Findings (continued)

Making sure things work

Definition

2.629 Making sure things work means planning action, taking action and measuring the impact of that action to help plan future activity.

2.630 Key points are that:

activity must aim to reduce fraud and error
the results of counter fraud efforts must be measurable
organisations must be sure that rules and procedures are followed correctly
countering fraud is everyone’s business and all organisations must co-operate
the public understand that cheating the benefit system is a crime.

Contract management

2.631 We reviewed the benefit administration between Lambeth and Capita. The results of our analysis are at Appendix E, which also covers the contract arrangements. We considered that overall the contract was well written and had a number of sound features.

2.632 We were concerned there was no explicit linking of pricing and performance as there was for the Council Tax part of the overall contract. The absence of those links means Lambeth has less influence than might be expected over delivery of HB.

Monitoring the contract

2.633 Regular monitoring and appraisal of work carried out by contractors is an essential part of an effective and efficient and secure benefits service. However, Lambeth’s performance in monitoring Capita’s HB and CTB performance is less than rigorous.

2.634 We have commented in detail about the construction of the contract and how Lambeth has monitored it at Appendix E.

2.635 From the evidence provided by Lambeth, it monitors the contract in the following way:

Lambeth has regular monthly meeting with Capita management
minutes of the meetings are kept
Capita management provides Lambeth with a monthly statistics pack
Lambeth reports regularly to Members on the performance of Capita.

2.636 However, we found 2 serious weaknesses in the monitoring of the contract:

there are no reliability checks of the statistics provided by Capita
Lambeth does not systematically compare Capita’s performance to the HB performance specification.

2.637 If Lambeth had checking procedures in place it would have been aware of the performance failures detailed in Getting it right and Keeping it right in this report.

2.638 We were concerned that the 3 default notices that had been issued only addressed what could be construed as minor issues when compared to the failing service at Lambeth.

2.639 The officer responsible for the monitoring of the contract is also the HCC. We are concerned that HB forms only part of their duties. Dedicated officers monitor other parts of the contract. We do not believe that this part of the contract can be effectively monitored part-time. We consider it strange that a single officer on a full-time basis monitors other parts of the contract, such as Council Tax and NNDR, yet the HB part of the contract is not.

2.640 We are also concerned whether the detailed monitoring required can be carried out with the current level of resource in the Corporate Commissioning area.

We recommend that, to ensure a more rigorous contract-monitoring regime, Lambeth:

introduces a systematic performance measurement of the contract with Capita based on the HB specification within the contract
makes one officer solely responsible for the monitoring of the contract
reviews the contract monitoring staffing resources.

Partnership Board

2.641 Since the benefits service was contracted out, Lambeth has served 3 notices on Capita, demanding service improvements. However, subsequent negotiations between the 2 sides resulted in them resolving to work together to turn around the failing service.

2.642 The PB was set up in March 2000. This was a joint taskforce comprising Lambeth Members and officers and members of the Capita Board to monitor the performance of the benefits service, initially on a weekly basis.

2.643 The PB’s key objectives were to:

improve customer care
reduce the number of complaints
reduce the backlog of work.

2.644 Further objectives were to:

set priorities for the contract management team and staff
consider the need for additional resources to increase the rate of recovery to the contract specification.

2.645 The PB’s lifespan was expected to be limited, ceasing in February 2001, by which time its objectives would have been met. Unfortunately, at the time of our inspection, although there had been signs of recovery since the Academy conversion, the total work backlog was as high as, if not higher than, when the PB was created.

2.646 We consider that the PB is a positive step to resolving the contractual and operational difficulties at Lambeth. However, the PB should create an effective policy coupled with an action plan and ensure the plan is effectively monitored and targets are met.

Corporate counter fraud strategy

2.647 BFI’s Good Practice Guide states that a high-level corporate counter fraud policy statement will provide elected Members and council officers with a clear definition of their accountability and responsibilities in their fight against corruption.

2.648 The statement should include:

a definition of:
- what constitutes internal and external fraud
- what constitutes corruption
- the roles and responsibilities of Members, management and employees
- the roles and responsibilities of internal and external auditors
- the role of the public
- the sanctions that will be applied when fraud and corruption are proven
reference to the strategies that will support the overall counter fraud policy statement.

2.649 Lambeth approved a high-level anti-fraud and policy statement in 1996. It sets out the responsibility of Members, officers and staff to demonstrate the highest standards of integrity at all times. The opening paragraph states that:

…the London Borough of Lambeth is committed to combating fraud, corruption and dishonesty wherever it is found in all of its activities.

2.650 The statement goes on to set out:

the role of CAFT and its reporting lines through to the Chief Executive (the reporting lines have recently changed to the Borough Solicitor)
the role of the Housing Investigations Team
the role of IA and the need to liaise with external agencies
its determination to prosecute offenders wherever practicable.

2.651 There is a register of Members’ interests and a register of officers’ interests. Capita has agreed that their staff complete a declaration of interests.

2.652 CAFT adopted a 3-year strategic plan in 1998, which superseded the 1996 high-level anti-fraud and policy statement. This had the aim of reducing fraud within Lambeth to a minimum by March 2001 and of holding it there thereafter. This has now been superseded by a business plan adopted in July 1999 that incorporates the BV performance indicators and targets for 2000/01. These are:

level of HB and CTB fraud
WBS

value of fraudulent HB and CTB overpayments identified from CAFT investigations

level of council tenancy related fraud
level of fraud against other authority services
value of other authority services overpayments identified from CAFT investigations
formal sanctions initiated as a result of CAFT investigations.

The above are to be reported in the Lambeth Best Value Digest.

2.653 However, we found that the current business plan does not contain:

a definition of fraud and corruption
reference to the role of the public in fighting fraud.

We recommend that Lambeth reviews its current various counter fraud statements and business plans and formulates one coherent policy.

2.654 CAFT at present reports on a quarterly basis to the LA’s Scrutiny Committee originally via the Head of CAFT. However, we now understand that the Borough Solicitor is undertaking this role.

2.655 Since the LA adopted the policy the reporting lines for CAFT have changed, and the housing investigation team has been incorporated into CAFT that now reports to the Borough Solicitor rather than the Chief Executive. The Scrutiny Committee has now replaced the Audit Committee. There is a need for this policy statement to be revised and brought before Members again to reflect the changes that have occurred. Changes should reflect not only good practice and specifically mention HB and CTB, but also the changes in organisation and reporting lines within the LA. This action would also give Members the opportunity to renew and publicise their commitment to combating fraud and corruption.

System and information security

Building access

2.656 Access to OMH is by showing a pass to security staff at reception. Visitors are asked to sign a visitor’s record book and are issued with a returnable pass.

2.657 We found that members of the public are allowed access to use the public conveniences. This is of concern, as once a person has been allowed past the security staff, they move to an area where the lifts allow entry to the benefits section without any further door controls. Our concerns were heightened when we observed benefit files in open crates by the lift area on floor 1. This raises questions around the issue of confidentiality that should be afforded to benefit files.

2.658 Some doors have keypad entry systems. However, during our inspection we observed periods when the internal doors were propped open without anybody in attendance. We were also concerned to note that the door codes are not regularly changed despite the high turnover of staff.

We recommend that Lambeth should:

introduce keypad entry systems for all access doors and lifts from common areas
change the building access codes at least quarterly, or more frequently if the turnover of staff demands it
stop leaving confidential benefit files in an insecure area.

System access

2.659 Capita’s central control team is based at its Bromley offices and maintains and manages the benefit processing. The system control team is responsible for the processing systems in 4 LAs. The team was reorganised in July 2000 so that IT staff are able to deal with any site whilst operating from Bromley. The section is split into training and liaison, technical, statistical, batch and help desk support.

2.660 The Academy system is password secured and the control team is responsible for maintaining and securing access to the system.

2.661 We were concerned to find that the process to control user creation and deletion is not being complied with. XXXX XXXX XXXX XXXX XXXX XXXX XXXX XX
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2.665 We also found examples of other Capita site staff (including CTAX recovery officers) with update access for the Lambeth benefit processing system. XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XX
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2.666 The implications of the opportunity for unauthorised access are very serious and Lambeth cannot in these circumstances give an assurance as to the integrity of the system. The risks are further increased when staff regularly work outside of normal hours when the monitoring of unauthorised entry may be reduced.

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2.667 When requests are made for new users to be created, the team leader, supervisor or manager advises the central control team of the required access level. As part of our review, we compared the access levels to job roles.

2.668 We were concerned to find that many users had access levels that appeared inappropriate for their role. In particular many staff had system update access when in fact, all they needed was view-only access. We detail examples of inappropriate access levels in Figure 2.88.

Fig. 2.88: Analysis of user access levels
Access level	Actions that can be undertaken with that level	Users with inappropriate access levels
Assessor	Full update facilities to process claims	Some members of call centre, primary team, customer services, overpayments, payments, determination officers, control team and various managers.
Manual adjustments		A member of customer services, payments, partnership development manager.
HB all read/update	Access and update to everything including parameter tables	Some members of customer services, payments, control team
System all read/update	Access and update to everything including parameter tables and general system settings	Partnership development manager, CTAX project officer at Bromley and Bromley benefit manager.

Source: BFI sampling

2.669 We showed Lambeth the results from our analysis and it was agreed that at least 27 members of staff had inappropriate access levels. Lambeth stated that it would review all access levels to job roles.

2.670 The system is able to produce reports of daily transactions made by individual members of staff. However, managers are not currently monitoring the reports so are unaware of any inappropriate system activity. Some staff did not know they had the greater level of access.

2.671 Having greater than required access levels:

allows unintentional mistakes, in that it may allow a person into a screen they are not familiar with
creates opportunities for internal fraud
leaves staff vulnerable to accusations of wrongdoing
could create a conflict of interests. For example, it would be easier for a member of the overpayment team to write off a debt than to pursue recovery.

2.672 It would be better to create more access level groups giving staff specific access to enable them to do their job rather than overall access. An example of this is that all the central control team members have full administrator access to the system. Good practice advocates that very few people have full update access to all screens.

We recommend that, to reduce the risk of internal fraud and error:

access levels should be reviewed across the board and restricted to those needed to do the job. The emphasis must be to minimise the update facility for each user. An example would be to consider whether it is necessary for PAT to have access to payment screens
staff who change jobs or responsibilities should have their access levels reviewed to avoid unnecessary access rights continuing.

2.673 Access violations to the system are not currently reported. DA reported this weakness during its 1998/99 audit in of the previous benefit system. Lambeth has subsequently failed to implement formal processes to make sure access violations were reported and investigated following the move to the Academy system.

2.674 Following our on-site inspection, the control team has written an interrogation report that will show any invalid attempts to log on. This will be run nightly and reviewed by the control team. Any suspicions will be reported to the benefits manager for further investigation.

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2.676 We did see that system idle time out facility was in operation in Lambeth. This provides a blank screen after a pre-set period of time starting from when the unit was last used.

2.677 The system is not available until approximately 08.45 each day. This results in some staff not being able to use the system when they start work. For example, the call centre, which opens at 08.00, has, by 09.00, a backlog of calls awaiting answers to enquiries.

2.678 There is a perception amongst staff that there had been lots of periods when the system had not been available during the day. Capita provided statistics for August and September, which were 8 and 6 hours respectively. We do not consider this to be excessive and agree that downtime is improving as problems are resolved.

Human resources

2.679 Lambeth encourages managers to measure service levels against exacting external standards. We found that:

Finance and Corporate Services has achieved Investors in People status
the Borough Solicitors Office has achieved ISO9001 accreditation
at the time of the inspection CAFT was working towards ISO9002 accreditation.

Recruitment and retention

2.680 Recruitment and retention of staff is a major issue at Lambeth. Staff told us that it is considered to be a career-threatening move to work at Lambeth because of the reputation for poor performance.

2.681 This reputation has not been helped by the early actions of Capita management. We were told that, from the beginning of the contract, Capita was critical of the quality of the staff it inherited. We consider the staff to be:

demotivated
poorly trained
poorly developed with little or no feedback about performance.

2.682 The staff we interviewed were enthusiastic, wanted to do a good job, but were held back by the failure to make adequate provision for training and development.

2.683 In view of the failures shown above, it is not surprising that staff turnover in the HB sections at OMH over the last 2 financial years has been high. Using data provided by Lambeth, we calculated that the overall staff turnover within the benefit administration team was:

24% in 1998/1999
18% in 1999/2000.

Between April 1999 and June 2000, 60 staff left.

2.684 We were told that each member of staff had their training needs assessed. A training plan had been developed. However, Capita has not been able to deliver the training detailed on the plan as the training resource available does not match demand due to the high turnover of staff at Lambeth.

2.685 We were told that each member of staff receives a 6-monthly appraisal. We found the appraisal procedures are not applied consistently.

2.686 There is a lack of skilled HB and CTB processing resource in London, allowing temporary staff to command high hourly rates of pay. In view of this it is essential that Capita and Lambeth should ensure the development and motivation of their staff.

2.687 An alternative is for Capita to continue to use spare capacity at its Mendip site to help with assessing claims. This solution may be worth investigation if it is found that recruitment of quality staff to OMH becomes harder to achieve.

Staff vetting

2.688 LAs need to be satisfied that they have the highest standards of integrity and probity. This is important as each HB assessor initiates the payment of thousands of pounds each year. It is vital that the LA has a high standard of integrity and honesty for permanent, temporary and contract staff.

2.689 The AC handbook, Countering Housing Benefit Fraud, recommends the following recruitment checks:

verifying references provided with employees
verifying whether previous employers were genuine
ensuring that the skills profile is met, using competency requests if required
verifying educational and professional qualifications
verifying previous employment and duties performed.

2.690 Lambeth and Capita have developed a range of corporate polices and good, written guidance for officers and managers involved with:

staff recruitment and vetting arrangements
staff appraisal
staff training and development.

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2.691 At the time Capita won the contract most of the Lambeth HB managers had left. Capita was obliged to bring in a fresh team, but since then there have been further changes at all levels of management. We were told this has resulted in:

an inconsistent approach when dealing with issues
changes in priorities, leading to the revision of action plans
a lack of accountability
a fall in staff morale.

2.692 The high staff turnover has placed pressure on Capita's ability to recruit and retain staff. We discussed this with Lambeth and were told that to make good the shortfall, Capita has employed casual staff on an ongoing basis.

2.693 Contractors should be placed under the same obligations to verify information about their staff. It is important that the LA monitors and tests contractors’ adherence to such requirements.

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2.696 There is a register of Members’ interests and a register of officers’ interests. Capita has agreed that their staff complete a declaration of interests.

We recommend that, to improve the security and integrity of the benefit system, Lambeth monitors the recruitment activity of the contractor to ensure that:

references for temporary staff are followed up by site managers
an induction programme for new staff is undertaken
communications between Capita management and the training section are improved.

Support for staff

2.697 Lambeth's appraisal procedures are detailed in the Corporate Personnel Standards document dated September 1999. This links training and development to appraisals.

2.698 The scheme requires appraisals to be undertaken on an annual basis and reviewed every 6 months. Performance is monitored throughout the year and measured against an agreed set of objectives and competencies. Training needs are listed on a PDP and forwarded to Lambeth’s Corporate Training section. However, we found that due to pressure of work the appraisal timetable was behind schedule for most of the staff.

2.699 Capita's appraisal policy is detailed in its performance management document dated 1998 which states:

An employee's contribution to the Group will be maximised if they know what they have to do, how well they have to it and how well they have done.

2.700 We found Capita’s written procedures to be sound. However, Capita's annual appraisal system only became effective from April 2000. In practice, some appraisals were not completed until the end of July. Furthermore, interim reviews that were due in July have not been completed. This does not follow standing instructions and adversely affects the ability of individuals to contribute to the 2000/01 training and development plan for OMH.

2.701 Responsibility for nominating staff to Capita’s training team for induction training rests with team leaders. However, we were advised that the induction programme for new starters is not being implemented at OMH due to the high turnover of staff and the pressure to employ staff on the backlog of work. This was not the only breakdown in communications. We found that training officers could not prepare for each new intake as they were not notified in advance of recruitment programmes or start dates of new employees.

We recommend that, to promote the benefits of staff appraisal and reinforce its commitment to it, Lambeth ensures that Capita management:

reviews the existing programme
considers the impact of the appraisal procedures when developing action plans to reduce work
ensures team leaders are give sufficient time to prepare for and undertake appraisal interviews.

We recommend that, to identify the training needs of staff more effectively:

a forum consisting of team leaders, staff employed on complaints, appeals and determination officers and training officers meet regularly to discuss and plan ways of improving performance through training
a formal agenda should be drawn up with contributions invited from benefit processing staff
formal minutes from the forum should be published and discussed at section team meetings
the effectiveness of the forum is evaluated after 6 months and the results reported to the Lambeth and Capita senior management teams.

2.702 Both Lambeth and Capita staff said that they constantly identify areas of weaknesses in benefit assessment work that should be addressed through further training. However, further training is not always provided.

2.703 We were told that Lambeth’s determination officers make Capita’s team leaders aware of errors. Lambeth has also analysed the results from determination officer rejections, to identify areas for further training. The results of the analysis were presented to Capita in March 2000, but the contractor has not developed the data for training purposes. This also applies to results of case reviews and reassessments by the complaints and appeals staff.

2.704 The absence of formal feedback procedures can result in:

poor performance levels, leading to poor levels of customer service
failure to fully identify the training needs of individuals
issues not being addressed during staff appraisals
failure to properly identify training priorities and the resources required to meet them.

2.705 At the beginning of October 2000, Capita introduced the first of a series of modular based workshops under the heading of Team Development Time. Each module takes 4 weeks to complete. The event has been developed jointly with Lambeth and is currently being tested by staff employed on appeals, overpayments and the customer reception points at OMH.

2.706 Capita has also decided to have a dedicated training team centralised at OMH. The objectives of the training team are to:

provide technical training and policy guidance to support the assessment function
establish clear procedures and best practice across all Capita sites
improve communications between assessment staff and trainers.

2.707 The training so far has been dominated by the need to address technical training for new entrants and training on the introduction of VF procedures. As a consequence customer service training and refresher training for experienced staff, in particular on all aspects of overpayments, has not been undertaken.

2.708 Evaluation of training is important, as it is a means of measuring the effectiveness of the system. At Capita operations at OMH, this is confined to the completion of evaluation sheets by students at the end of their course. These are of limited value, as they are not supported by a formal process of team leaders discussing training objectives during appraisals and then forwarding comments on the training provided.

2.709 We found that training officers want to improve liaison and communications with HB and CTB team leaders at OMH. Progress is slow as we found the training team receives little support from Capita management. A draft SLA setting out their respective roles and responsibilities was completed by the training officers several months ago, but this was not given any priority by management and is currently being revised following recent comments from team leaders.

We recommend that Capita introduces a formal system of evaluation to determine the effectiveness of the current training activities.

2.710 Communications are further compromised as:

there is currently no formal arrangement for training officers and HB section representatives to meet regularly to discuss ongoing issues and identify and influence future training events
DSS circulars are issued to staff with a brief summary of the potential impact on operations. However, training officers do not ensure that staff have received their copy and that contents are understood and the changes implemented
team leaders should prepare staff for courses, but do not due to pressure of work. This results in valuable time being taken up while students complete pre-course reading
trainees are withdrawn from courses with no, or late, warning by team leaders due to pressure of work.

2.711 The handling of the training budget, which is held centrally, further compromises the co-ordination and prioritisation of training. It has not, for example, been broken down into a site allocation, nor have site contract managers been allocated a notional figure from which to work. Managers are not made aware of in-month expenditure or the level of funding available for the remainder of the year. However, line managers are instructed to have regard to the costs of training when considering the most effective means of improving the performance or development of their staff.

We recommend that, to improve line management accountability for training and development proposals for Capita staff, Lambeth should ensure that:

the central training budget is devolved to the site contract manager
the site contract manager is given a specific allocation for the financial year
managers and team leaders are provided with sufficient financial information and support from the training section to develop a training plan that does not exceed the budget allocation
training profiles are monitored by the training manager and the site contracts manager
training profiles are evaluated at the end of each financial year.

Best Value

2.712 Over the last 5 years the LA has made improvements to its management structure and the culture in the LA. We understand that the HB service is to be the subject of a BV review during 2001/02. Lambeth has identified areas in need of significant improvement including:

the HB service
contract management
income collection.

2.713 During 1999/2000 the LA began its modernisation programme by:

implementing, on an experimental basis, a Cabinet style of government
setting up a cross-party Scrutiny Committee of backbench councillors to review the work of the LA
establishing a Standards Committee
adopting a code of conduct for councillors
adopting a code of conduct for employees and a code of governance covering corporate standards
adopting a whistleblowing policy to allow employees to make declarations under the Public Interest Disclosure Act.

Internal and External Audit

Internal Audit

2.714 IA has been contracted out to PWC since December 1997. An in-house team remains in place with responsibility for undertaking reactive non-fraud management investigations, whereas PWC covers planned audits, such as the system audit in April 2000 of the Fraud Case Management system.

2.715 PWC reports to the Chief Internal Auditor, who has responsibility for the strategic management of IA. In the absence of corporate policy, CAFT and IA discuss any weaknesses found in their respective investigations to determine if more work is required.

2.716 As part of the 1999/2000 corporate audit plan, IA’s time spent on HB and CTB functions was 50 days, made up of:

20 days on Capita monitoring controls work related to Academy
15 days on Members’ scrutiny of the HB system
15 days on counter fraud.

2.717 To provide an indication of the adequacy of IA coverage, we examined the work of IA by comparing Lambeth's revenue expenditure against the expenditure for HB as a percentage. We then compared this with the percentage of days spent by IA on providing assurance on the benefits section’s work. The results are shown in Figure 2.89.

Fig. 2.89 Revenue expenditure compared to HB expenditure
Year	Total Lambeth revenue expenditure (£ million)	HB/CTB expenditure (£ million)	HB/CTB (%)
1997/98	690.4	163.3	23.6
1998/99	672.9	144.5	21.5
1999/2000	730.1	146.3	20.0

Source: Lambeth

2.718 There is no simple ratio between the amount of HB spending and the number of IA days to be used in this area. However, in view of the potential risk posed by fraud and error within HB and CTB, it is not unreasonable to expect a far greater level of activity by IA than that shown in Figure 2.90. However, we accept that there are some functions carried out by CAFT, such as internal investigations, which are not reflected in the percentages quoted in Figure 2.90.

Fig. 2.90: Comparison of IA days spent on HB/CTB
Year	Total actual IA operational days	Actual IA HB/CTB operational days (including counter fraud)	Actual % spent on HB/CTB
1997/98	1,387	35	2.52
1998/99	1,453	40	2.75
1999/2000	1,437	50	3.47

Source: Lambeth

We recommend that Lambeth reconsiders the level of IA activity in HB and CTB and increases activity to take account of the levels of spend and risk it presents.

2.719 Implementing this recommendation will:

provide the LA and elected Members with assurance that secure procedures are in place to protect the system against fraud and abuse
ensure IA reviews the current audit plan and commits further resources to it.

2.720 We also found that whilst almost all of IA recommendations were accepted by Lambeth, there are major weaknesses in procedures to ensure that subsequent action plans are implemented.

2.721 Further comments on the relationship between IA and benefits are made in Appendix F.

External Audit

2.722 DA undertakes the EA function. We found that DA's annual review of the HB and CTB functions and anti-fraud measures has been thorough and provided the LA and Members with expert advice.

2.723 As part of its review DA is required to comment on the work of IA. We were told that the relationship between the parties has improved and in its 1998/1999 annual report DA reported that for the first time it could place a greater reliance on the work of IA. However, from our discussions with DA and the results from this inspection we share concerns over:

Lambeth's inability to quickly progress action plans
Lambeth's inability to reduce backlogs of work
the absence of contract monitoring by Lambeth and accountability by Capita in key areas.

We recommend that, to ensure that recommendations made by IA and DA are implemented within agreed timescales:

nominated officers charged with taking forward recommendations report quarterly on progress and are made accountable for their actions
the Chief Executive and Members review progress reports.

2.724 We found that DA worked closely with Lambeth to introduce procedures to improve the integrity and timeous completion of the LA’s annual subsidy claim to DSS.

We recommend that IA and DA use the findings from this report to target their resources.

2.725 This will focus their attention on the areas of greatest weakness and provide the Chief Executive and Members with:

a means to measure progress since the publication of the BFI report
an assurance that future IA plans address areas at risk.

DA management letter

2.726 In its management letter to Members dated16 December 1999, DA stated that Lambeth:

…is strengthening the arrangements it has to meet its stewardship responsibilities and is improving its financial standing.

2.727 DA also reported that:

Lambeth is now well placed to respond to the key challenge of BV and has already established many of the arrangements proposed by the government's modernising agenda.

2.728 Although noting that there were areas that could still be further improved, overall DA found:

as a result of the phasing in of the managed audit regime it has been able to place greater reliance on IA work for most of the major significant systems
progress had been made by CAFT in that it has increased its focus on proactive work through the introduction of risk management techniques.

2.729 As part of its annual audit of Lambeth's accounts, DA enters an opinion on the LA’s accounts and in addition it certifies the LA's annual subsidy claim to DSS. In recent years Lambeth has had considerable difficulty in supporting its claims for HB and CTB subsidy. In December 1998, DA reported that it had been able to certify the completion of the 1993/94, 1994/95, 1995/96 and 1996/97 accounts. The 1997/98 subsidy claim was reduced by £13 million due to non-referral of cases to the RO.

2.730 DA advised us that, as a result of action taken by Lambeth, there has been marked improvement in the presentation of the 1998/99 subsidy claim. This is due to Lambeth undertaking detailed checks on a sample of cases to test the integrity of:

reported WBS cases.
the classification of overpayments
threshold cases
Housing Revenue Account (HRA) and non-HRA rebate cases.

We recommend that Lambeth undertakes further work to improve performance in relation to:

the outstanding recommendations identified in Appendix F
the level of compliance with section 1(1A) and (1B) of the SSAA 1992 procedures
the potential number of HB and CTB payments made to claimants without reference to the determination officer
the consistency and reliability of data supplied by Capita to Lambeth.

Management information

2.731 For HB and CTB administration to run smoothly, managers must have access to good quality and accurate management information.

2.732 We consider that the quality of management information in Lambeth is poor. We found that:

information passed to the PB has been inaccurate
PWC has been asked to report and advise how the information can be improved
the Academy system has not been used to its full potential. There are a number of report functions within the system that have not been utilised
the client side had little faith in the accuracy of the information being provided by the system. This was a matter for concern especially, because the system:
- is owned by Capita
- has been implemented successfully in at least 3 other sites.

2.733 We found that the expertise that Capita had in its central IT section was not being utilised and that Lambeth was receiving poor management information as a result.

We recommend that, to help Capita and Lambeth make informed decisions about the quality and level of the service they offer to claimants, Lambeth ensures that Capita:

reviews the use of the Academy system
identifies the areas where performance and management reporting can be improved.

Caseload management

2.734 Clear responsibilities are an essential part of effective administration. Staff should know what is expected of them and should be accountable for their work.

2.735 Benefit records need to be easily accessible, well maintained and controlled, easy to use and clear. This is because records are needed to:

help assessors respond rapidly and confidently to claimant queries, either in person or over the telephone
enable staff to carry out and record the outcome of necessary checks and cross-checks to help process claims effectively and efficiently and at the same time minimise fraud and error.

2.736 The absence of defined caseload responsibility for individual members of staff reduces the efficiency of the benefits section at Lambeth. For example, there are no controls or procedures in place to ensure that staff do not only deal with the more simple cases. There are potential risks to the integrity of the benefit if Lambeth does not ensure duties within the benefits section are separated.

2.737 Work patterns on the assessment sections are directed towards taking action on a work item rather than completing all the action required to clear the claim. The current procedures mean that staff do not retain responsibility for claims.

2.738 There are no productivity targets linked to the clearance of claims and staff output is not formally monitored. Staff are therefore not encouraged to clear claims.

2.739 We suggest that Lambeth changes the way in which work is allocated. Assessors should have their own work, allocated on an individual or team basis, so there is an incentive to deal with cases promptly and correctly. The benefits here are that assessors will become responsible and accountable for all work allocated to them.

2.740 Once assessors’ work has been allocated it will be necessary for staff duties to be rotated periodically. This will ensure that staff do not become over familiar with the cases they are responsible for. As a result the work of the benefits section will be better organised and structured.

We recommend that, to improve the effectiveness and efficiency of the benefits section, Lambeth:

defines specific work allocations for staff
periodically rotates staff responsibilities within the team.

2.741 This will improve responsibility and accountability throughout the benefits section and reduce the opportunity for internal fraud and error.

2.742 We found that assessment staff can put a claim into payment without any managerial checks. This, and the other significant weaknesses we identified relating to the integrity of HB and CTB, detailed in Appendix A, increase the opportunity for internal fraud.

2.743 The AC Management Handbook, Countering Housing Benefit Fraud, states:

As a matter of good practice, councils should normally require benefits staff, investigators and internal auditors to provide signed declarations of any possible conflicts of interest.

2.744 We found that, despite there being a corporate conflicts of interest policy, there are no procedures to ensure staff do not deal with sensitive cases such as those of friends or relatives.

We recommend that Lambeth urgently:

provides all staff with written procedures to ensure they do not deal with sensitive cases such as those of friends or relatives
ensures that the details form part of the induction process for Lambeth and Capita staff
undertakes periodic management checks to ensure compliance.

Making sure things work – recommendations
We recommend that, to ensure a more rigorous contract-monitoring regime, Lambeth: introduces a systematic performance measurement of the contract with Capita based on the HB specification within the contract makes one officer solely responsible for the monitoring of the contract reviews the contract monitoring staffing resources. (Paragraph 2.640)
We recommend that Lambeth reviews its current various counter fraud statements and business plans and formulates one coherent policy. (Paragraph 2.653)
We recommend that Lambeth should: introduce keypad entry systems for all access doors and lifts from common areas change the building access codes at least quarterly, or more frequently if the turnover of staff demands it stop leaving confidential benefit files in an insecure area. (Paragraph 2.658)
XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX X XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX X XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX X XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX X (Paragraph 2.666)
We recommend that, to reduce the risk of internal fraud and error: access levels should be reviewed across the board and restricted to those needed to do the job. The emphasis must be to minimise the update facility for each user. An example would be to consider whether it is necessary for PAT to have access to payment screens staff who change jobs or responsibilities should have their access levels reviewed to avoid unnecessary access rights continuing. (Paragraph 2.672)
We recommend that, to improve the security and integrity of the benefit system, Lambeth monitors the recruitment activity of the contractor to ensure that: references for temporary staff are followed up by site managers an induction programme for new staff is undertaken communications between Capita management and the training section are improved. (Paragraph 2.696)
We recommend that, to promote the benefits of staff appraisal and reinforce its commitment to it, Lambeth ensures that Capita management: reviews the existing programme considers the impact of the appraisal procedures when developing action plans to reduce work ensures team leaders are give sufficient time to prepare for and undertake appraisal interviews. (Paragraph 2.701)
We recommend that, to identify the training needs of staff more effectively: a forum consisting of team leaders, staff employed on complaints, appeals and determination officers and training officers meet regularly to discuss and plan ways of improving performance through training a formal agenda should be drawn up with contributions invited from benefit processing staff formal minutes from the forum should be published and discussed at section team meetings the effectiveness of the forum is evaluated after 6 months and the results reported to the Lambeth and Capita senior management teams. (Paragraph 2.701)
We recommend that Capita introduces a formal system of evaluation to determine the effectiveness of the current training activities. (Paragraph 2.709)
We recommend that, to improve line management accountability for training and development proposals for Capita staff, Lambeth should ensure that: the central training budget is devolved to the site contract manager the site contract manager is given a specific allocation for the financial year managers and team leaders are provided with sufficient financial information and support from the training section to develop a training plan that does not exceed the budget allocation training profiles are monitored by the training manager and the site contracts manager training profiles are evaluated at the end of each financial year. (Paragraph 2.711)
We recommend that Lambeth reconsiders the level of IA activity in HB and CTB and increases activity to take account of the levels of spend and risk it presents. (Paragraph 2.718)
We recommend that, to ensure that recommendations made by IA and DA are implemented within agreed timescales: nominated officers charged with taking forward recommendations report quarterly on progress and are made accountable for their actions the Chief Executive and Members review progress reports. (Paragraph 2.723)
We recommend that IA and DA use the findings from this report to target their resources. (Paragraph 2.724)
We recommend that Lambeth undertakes further work to improve performance in relation to: the outstanding recommendations identified in Appendix F the level of compliance with section 1(1A) and (1B) of the SSAA 1992 procedures the potential number of HB and CTB payments made to claimants without reference to the determination officer the consistency and reliability of data supplied by Capita to Lambeth. (Paragraph 2.730)
We recommend that, to help Capita and Lambeth make informed decisions about the quality and level of the service they offer to claimants, Lambeth ensures that Capita: reviews the use of the Academy system identifies the areas where performance and management reporting can be improved. (Paragraph 2.733)
We recommend that, to improve the effectiveness and efficiency of the benefits section, Lambeth: defines specific work allocations for staff periodically rotates staff responsibilities within the team. (Paragraph 2.740)
We recommend that Lambeth urgently: provides all staff with written procedures to ensure they do not deal with sensitive cases such as those of friends or relatives ensures that the details form part of the induction process for Lambeth and Capita staff undertakes periodic management checks to ensure compliance. (Paragraph 2.744

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