BFI findings

Strategic Management

Fig. 2.1: Results of BFI’s assessment for Strategic Management

Source: BFI inspection assessment

This and all subsequent radar graphs show the levels of performance for each of the elements of individual Standards. The Standard score is the level of performance that needs to be achieved for the local authority to be at Standard. The BFI assessment is the level of performance that has been achieved. Where the dotted line is outside the solid line, the local authority is performing above Standard.

2.1 Benefits administration has to be set within the much broader context of a local authority’s overall strategies and responsibilities towards, for example, neighbourhood renewal, alleviating poverty, preventing homelessness, helping people into work and enhancing consumer choice.

The Vision

2.2 London Borough of Hackney was not at Standard for this element. Its strategic vision did not contain reference to the Benefits service in relation to the 7 functional areas of Standards. However, its strategic vision did refer to provision of customer-focused services and supporting people to live in decent housing.

2.3 London Borough of Hackney used to operate with discrete business units but these had failed, in many instances, to deliver adequate levels of service. Because of this a decision had been made to try and avoid what senior officers referred to as individual branding of services. The focus would be on building a corporate identity and vision to move the whole organisation towards the same goals.

2.4 The council’s overarching vision statement, had been approved by Members and was set out in the Hackney 2020 Vision. This vision sets out 7 key aims to be achieved by 2020:

• a thriving, healthy and inclusive community
• a place where you would want your children to be educated
• a good place to live
• a good place to get around
• a good place to work and do business
• a place to enjoy yourself
• a confident and safe community.

2.5 The Revenues and Benefits Division and Audit and Anti-Fraud Division had examined their services to identify how they supported the Hackney 2020 Vision and had given this information to staff through presentations, posters displayed throughout the offices and screen savers on PCs.

2.6 The links to the Benefits service were identified as:

• a thriving, healthy and inclusive community – a successful Revenues and Benefits section means: easy access to services, more community care, new technology for all and less poor people
• a good place to live – a successful Revenues and Benefits section means: less poverty, less homelessness, better and safer homes, more affordable homes
• a good place to work – good staff training, communication, facilities means: good staff morale, excellent Revenues/Benefits relations, better benefit take up, improved collection and better customer understanding.

2.7 In 2002 the Audit and Anti-Fraud Division had developed a separate vision which was displayed in the division's offices:

Within two years the London Borough of Hackney will be recognised as a leading example in the detection, investigation, deterrence and prevention of fraud and corruption in the administration of Local Authority funds and Housing Benefit.

2.8 Within the Revenues and Benefits Division, managers and staff had a clear sense of purpose to continue to improve. This relates back to quietly getting better, one of 3 strategic aims in the Corporate Plan 2002. However, the Corporate Plan 2003-2006, approved by Members on 29 January 2003, set out changed strategic aims. These were:

• making sure the council works properly
• involving the public in what we are doing to get better
• improving opportunities and quality of life in the borough and promoting social inclusion.

2.9 Senior officers described their aim to continuously improve the service in varying terms of rank with the best, top quartile or becoming the best. What varied was the timeframe stated. This was anywhere between 2 and 5 years. The targets set out in the 2003/04 service plan for the Finance Directorate in relation to Processing of Claims were to achieve the targets set out in Standards by 2007.

2.10 To achieve Standard, London Borough of Hackney needs to develop a strategic vision for the Benefits service to include the elements set out in Standards and for this strategic vision to be endorsed by Members.

Recommendations

We recommend that London Borough of Hackney:
develops a strategic vision for the Benefits service, approved by Members, covering the 7 functional areas of Standards and that the service is: speedy and accurate secure, reducing the risk of error deters fraud by recovering overpayments minimises barriers to work.

Policy objectives

2.11 Authorities should support the strategic vision with high level policies and clear objectives for the Benefits service. Together these should:

• eliminate the need for senior managers to make recurring or routine decisions
• provide a systematic way of delegating operational decisions in a manner that will sustain consistency of approach and equity of service
• be linked to its high level strategic and business plans.

2.12 London Borough of Hackney was not at Standard for this element because its policy objectives did not:

• link back to the Vision
• bridge the gap between the Vision and the current position
• include targets to meet the full range of Standards over time.

2.13 However, Members had endorsed the objectives and they formed part of the annual planning cycle. Although senior officers told us that the annual planning process itself was in a developmental stage.

2.14 The Hackney 2020 Vision was an appendix to the corporate plan
2003-2006. However the links between the 2 were unclear. In its comprehensive performance assessment of the authority, the Audit Commission identified that the Vision was not reflected in the key objectives in the corporate plan. London Borough of Hackney planned to address this during 2003 when it revised the Hackney 2020 Vision. A borough wide consultation exercise in line with government guidance on community strategies would be used to inform the revised vision.

2.15 There were clear links between the 2003/04 service plan for the Finance Directorate, approved by Members in February 2003, and the corporate plan 2003-2006. There were also clear links between the service plan and the council’s draft recovery and improvement plan which was being prepared in response to the Audit Commission’s comprehensive performance assessment.

2.16 The service plan set out objectives for the directorate under 3 headings that mirrored the 3 strategic aims for the council. The links could have been improved in relation to the third aim of improving opportunities and quality of life in the borough and promoting social inclusion. The only objectives of the Finance Directorate set out under this heading related to recruitment to the directorate. There was no reference to the important contribution benefits administration can play in promoting social inclusion. Links could also have been made to improving housing, preventing evictions by paying benefits promptly and protecting and supporting the most vulnerable people in our community. In interviews we found that Members were fully aware of the wider role that efficient benefits administration can play in relation to social inclusion.

2.17 This was the first time that the service plan had been produced in this format and provided a firm foundation from which to develop.

2.18 The service plan contained high level targets, some of which had key milestones against which to measure progress. For example the target to process claims within 36 days had annual incremental targets to achieve the Standard by 31 March 2007. However deciding on 90% of claims within 14 days had no key milestones.

2.19 There was no reference in the service plan to achieving the Counter-fraud or Overpayment Standards.

Recommendations

We recommend that London Borough of Hackney:
links its policy objectives for the Benefits service to the strategic vision we recommend it develops for the service
ensures the objectives bridge the gap between the strategic vision and the current position
sets specific targets, including key milestones, to meet all Standards over time
develops objectives in relation to the links between efficient benefits administration and social inclusion and anti-poverty in its next Finance Directorate service plan.

Operational planning

2.20 Operational planning ensures that resources are effectively managed and monitored to deliver service standards and performance targets.

2.21 An operational plan for administering HB and CTB translates the Vision, policies and objectives into practical ways of providing a service. Effective operational plans will allow any changes that are required to improve the HB and CTB service to be managed.

2.22 Plans can only be effective if they are developed, used, monitored and adapted to meet changing circumstances. Managers and staff need to be convinced that the plans are realistic and achievable.

2.23 London Borough of Hackney was not at Standard for this element. However, the Revenues and Benefits and Audit and Anti-Fraud Divisions had work plans in 2002/03 and were in the process of translating the 2003/04 service plan for the Finance Directorate into work plans for 2003/04. In the draft work plans provided to us there were clear links back to the service plan.

2.24 To achieve Standard, London Borough of Hackney needs to ensure that operational plans:

• identify key milestone dates
• recognise the impact of plans on stakeholders
• are communicated to stakeholders
• include a business continuity plan.

2.25 Responsibility for delivering the objectives was defined in the draft work plans and the Assistant Directors of Revenues and Benefits and Audit and Anti-Fraud were accountable for delivery against each of the plans.

2.26 Progress was reported regularly to Members through Vital Signs and meetings with the Lead Member for Finance. The Vital Signs provided to Members were output measures of progress in key areas of concern agreed with the Audit Commission, in response to its corporate governance report in July 2001. Although there was no evidence that the Lead Member meetings were taking place every fortnight as planned, the Lead Member had up-to-date information about progress against plans.

2.27 The impact of plans was not communicated to all stakeholders although issues relevant to landlords were discussed at regular meetings with housing associations.

2.28 London Borough of Hackney appointed a project manager to introduce its new electronic document management system and new benefits IT system. Interim targets for implementation were set, monitored and revised where necessary. Progress in relation to these projects was reported to the Cabinet Audit, Finance and Procurement Committee on 17 February 2003.

2.29 Some plans included key milestone dates but this was not true for all of them. For example the draft audit and anti-fraud work plan for 2003/04, identified as an objective, the delivery of an ICT solution to link its IT system with the new Benefits IT system. However, this objective was stated as being ongoing from April 2003, with no milestone or end date for its achievement.

Recommendations

We recommend that London Borough of Hackney:
ensures work plans include key milestone dates for each objective
recognises and communicates, to all its stakeholders, the impact of operational plans on its stakeholders
produces a documented business continuity plan for its Revenues and Benefits and Audit and Anti-Fraud Divisions and that this plan is: tested reviewed annually communicated to staff.

Performance targets

2.30 Performance targets underpin policy objectives and service standards and give staff a clear view of the desired outcome, and management clear accountability for providing effective and secure administration.

2.31 London Borough of Hackney was close to Standard for this element. It had set targets for all relevant Best Value Performance Indicators. These targets were specific, measurable, achievable, realistic and time-based. They were published to customers in the council’s Performance Plan and in the council newspaper, Hackney today, which was distributed to all households in the borough. These targets however, were only for 2003/04. They did not show future plans for improvement.

2.32 To achieve Standard for this element London Borough of Hackney needs to:

• set targets for all Best Value Performance Indicators for up to 3 years ahead
• develop specific, measurable, achievable, realistic and time-based targets in relation to its counter-fraud activity particularly for the value of Weekly Incorrect Benefit and number of sanctions cases
• communicate its local performance targets to customers.

2.33 London Borough of Hackney had set Best Value Performance Indicator targets for processing new and renewal claims and changes of circumstances for 3 years ahead. However other Best Value Performance Indicator targets had not been set for the same period.

2.34 In relation to counter-fraud activity, individual targets were set out in the key work objectives of the staff but there were no targets included in any of the strategic or operational planning documents of the organisation.

2.35 Included in the council’s strategic planning documents were 2 targets in relation to the recovery of overpaid benefits. These were:

• to achieve 35% in relation to Best Value Performance Indicator 79b, the percentage of cash recovered during the period being reported on as a percentage of the value of recoverable overpayments identified by the authority in the year
• to recover £2 million in 2003/04 in relation to debts transferred to the sundry debts system.

2.36 A comprehensive set of overpayment recovery targets is required to support performance monitoring and development. This is covered in more detail under Overpayments.

2.37 London Borough of Hackney had local targets which were specific, measurable, achievable, realistic and time-based, particularly in relation to response times to enquiries made in person, by telephone or in writing, however these targets were not communicated to customers. The draft work plan for the Revenues and Benefits Division included an objective to produce a customer charter by the end of May 2003 and for it to be distributed to all relevant council offices.

2.38 London Borough of Hackney based performance targets on the latest available information and data on performance. For instance, in the 2002/03 work plan the target was to achieve Processing of Claims Standards by 2004/05, this was amended to 2007 in the 2003/04 work plan. When the earlier target was set there was no data on which to base it due to the lack of management information available when the service was brought back
in-house. With the availability of data on the performance of the service since April 2001 the target had been revised.

Recommendations

We recommend that London Borough of Hackney:
sets targets for all Best Value Performance Indicators not only for 2003/04 but also up to 3 years ahead
develops targets that are specific, measurable, achievable, realistic and time-based, in service and work plans for counter-fraud activity
communicates to customers, its local performance indicators on standards of service.

Performance monitoring

2.39 Performance monitoring provides assurance to Members and senior officers that HB and CTB administration is effective and secure. It is important that Members and senior officers receive reports on performance against the Vision, objectives and plans to make the accountability process transparent. Performance monitoring can also encourage the development of a culture of continuous improvement.

2.40 London Borough of Hackney was not at Standard in relation to performance monitoring because of delays in providing the Department with management information and subsidy returns. This was mainly due to the deficiencies of the benefits IT system and Hackney interim document system.

2.41 With one exception, London Borough of Hackney was able to collect sufficient management information to monitor Best Value Performance Indicators. The exception was overpayments, where the information was held on more than one system. This led to delays in providing management information and to the information provided being inaccurate. Information on overpayments is a vital part of the Department’s management information needs and is necessary for the completion of subsidy returns.

2.42 At the time of the on-site phase of our inspection, Audit Commission (District Audit) had not been able to submit audited subsidy returns to the Department for 2001/02 for London Borough of Hackney. We were told that when benefits administration was contracted-out neither London Borough of Hackney nor the contractor was undertaking reconciliations. London Borough of Hackney had worked hard to overcome this problem and had put systems in place to ensure that they were carried out, though it may take until 2004/05 to resolve the historical problems.

2.43 In our previous report we recommended that London Borough of Hackney examined the arrangements in place for preparing and checking subsidy returns. Since that inspection London Borough of Hackney had established a separate team to deal with subsidy and subsidy awareness sessions had been provided for all relevant Benefits service staff. Subsidy claims remained an issue for the council with particular problems being the identification of housing revenue account and non-housing revenue account expenditure and classification of overpayments. However, we saw positive steps being taken to overcome the problems.

2.44 London Borough of Hackney used management information to inform Members on a monthly basis in Vital Signs. Vital Signs was available on the council’s website.

2.45 In relation to benefits administration, information reported in Vital Signs included the:

• number of claims in payment
• number of claims received and no action taken
• average cost of handling a claim
• percentage of claims processed without a financial error
• average time for processing new claims
• average time for processing changes of circumstances
• percentage of renewal claims processed on time.

2.46 We saw copies of Revs and Bens Information Bulletins providing staff with information on performance.

2.47 Staff told us that due to pressures of work experienced by team leaders in complying with the directions and then for the implementation of the new IT systems, monitoring of individual performance had not been consistently applied across the Benefits service. We saw good practice in the Call Centre and Enquiries teams. However monitoring of individual performance in the Benefit teams was not applied consistently by the different team leaders.

2.48 The new Benefits IT system and electronic document management system should help London Borough of Hackney to more accurately define work in progress and target resources in future. However, more work is required to improve the reporting capability of existing IT systems in the meantime. While we were on site efforts were being made to improve the management information provided by the Benefits IT system, Hackney interim document system and the bespoke overpayment management system known as Debtsys.

Recommendations

We recommend that London Borough of Hackney:
ensures that audited subsidy returns and management information are submitted to the Department on time
develops the Hackney interim document system reporting capability as a priority.

Organisational structure

2.49 Organisational structure plays an important part in the performance of any local authority administering HB and CTB. It is important that human and other resources are structured in a manner that provides an effective workforce to ensure a secure and effective service. Organisational design will obviously be influenced by council-wide policy on issues such as:

• service centralisation or decentralisation
• outsourcing
• the size and geography of the local authority
• the siting of benefits and counter-fraud work within Finance or Housing, or a combination within these or other departments.

2.50 It is important that the organisational structure adopted should not have an adverse impact on the administration of benefits. The Institute of Revenues, Rating and Valuation recommends that the Benefits Manager should occupy a senior position within the authority with a direct reporting line to the Section 151 Officer.

2.51 Figures 2.2 to 2.6 illustrate the organisational structure at London Borough of Hackney at the time of our inspection. The Benefit Managers were the Assistant Directors of Revenues and Benefits and Audit and Anti-Fraud and they reported directly to the Director of Finance who was the Section 151 Officer.

Fig. 2.2: Chief Officers

Source: London Borough of Hackney

Fig. 2.3: Finance Directorate

Source: London Borough of Hackney

Fig. 2.4: Revenues and Benefits Division – Benefits section

Source: London Borough of Hackney

Fig. 2.5: Revenues and Benefits Division – Support Services Section

Source: London Borough of Hackney

Fig. 2.6: Audit and Anti-Fraud Division

Source: London Borough of Hackney

2.52 London Borough of Hackney was not at Standard in relation to its organisational structure largely because it had been unable to fill all posts within the structure with permanent employees. Some senior posts had been unfilled, other than on a temporary basis, for some time.

2.53 Until April 2001 an external contractor undertook benefits administration. At the time of our inspection it was all administered in the Revenues and Benefits and Audit and Anti-Fraud Divisions within the Finance Directorate.

2.54 The Finance Directorate senior officer structure was approved by Members in May 2001 with other posts approved in February 2002. The new structure of the Revenues and Benefits Division took effect from September 2002. However London Borough of Hackney had been unable to recruit to the Finance and IT Manager posts and these were filled by consultants at the time of our on-site work.

2.55 In the Audit and Anti-Fraud Division a number of management posts were vacant until the end of August 2002. Some remained unfilled at the time of our on-site work. These included the Assistant Director post, which was filled by a consultant, and the Head of Counter-Fraud. While we were on-site the structure of the Audit and Anti-Fraud Division was being further reviewed due to London Borough of Hackney’s inability to recruit a suitably experienced person as Head of Counter-Fraud. While we were on-site the HB Fraud Investigation Manager post also became vacant.

2.56 London Borough of Hackney experienced difficulties recruiting staff to many of the posts in the new structure, having to rely instead on high numbers of temporary and agency staff. In an effort to address this issue the Finance Directorate held a recruitment fair in November 2002. As a result of this 20 new permanent members of staff joined the Benefits service in April 2003.

2.57 At the time of our on-site inspection London Borough of Hackney was in the process of implementing new IT systems. To help with this a separate project team had been set up and additional staff were covering the work of those who moved to the project team. The number of additional staff employed was being reduced but from September 2002, when the new structure became operational, the agreed establishment of the Benefits section had been exceeded.

2.58 At the time of our on-site visit not all of the reporting lines in the structure were being followed. For example the Finance Manager and IT Manager reported directly to the Assistant Director of Revenues and Benefits and the Overpayment Team Leader reported directly to the Head of Support Services. Senior officers told us that the reporting lines temporarily being followed allowed best use to be made of the specialist skills of temporary staff.

2.59 London Borough of Hackney’s Finance Directorate Induction and Development Manual showed the structure of the Overpayments team to be 15 permanent and one temporary members of staff. While we were on-site there were 16 staff on the Overpayments team, only one of whom was on a permanent contract of employment. One of the objectives in the draft work plan for the Revenues and Benefits Division was to assess the potential for reducing the number of staff within the Overpayments team by 31 March 2004 taking into account the impact this would have on collection rates.

2.60 There were several management layers in the structure. This can make communication difficult. However we found that staff were receiving information and they felt that managers were making an effort to communicate with them. We saw copies of corporate, directorate and divisional newsletters which were all used to provide information to staff. Managers told us that the lack of meeting rooms at Keltan House did mean that messages did not always get to everyone as quickly as they would like.

2.61 We found that teams were focusing on their own area of responsibility and not on the bigger picture. The communication between teams was good at a senior level in each division, but required improvement at other levels. This meant that at an operational level the Counter-fraud team, the Overpayments team and Benefit teams were not operating as effectively as they could.

2.62 In our previous report we recommended that London Borough of Hackney should review its staffing numbers in relation to its counter-fraud activity, benefits administration and customer service. All 3 areas were reviewed in 2002. Due to London Borough of Hackney being unable to recruit to some key posts and the Benefits section at all times exceeding its agreed establishment, the effectiveness of the resulting changes could not be fully measured. However the service provided in all 3 areas had improved from that found in our previous inspection.

2.63 We also recommended that internal liaison should be improved. Work had been done in this area. For example the enquiries and call centre staff told us that they felt they received more support from their colleagues when they were dealing with customers. However more work was required as outlined above.

Recommendations

We recommend that London Borough of Hackney:
recruits sufficient staff to provide the level of service required to achieve all Standards without heavy reliance on temporary staff.

Procedural guidance

2.64 HB and CTB are important components of the national Benefits system and it is important that staff and managers responsible for their administration are supported and guided by good procedures.

2.65 London Borough of Hackney was very close to Standard for this element. In our previous report we recommended that procedures should be fully documented and it was encouraging to see that so much progress had been made in this respect. The majority of procedures had been documented, during a project established specifically to improve this area. Procedural guidance was available to all staff on their desktop computers. The procedures included guidance on version control and updating the database.

2.66 There were still some areas not documented, such as how to deal with appeals, claims from asylum seekers, students and the application of the fit and proper person test. Also section 16 of the claim form allowed a customer to nominate a third party to deal with the council and help manage their affairs. But, there was no documented procedure to ensure that the representative was advised in writing of their duties and responsibilities.

2.67 Some documented procedures required further development. For example, the procedure covering making payments on account did not include the requirement to make payments in the circumstances set out in regulation 91 of the Housing Benefit (General) Regulations 1987.

2.68 XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXX XXXX XXXX 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 XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX

2.69 To achieve Standard, London Borough of Hackney needs to complete the documentation of all procedures, add them to the database and make them available to all relevant staff.

2.70 At the time we were on-site, London Borough of Hackney had not advised all relevant staff of the availability of the new guidance notes. We were told shortly after leaving that the Training and Development team had told all staff how to access the procedural guidance.

Recommendations

We recommend that London Borough of Hackney:
completes the process of documenting its procedural guidance notes by: updating the database making them available to all staff ensuring they are maintained effectively.

Management assurance

2.71 It is important that staff and managers responsible for the administration of HB and CTB are provided with regular and systematic assurance that the Benefits service and counter-fraud efforts are working as planned.

2.72 London Borough of Hackney did not operate regular management checks for claims processing as recommended by the Audit Commission in the Countering Benefits Fraud: A Management Handbook and so was not at Standard for this element.

2.73 London Borough of Hackney was however undertaking 100% management checks in relation to its counter-fraud operations. This was something we recommended following our previous inspection.

2.74 The Benefits section also had procedures in place to check at least 10% of assessments. In addition the Overpayments team checked assessments that resulted in a debt transferring to the sundry debts system. However, it did not undertake monitoring to ensure that checks were done regularly or have clear criteria for selecting samples. There was also a failure to use the results of checking to identify training needs.

2.75 To achieve Standard, London Borough of Hackney needs to:

• operate regular management checks in relation to assessment of claims and recovery of overpayments
• report the results of management checks to senior officers and Members
• ensure the results of the checks are fed into staff training and development plans.

2.76 There was evidence that improvements were under way in the development of management checking procedures in relation to processing of claims. However there were a number of shortcomings that we have addressed in the Processing of Claims section.

Recommendations

We recommend that London Borough of Hackney:
develops clear criteria for management checks in the processing of claims and overpayments recovery that identify: the types, numbers and proportions of cases it checks the selection of samples
introduces a central summary of the results of checks to aid the identification of training needs and procedural weaknesses. This summary should be reported to senior officers and Members at regular intervals
ensures the results of checks are used to inform individual staff training and development plans.

Management information

2.77 Management information provides a sound base for managers to evaluate the effectiveness and security of the Benefit system and is a useful tool for management to make informed decisions on the day-to-day running of their sections and to keep Members informed of performance. It should not be used simply to generate a local authority’s current set of performance indicators.

2.78 We found that London Borough of Hackney used management information to adjust work priorities and resource allocation but there was no evidence that it used it to predict trends, identify patterns and risks, establish low areas of take-up or identify procedural weaknesses. Therefore performance for this element was not at Standard.

2.79 We identified problems in relation to management information which included:

• failure to fully utilise existing IT system reports
• the validity of data used to monitor speed of processing reported changes of circumstances
• reports on payments on account and interim rent payments that did not identify key information to assist with the monitoring of such payments
• use of data from the Hackney interim document system to monitor claim processing times.

2.80 Senior managers told us that they would like to be able to obtain more accurate and timely management information with less user intervention and this was one of the reasons for deciding to replace the Benefits IT system. Managers were trying to identify the reports from the new IT systems that would provide the information they required to make informed decisions about their business areas. While we were on-site we saw efforts being made to produce better management information from all IT systems.

Recommendations

We recommend that London Borough of Hackney:
develops its management information so that it can use it to: predict trends identify patterns and risks establish areas of low take-up identify and remedy procedural weaknesses
urgently implements the use of existing system reports that enable analysis of performance in key areas of benefits administration
fully assesses its management information needs in relation to the Benefits service, prior to implementing the new Benefits IT system.

Training and development

2.81 Effective and secure delivery of HB and CTB depends on staff performance. The administration of these benefits is complex and staff retention and recruitment are major issues for managers. Local authorities should offer effective training, career and personal development activities.

2.82 Investment in the training and development of staff, plays a key role in:

• attracting new recruits
• retaining staff
• offering a career path for potential managers
• developing the management skills of more senior staff.

2.83 Investment in performance management can:

• bring greater consistency and fairness to the management of staff
• highlight where individuals need to develop or improve performance
• ensure that career advancement is based on demonstrable delivery of results and competence to take on greater responsibility.

2.84 London Borough of Hackney was not at Standard for this element, although a lot of effort had gone into improving this area since our last inspection.

2.85 The areas requiring more work included:

• evaluation of training
• results of evaluation informing future training plans
• system of interim feedback to staff on their performance.

2.86 A dedicated Training and Development team comprising a Training and Development Manager plus 3 Training and Policy Officers and 2 temporary secondees from other teams existed. We saw comprehensive training plans covering 2002/03 and 2003/04. These included new and existing staff. Most of the training in the 6 months prior to our inspection had concentrated on the major IT system changes.

2.87 New staff were issued with an induction manual which explained practical matters such as hours of work, annual leave as well as the training, support and development individuals could expect.

2.88 A bespoke 14-week training plan based on the Department’s model was planned for all new recruits. London Borough of Hackney planned to run this training for the first time in April 2003. The programme covered all technical aspects of benefits as well as sessions on customer service and the culture and history of the borough. It included regular testing of understanding and competence to ensure that new staff were able to make a full contribution as soon as they joined their team.

2.89 Local training sessions were held to cover changes to procedures following receipt of the Department’s circulars. Transitional Housing Benefit and students had been covered in this way over the past year.

2.90 External trainers were also used. Tax Credit training was being undertaken by an external company while we were on-site.

2.91 For simpler changes a summary of the circular was prepared by the Training and Development team and distributed for discussion at team meetings.

2.92 Feedback from staff was used to evaluate training. To make the evaluation more meaningful, London Borough of Hackney was aware that it needed to undertake more analysis of the pre and post training efficiency of trainees, and to revisit this at regular intervals.

2.93 This evaluation could then be used to shape and revise any future training in the light of the results obtained. The results of any quality control checking could also feed into the identification of training needs.

2.94 All permanent staff had job descriptions and although temporary staff did not, the expectations of them were discussed jointly with their team leader to ensure understanding.

2.95 Specific, measurable, achievable, realistic and time-based targets were being agreed with all staff as part of the appraisal process that was being carried out while we were on-site.

2.96 Formal written appraisals were undertaken for the first time in early 2003 with a mid-year progress review due in summer 2003. Personal development plans and specific, measurable, achievable, realistic and time-based targets were agreed with all staff as part of this process. The procedure for supervision meetings between appraisals set out in the Finance Directorate Induction and Development Manual issued to new recruits varied from team to team according to the nature of work, responsibilities and experience of the individual. Supervision meetings had taken place for customer service staff and between Benefit team managers and Benefit team leaders. We saw no evidence that any had taken place elsewhere in the Benefits service although managers in the Audit and Anti-Fraud Division told us of plans to hold such meetings at 6-weekly intervals.

2.97 The Training and Development team acted as the specialist referral point for any technical queries that could not be resolved by the team leaders. Benefit teams also had access to the Institute of Revenues, Rating and Valuation legislation database through their PCs.

2.98 The budget allocated to training had increased significantly over recent years, and for 2003/04 was £273,000. In comparison the actual spend in 2001/02 was just £37,744.

2.99 Training was the subject of several recommendations in our first report. Details are given at Appendix F. It was pleasing to see that a lot of effort had gone into improving this area. All of our recommendations had been addressed.

2.100 London Borough of Hackney was aiming to achieve Investor in People and Charter Mark accreditation by the end of 2003.

Recommendations

We recommend that London Borough of Hackney:
introduces a training evaluation system and ensures that the results of this influence future training plans ensures that interim feedback to staff on their performance is undertaken across all teams.

IT

2.101 Every local authority should make the most of available IT to support an effective and secure HB and CTB administration, and the technology deployed should assist the local authority in making progress against the e-government agenda.

2.102 Automation of processes should enable greater efficiency and provide reliable and timely management information to monitor performance and inform management decisions.

2.103 London Borough of Hackney was not at Standard for this element because:

• its systems provided insufficient data to ensure the accurate and timely submission of the Department’s subsidy and management information returns
• of weaknesses in its financial interfaces
• it did not have fully documented testing procedures that could be used to test all software releases and systems updates, including those for all interfacing systems
• of weaknesses in the operation of key security controls
• the IT disaster recovery plan for the Revenues and Benefits Division had not been tested
• it did not have an IT disaster recovery plan for the fraud data-tracking system.

2.104 The Benefits IT system did not have an automatic interface to the IT system used by the Audit and Anti-Fraud Division. However it had automatic interfaces with the following systems:

• housing rents
• Council Tax
• Hackney interim document system
• Debtsys overpayment management system
• cheque payment processing and reconciliation.

2.105 London Borough of Hackney confirmed that the Benefits IT system was able to calculate and pay benefit. However, it had also identified various weaknesses in the system’s overall functionality, which had possibly been made worse by the initial set-up and historical use of the system. Weaknesses included:

• unreliable and incomplete data in respect of the critical areas of HB subsidy and the Department’s management information returns
• inadequate overpayment recovery facilities
• inadequate management information.

2.106 London Borough of Hackney had taken a number of steps to address these issues, including:

• the establishment of a dedicated Subsidy team to improve accuracy and prompt submission of returns
• development of a bespoke overpayment and debt recovery system, known as the Debtsys overpayment management system
• development of a bespoke electronic document management system.

2.107 To fully address these problems and because of the decision of the supplier of the Benefits IT system to give notice of the removal of its support arrangements, London Borough of Hackney undertook a tender exercise for replacement Benefits IT and electronic document management systems. Both new IT systems were due to go live in April 2003, but this was changed to July 2003 for the Benefits IT system and October 2003 for the electronic document management system.

2.108 There were weaknesses in the authority’s finance IT system and relevant interfaces. We identified problems with the reconciliation of payments. We comment on London Borough of Hackney’s inability to make payments by Bankers Automated Clearing Services under Customer Services. London Borough of Hackney had plans to replace its finance IT system by the end of 2003.

2.109 Relevant IT systems operated in a controlled technical environment and were supported by a Revenues and Benefits Division IT team, and external contract personnel. Availability of the Benefits IT system was reported to be very good, with less than 1% down-time. However, the document management system was less reliable, with down-time of around 10%.

2.110 XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXX

2.111 The IT team was responsible for the logging, control and clearance of system faults. Electronic records were maintained to control all reported faults. The team was also responsible for the release of new software or system updates in relation to bespoke systems and for the installation of new releases of software from external suppliers. Testing arrangements were in place but recent releases had not been fully tested due to resource pressures caused by planning for the introduction of the new IT systems.

2.112 An IT disaster recovery plan for the Revenues and Benefits Division had been produced but had not been tested. There was no IT disaster recovery plan for the fraud data-tracking system.

Recommendations

We recommend that London Borough of Hackney ensures that:
the new Benefits and finance IT systems: provide sufficient data for the accurate and timely completion of subsidy and the Department’s management information returns provide comprehensive management information allow payment via the Bankers Automated Clearing Services allow full reconciliation of payments
ensures that the new Benefits IT system includes automatic interfaces to all other relevant IT systems within the authority
fully documented testing procedures are used to test all software releases and systems updates, including those for all interfacing systems
an IT disaster recovery plan is produced for the fraud data-tracking database
its IT disaster recovery plans are tested at least annually and the outcome is used to refine the existing plan.

Internal Audit

2.113 Internal Audit provides assurance to management and Members about the effectiveness and security of HB and CTB administration.

2.114 We found Internal Audit had systems in place that enabled it to be close to achieving Standard. London Borough of Hackney had a programme of work which:

• was agreed by Members
• extended over a 3-year period
• assured compliance with benefit regulations.

2.115 In July 2000 Members approved the award of a contract to undertake Internal Audit work for the council to an external contractor. However, due to protracted contract negotiations it was not signed until September 2001. This meant that for the period from July 2000 to September 2001 the council was without an Internal Audit resource of any significance.

2.116 In addition, London Borough of Hackney had an in-house Internal Audit team that had been created as part of the restructure of the Finance Directorate approved by Members in February 2002. The in-house team of 4 was established in July 2002 but one of the posts was not filled until February 2003.

2.117 There had been little Internal Audit activity in relation to benefits administration between July 2000 and the time of our on-site inspection. There had been 2 audits, comprising an ad hoc audit report concerning compliance with Directions and an audit requested by Audit Commission (District Audit) of the procedures for dealing with HB cheques that were returned as unpresented.

2.118 The procedure was for all Internal Audit reports to be discussed and agreed with the service manager. Senior managers considered all Internal Audit reports. Members could track the progress of Internal Audit work and received a summary of each report and details of high risk recommendations as part of a planned regular monitoring report considered by the Cabinet Audit, Finance and Procurement Committee. The Committee considered the first of these reports on 17 February 2003.

2.119 At the time of our on-site inspection Internal Audit had begun to
co-ordinate work with Audit Commission (District Audit) to avoid duplication of effort.

2.120 London Borough of Hackney was not at Standard because the:

• Standards had not been built into the Internal Audit work programme
• level of Internal Audit activity in relation to benefits between 2000 and 2003 was insufficient to assure that benefit delivery systems were secure.

2.121 London Borough of Hackney should consider whether its Internal Audit resources are sufficient to assure Members and senior managers that the Benefit system is secure, particularly in relation to the number of audit days planned for 2004/05. In 2001/02 London Borough of Hackney’s gross expenditure on benefits was estimated at 21% of gross revenue expenditure. The strategic audit plan 2002/05 showed that 40 audit days had been allocated to the Benefits service in 2002/03. This was 4% of the total number of audit days planned. In 2003/04 the plan showed 55 days split between benefits administration and anti-fraud arrangements, and for 2004/05, 20 days on benefits administration. This reduced level of coverage represented only 2% of all planned activity for 2004/05. London Borough of Hackney told us that Internal Audit may look at aspects of benefits administration in its audits of other areas such as financial management reviews.

2.122 In our previous report we recommended that London Borough of Hackney reconsidered the level of Internal Audit activity in HB and CTB and established an appropriate minimum resource allocation. This was because in 1999/2000 just 2.3% of available audit days had been spent on HB and CTB and in the 2 previous years less than 2%. Planned audit days for 2004/05 were down to these low levels.

2.123 We also recommended that London Borough of Hackney put in place a revised system for following up Internal Audit recommendations. This was done in 2002. The new system needs to consolidate and be reviewed to ensure it delivers the desired outcome and provides assurance to Members on security and effectiveness.

Recommendations

We recommend that London Borough of Hackney:
includes assessing performance against Standards in its Internal Audit work programme
deploys the level of Internal Audit resource based on risk including due consideration of the amount of money paid in respect of HB and CTB, compared to the council’s gross revenue expenditure.

External Audit

2.124 External Audit has statutory duties to report on the arrangements that the local authority has put in place to secure economy, efficiency and effectiveness in its use of resources. It also gives independent assurance on matters relating to the accounts and reports on the arrangements to secure propriety. Local authorities must act on this independent advice and assurance, while having their own systems of assurance. They cannot rely on External Audit identifying faults.

2.125 The external audit service for London Borough of Hackney was provided by the Audit Commission (District Audit) and:

• provided constructive feedback and input in relation to weaknesses identified as part of the audit of the benefit subsidy claims
• reported regularly to senior officers and reported key issues to Members in the Annual Letter
• at the time of our inspection had begun to co-ordinate its activities with those of the council’s Internal Audit service.

2.126 London Borough of Hackney fell short of achieving the Standard because of weaknesses in monitoring the progress of action plans. However, the Audit Commission indicated that improvements in this area had been experienced in the last year with London Borough of Hackney responding positively to a number of issues raised in previous reports.

2.127 The council’s Overview and Scrutiny Board monitored progress of the Audit Commission’s annual letter. On 19 February 2003 this board considered the 2001/02 annual letter dated 28 January 2003 from the Audit Commission.

2.128 The council prepared an action plan in response to our first inspection. Initially monitoring of its progress appears to have been good but London Borough of Hackney was not able to provide an up-to-date progress report covering all our recommendations.

Recommendations

We recommend that London Borough of Hackney:
puts procedures in place to ensure the monitoring of progress against External Audit recommendations and that these procedures are reviewed at least annually to ensure that they are effective.

Cost of benefit administration

2.129 There is no definitive costing structure for benefit administration although local authorities should be guided by the provisions contained within the Department’s circular S1/2000.

2.130 London Borough of Hackney was not at Standard for this element because the cost per claim was not calculated at regular intervals.

2.131 When the Benefits service was brought back in-house there was no reliable information from which to set a realistic budget. For expediency a budget was set for the whole Revenues and Benefits Division and the cost of claims was calculated by apportionment. After 2 years the budget was split between the Revenues Section and the Benefits section leaving the costs of the Support Services Section to be apportioned between them at the end of the year.

2.132 Different cost per claim ratios were used in the calculation and we were told that cost of claims was to be used as a local performance indicator in the Vital Signs reported to Members. The draft Revenues and Benefits work plan 2003/04 contained an objective:

To protect the public purse through maximisation of subsidy and reductions in the net cost of benefit.

2.133 The cost per claim of London Borough of Hackney for 2001/02 was £116.97. The average cost per claim for London Boroughs in 2001/02 was £88.10 with top quartile performance of £72.94.

Recommendations

We recommend that London Borough of Hackney:
calculates the cost per claim at quarterly intervals.

Internal working arrangements

2.134 Local Authorities need to manage their internal partnerships and relationships to support short and longer term policy objectives. Such management includes ensuring that common goals are set for an effective and secure HB and CTB administration.

2.135 London Borough of Hackney was not at Standard for this element. Although close relationships had been forged with other teams within the council, they were not formalised.

2.136 One of the Benefit teams also acted as a Landlord Liaison team. This team worked closely with staff from the council’s Housing Directorate based in the Neighbourhood Housing Offices.

2.137 Regular meetings were held between the Landlord Liaison team and the Neighbourhood Housing Offices. These were used to share service developments and update each other on any issues. Each Neighbourhood Housing Office also had an Income Maximisation Officer whose job was to ensure that all claimants were aware of their benefit entitlements.

2.138 A service level agreement had been drawn up to formalise the relationship with the Neighbourhood Housing Offices, but this had not been seen or signed by the Neighbourhood Housing Offices.

2.139 The relationship between the Benefits service and Housing Directorate was commented upon in our last report and was considered to be having an adverse effect on claimants. It was encouraging to see that progress had been made in improving the quality of this relationship.

2.140 The Benefits service and the council’s Social Services Directorate had undertaken joint work on the Transitional Housing Benefit Scheme.

Recommendations

We recommend that London Borough of Hackney:
formalises its relationships with other council teams involved in benefit administration. This should involve defining the responsibilities, communication channels and cover the frequency of reviews of the effectiveness of the agreement.

External working arrangements

2.141 Local authorities function within their own network of relationships with customers, stakeholders and other bodies in their communities. Effective partnerships with these external organisations will provide mutual benefits through savings in administrative costs and benefit expenditure and reduce the amount of fraud and error. Some stakeholders such as the Rent Service and Jobcentre Plus play a key part in handling HB and CTB claims effectively and securely.

2.142 We found that London Borough of Hackney was not at Standard for this element because of the lack of service level agreements with some organisations.

2.143 The lack of service level agreements with the Rent Service, Registered Social Landlords and the Employment Service was covered in our previous report, with recommendations to introduce these. Limited progress had been made in this area. Exchange visits between the Benefits section and the Benefits Agency were also recommended and these had not taken place.

2.144 A Fraud Partnership Agreement existed with the Counter-Fraud Investigation Service, however this was not formally monitored though it was discussed at regular meetings.

2.145 The Rent Service told us that it had signed a new agreement, but at the time of our on-site inspection was waiting for London Borough of Hackney to sign it. In May 2003 London Borough of Hackney told us that the agreement had been signed. This agreement had been tailored around local circumstances.

2.146 No service level agreement existed with Jobcentre Plus or The Pension Service. Contact had been made with Jobcentre Plus and an initial meeting held. Both parties were keen to sign an agreement and recognised the benefits of closer working. There had been no contact with The Pension Service.

2.147 At the time of our inspection London Borough of Hackney told us it intended to sign service level agreements with the housing associations in its area. This had not been done and the housing associations told us they were unaware of this plan. Despite this lack of a formal agreement, a good relationship existed with Registered Social Landlords, aided by the Landlord Liaison team. This is discussed in more detail under Working with Landlords.

Recommendations

We recommend that London Borough of Hackney:
establishes service level agreements with: Rent Service Jobcentre Plus The Pension Service Registered Social Landlords
monitors these agreements at least quarterly to assess performance, and holds regular meetings to discuss performance.

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