recommend that Barnet reviews the validity of its WBS cases prior to the EA visit, or in conjunction with EA.

Working with BA and CBFIS

2.172  BAFIS does not automatically inform BA when it discovers a change of circumstances, even where the claimant may be in receipt of IS or JSA. This can result in claimants receiving benefit when not entitled to do so.

2.173  On completing an investigation, BAFIS does not always send an SLA3 form to allow BA to determine the effect on BA administered benefits. We looked at 71 BAFIS investigations and found that an SLA3 had been sent in only 14 cases. We consider that it would have been appropriate to send an SLA3 in 35 of the cases.

2.174  The cases in which an SLA3 was not sent related to:

• 5 cases of income-related fraud
• 2 cases of living together as husband and wife
• 13 cases of non-residency. A change of address does not necessarily affect entitlement to BA benefits, but it is good practice to inform the BA so that they can consider further enquiries
• one case of accommodation-related fraud. Such fraud may not affect BA benefit entitlement, but it is good practice to inform the BA for the reasons given above.

2.175  This will ensure that BA is able to re-assess benefit entitlement and calculate overpayment in all appropriate cases. It is also good practice to send SLA3 forms in cases that might not directly affect BA entitlement but could alert BA to undertake further enquiries.

2.176  We will be recommending to CBFIS separately that they comply with procedures as laid down in the SLA.

We recommend that BAFIS issues SLA3s in all relevant cases.

SLA

2.177  The vast improvement in liaison between BAFIS and CBFIS is largely due to the efforts of the temporary BAFIS manager. Effective monitoring of the SLA is a national requirement and LAs must sign a completion certificate for BA each year to certify that monitoring has taken place.

2.178  Neither BAFIS nor CBFIS comply with the SLA requirement that each must notify the other of investigations it is making (form SLA1 is available to BAFIS for this purpose). This creates a risk of duplicate activity, wastes an opportunity to share information, and can cause unnecessary expense.

2.179  Of 71 investigation cases, we found 56 where an SLA1 should have been issued to CBFIS but was not. BAFIS cited a lack of resources as the reason for this failure.

2.180  Both parties stated there had been little duplication of activity. We checked the extent of overlap between the work of BAFIS and CBFIS and found only one case where investigations had been concurrent, and one where investigations were carried out by both agencies within 2 months of each other.

We recommend that BAFIS implements the use of SLA1s with urgency to ensure that investigative activity is not duplicated with CBFIS.

Liaison

2.181  Effective liaison must be maintained between benefit assessors and fraud investigation teams to counter the risk of:

• benefit being incorrectly paid
• failure to correct payments quickly
• continuing overpayments
• fraud going undetected
• information and intelligence not being exchanged.

2.182  Liaison between BAFIS and the Benefits section is limited to informal discussion with the nominated liaison officer within benefits There are no formal meetings. This lack of effective communication has resulted in an uncoordinated approach to the delivery and security of benefits administration.

2.183  This is demonstrated by the conflict that we found in the classification of overpayments by the Benefits section and by BAFIS. This caused us particular concern because the problem had previously been identified by IA in 1996 and EA in 1998.

2.184  We are told that the issue has been resolved for 1997/98 by further reconciliation, but senior management for benefits and BAFIS have failed to deal with 1998/99 and 1999/2000. This failure has serious consequences for the proper administration of benefits and for subsequent subsidy claims.

We recommend that regular meetings take place between BAFIS and the Benefits section. Minutes should be taken and a joint action plan developed.

2.185  There is no current schedule of known potentially violent claimants and landlords for use by benefits and BAFIS staff. Failure to share information between sections could result in staff being put at risk.

2.186  Procedures for BAFIS staff introduced in May 1999 state that investigators must inspect the potentially violent register at the start of an investigation and must document that they have done so on the investigation file. There was no evidence that this procedure has been adhered to, and there was confusion about where the register is kept.

We recommend that Barnet compiles a comprehensive list of all known potentially violent claimants and landlords. This list should be constantly updated in conjunction with information from BA and shared with all sections undertaking visits. Once FIMS is up and running, BAFIS should use the facility to record a marker against claimants and landlords who are found to be potentially violent.

Keeping it right – recommendations

We recommend that:

Barnet improves the layout and content of its notice of determination to make sure that it is consistent, user-friendly and complies with the law. (Paragraph 2.137.) as a priority Barnet uses the IT system to set all benefit period end dates, to minimise the impact that introduction of VF might have on performance. To ensure its effectiveness, processors should be trained on why and how the VF risk system was devised and how it applies to claimants. (Paragraph 2.141.) BAFIS uses the VF risk groups with a view to extending its visiting programme to other claimant groups. The results of the visits should be evaluated to determine the effectiveness of using the VF. (Paragraph 2.145.) Barnet improves its initiative of issuing reminders to claimants by asking claimants to make nil returns. (Paragraph 2.149.) effective management checks are applied to BAFIS activities as a matter of urgency, and that Barnet reviews the depth of the management checks in the Benefits section. (Paragraph 2.161.) as a priority Barnet implements the EA recommendation to restrict the period of validity of cheques to one month. (Paragraph 2.164.) Barnet develops and implements management checks on BAFIS performance and activity. (Paragraph 2.171.) Barnet reviews the validity of its WBS cases prior to the EA visit, or in conjunction with EA. (Paragraph 2.171.) BAFIS issues SLA3s in all relevant cases. (Paragraph 2.176.) BAFIS implements the use of SLA1s with urgency to ensure that investigative activity is not duplicated with CBFIS. (Paragraph 2.180.) regular meetings take place between BAFIS and the Benefits section. Minutes should be taken and a joint action plan developed. (Paragraph 2.184.) Barnet compiles a comprehensive list of all known potentially violent claimants and landlords. This list should be constantly updated in conjunction with information from BA and shared with all sections undertaking visits. Once FIMS is up and running, BAFIS should use the facility to record a marker against claimants and landlords who are found to be potentially violent. (Paragraph 2.186.)

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