Executive summary
1.1 Housing Benefit (HB) and Council Tax Benefit (CTB) are important contributions to many household budgets. Just under 4 million people receive HB, including many families with children, and many pensioners. HB helps one in 6 households meet the cost of their housing at an annual cost of £11.5 billion.
1.2 In its response to the Housing Green Paper of November 2000 the Department for Work and Pensions (the Department) agreed to develop a performance framework for HB. The Benefit Fraud Inspectorate (BFI) played a major role and the new HB/CTB Performance Standards were launched and published in April 2002. Each local authority was sent a copy of the Performance Standards at that time, and encouraged to complete a self-assessment against them.
1.3 The Performance Standards allow local authorities to make a comprehensive self-assessment of whether they deliver benefit effectively and securely. The Department has chosen to consider the full picture of what constitutes an effective and secure Benefits service, that meets wider strategic objectives, rather than focusing solely on speed and accuracy of processing claims and security. They are Standards the Department expects local authorities to aspire to and achieve in time.
1.4 How quickly local authorities meet these Standards will depend on the circumstances they face, current levels of performance and the level of local and national resources, as well as the effectiveness of change management within the authority itself. The Department has therefore not set a timescale for how rapidly Standards will need to be met by local authorities.
1.5 This report assesses London Borough of Hackney’s administration of HB/CTB against Performance Standards and against progress since the first BFI inspection report published in March 2001. The findings in this report should be read in conjunction with the Standards pack. It can be downloaded from the Department’s website, www.dwp.gov.uk.
1.6 We are grateful
to London Borough of Hackney for its help and
co-operation throughout this inspection.
Overall performance
 |
Source: BFI inspection assessment
1.7 Figure 1.1 is a radar graph that provides an illustration of London Borough of Hackney’s performance against the 7 functional areas in Standards. The solid line shows the Standard level of performance, the dotted line is BFI’s assessment of London Borough of Hackney’s performance at the time of our on-site inspection in March 2003.
1.8 Our inspection was based on validation of London Borough of Hackney’s self-assessment for the Customer Services, Processing of Claims, Working with Landlords and Overpayments Standards and our own assessment for the other 3 Standards. We also measured progress against the recommendations in our first inspection report published in March 2001.
1.9 Managers in the Audit and Anti-Fraud Division completed a self-assessment against Standards before the on-site phase of our inspection. They had scored themselves above Standard for each of the 12 elements relating to counter-fraud work. However, they did not supply sufficient evidence to support their findings to enable us to use their self-assessment.
1.10 Although we found that London Borough of Hackney had not reached Standard in any of the 7 functional areas of Standards, we did find a great deal of professionalism, enthusiasm and effort to improve the administration of housing benefits and counter-fraud activity. For the Counter-fraud Standard London Borough of Hackney was at Standard for dealing with Do Not Redirect post. The Audit and Anti-Fraud Division had good liaison with the Department’s Counter-Fraud Investigation Service and had implemented a number of sound management practices. We also found performance in many areas of benefits administration had improved significantly from that found at the time of our previous inspection in 2000.
1.11 We found a great deal of support for the Benefits service from senior officers. This was further enhanced by the support given to the service by Members, particularly the Lead Member for Resources. From the progress made since our inspection in 2000 London Borough of Hackney appeared to have the processes in place to build on its achievements so far. This success is very much dependent on London Borough of Hackney improving its performance in relation to Processing of Claims.
Performance against Standards
Strategic Management
1.12 London Borough of Hackney did not achieve Standard in this area but performed well in terms of performance targets, procedural guidance and Internal Audit.
1.13 Our main concern was the suspension of regular management assurance checking as recommended by the Audit Commission in Countering Housing Benefit Fraud: A Management Handbook. If this is not undertaken regularly London Borough of Hackney risks impairing Members’ and senior officers’ ability to monitor performance and drive improvements in performance.
1.14 None of the council’s strategic or operational planning documents contained a vision for the Benefits service in relation to alleviating poverty and tackling social exclusion. However, we found that managers and staff had a clear sense of direction and purpose for their work.
1.15 London Borough of Hackney will achieve this Standard if it:
- implements the management assurance procedures it has developed
- improves the management information available from its IT systems
- formalises and monitors internal and external working arrangements
- ensures that its performance appraisal framework is applied consistently across teams.
Customer Services
1.16 London Borough of Hackney was near to achieving this Standard. It demonstrated many clear strengths. It was close to Standard in relation to its response to public enquiries, its effective training and development of customer service staff and for dealing with requests for reconsideration and appeals.
1.17 This is particularly pleasing given its performance at the time of our previous inspection, when only 18% of telephone calls were answered and customers visiting the offices had to queue for over 2 hours on average. Queuing times had been reduced to less than 30 minutes and 69% of calls were answered within 30 seconds.
1.18 XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXX and no work had been undertaken to ensure prompt processing of fast-track claims or provide an effective service to those moving into work.
1.19 London Borough of Hackney will achieve Standard in this area if it:
- clears the backlog of requests for reconsiderations and appeals
- undertakes the 10% quality control check before decision notices are sent
- analyses complaints and uses the results to feed into training plans and to improve procedures
- amends its decision letters to include the need for claimants and landlords to advise changes of circumstances to the council
- XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXX
- develops procedures to use the information received from Jobcentre Plus to fast-track claims of those moving into work.
Processing of Claims
1.20 London Borough of Hackney did not achieve Standard in this area but demonstrated its ability and determination to improve. Figure 1.2 shows some of the improvements made since our previous inspection.
| Reported performance 31 March 2001 |
Performance identified during 2003 inspection | Performance Standards targets |
|
|---|---|---|---|
% of claims processed within 14 days of receiving necessary information |
45 |
64 |
90 |
Average number of days to process claims from receipt of claim |
205 |
136 |
36 |
% of renewal claims paid without a break |
19 |
55 |
83 |
Average number of days to process changes of circumstances |
49 |
25 |
9 |
Source: The Department, BFI analysis
1.21 While Figure 1.2 shows commendable improvement by London Borough of Hackney, its performance still falls well short of Standard. Much work remains to be done to address this situation.
1.22 London Borough of Hackney had verification policies and procedures that were comprehensive and fully documented.
1.23 Our main concerns were the time taken from receiving a claim to it being processed and limits in the use made of IT system reports to identify blockages in the process.
1.24 There were also an unknown number of claims that had been received prior to April 2001 that had not been processed or had been processed incorrectly. London Borough of Hackney told us that this was not a large amount but was unable to identify the number of cases affected. When these claims were identified they were being processed leading to an adverse affect on reported performance figures. For example, the average number of days to process changes of circumstances was 140 days if these pre-April 2001 cases were included, but 25 days when they were excluded. These cases need to be identified and dealt with to stop performance figures continuing to be adversely affected.
1.25 London Borough of Hackney will achieve Standard in this area if it:
- substantially improves claim processing times
- confirms receipt of Income Support (IS) or income-based Jobseeker’s Allowance (JSA(IB)) promptly
- refers appropriate cases to the Rent Officer promptly
- identifies cases received prior to April 2001 that were not processed or processed incorrectly and deals with them as a matter of urgency
- makes full use of reports generated by the IT systems to identify delays in processes and monitor performance.
Working with Landlords
1.26 London Borough of Hackney was not at Standard in this area. However, it was close to Standard for preventing situations where delays in HB payments put a claimant’s tenancy in jeopardy and for minimising and recovering overpayments with many good practices.
1.27 The Benefits section had built good relationships with Registered Social Landlords in the area and London Borough of Hackney’s Housing Directorate. This had taken a lot of hard work due to the extremely poor relationships prior to April 2001.
1.28 London Borough of Hackney will achieve Standard in this area if it provides information packs to landlords and formalises its relationships with Registered Social Landlords through the introduction and monitoring of service level agreements. After our inspection, London Borough of Hackney told us it had introduced service level agreements with Registered Social Landlords in May 2003.
Internal Security
1.29 London Borough of Hackney did not achieve Standard in this area but its post opening procedures showed a great improvement from our previous inspection and was close to Standard. We found weaknesses in relation to IT security and reconciliation of benefit postings to its housing rent, revenues and finance IT systems.
1.30 London Borough of Hackney will achieve Standard in this area if it:
- ensures all staff employed in benefits administration and counter-fraud activity, including agency staff, are vetted using procedures at least equal to those recommended by the Audit Commission
- produces and implements an IT and information security strategy
- updates its system of information and access controls
- continues its programme of work to minimise subsidy and reconciliation discrepancies.
Counter-fraud
1.31 London Borough of Hackney was close to achieving Standard in some of this area, and we found that it had systems in place that would enable it to provide effective counter-fraud activity. It had undertaken joint prosecutions with the Department’s Counter-Fraud Investigation Service. It was at Standard for its use of the Do Not Redirect scheme and close to Standard in relation to its training for fraud investigators and its management of investigations.
1.32 Benefit investigators’ work was governed by a formal code of conduct. Since January 2003, management checks were undertaken to ensure compliance with regulations and monitor progress of investigations.
1.33 Our main concern was the limited outcomes in the form of sanctions.
1.34 London Borough of Hackney will achieve Standard in this area if it:
- communicates its anti-fraud and corruption strategy to all staff and the wider community
- includes targets for the number of sanctions in its business planning cycle
- provides fraud awareness training to all its employees at induction and provides annual refresher training, including detailed referral guidance to all staff involved in benefits administration
- ensures that suitable sanctions are applied whenever appropriate.
Overpayments
1.35 London Borough of Hackney did not achieve Standard in this area but did have some appropriate policies and procedures and demonstrated improvements from our previous inspection. At that time, to all intents and purposes, we found that overpayment recovery had ground to a halt with a growing number of overpayments and an increasing level of debt.
1.36 When the Benefits service was taken back in-house in April 2001 there were no systems in place to recover overpayments. Much of the debt had been recorded on an IT system that ceased to be operated by the council in 1999. A lot of work was undertaken to obtain access to these cases and to validate the information held. With this background, collection of debts of over £3 million in relation to debts transferred to the sundry debts system in 2002/03 was commendable. Although London Borough of Hackney had achieved a lot in this area much remained to be done. The authority was aware of this and was developing plans to maintain this impetus.
1.37 We were concerned about London Borough of Hackney’s inability to provide accurate verifiable performance information relating to all overpayments. However, at the time of our on-site inspection efforts were being made to obtain this information and a lot of progress had been made since April 2001 when there was no reliable information.
1.38 Our other concerns were:
- the inability to identify correct effective dates of changes of circumstances
- incorrect classification of official error and fraud overpayments
- inaccurate overpayment letters being sent to claimants in benefits IT system produced notifications
- debts deemed to be non-recoverable were not written off promptly.
1.39 London Borough of Hackney will achieve Standard in this area if it:
- ensures that its replacement IT systems can report accurately and comprehensively on all aspects of overpayment recovery and makes effective use of this information
- sets specific targets for the level and age of all outstanding debt and for the reduction of the levels and amounts of dormant debt.
London Borough of Hackney
1.40 London Borough of Hackney provides services to approximately 200,000 people. The authority is situated in east London, just north of the City of London. The borough was created in 1965 by the amalgamation of the boroughs of Hackney, Stoke Newington and Shoreditch.
1.41 The council’s problems have been documented in a series of highly critical reports by District Audit and inspectors including BFI. An Improvement and Development Agency peer review in November 1999 concluded that the borough faced the most grave and serious situation and that the road to recovery would be difficult.
1.42 In 2000 BFI found significant backlogs of work, poor customer service and ineffective counter-fraud activities.
1.43 The BFI report contained 143 recommendations. Of these 7 were no longer applicable due to legislative changes or because they related to the relationship between London Borough of Hackney and its contractor. Of the remaining 136, 92 (68%) had been implemented in full or in part. Appendix F sets out London Borough of Hackney’s progress against the recommendations from our previous inspection.
1.44 Following a series of adverse reports by the Audit Commission on London Borough of Hackney’s corporate governance culminating in its Corporate Governance report in July 2001, a series of Directions from 5 government Departments were issued on 12 October 2001. One of these related directly to the Benefits service. The Direction was as follows:
Clearance of outstanding Housing Benefit and Council Tax Benefit work
(1) No later than 31 December 2001, or such later date as the Secretary of State may decide, the Authority shall complete action on all work relating to entitlement to Housing Benefit and Council Tax Benefit that on 19 April 2001, was known by it to be outstanding. Such work includes new claims for benefit, renewal claims for benefit, notification of changes of circumstances and requests for reviews of benefit entitlement and requests for information.
(2) For the purposes of this part of the Direction, ‘complete action’ shall mean that the Authority has taken all reasonable steps to deal with all aspects of the work and is only unable to take further action because:
a) it is awaiting additional information in respect of entitlement to Housing Benefit or Council Tax Benefit from the claimant or third party;
b) additional information has been received within the 4 weeks proceeding 31 December 2001;
c) a request for revision or suppression of a decision was received within the 4 weeks proceeding 31 December 2001.
Checks of accuracy
(1) In completing action on ongoing work under paragraph 1, the Authority shall satisfy itself on an ongoing basis that it is acting lawfully and properly and in particular, that Housing Benefit and Council Tax Benefit claims are being decided in accordance with the law relating to those benefits and the terms of any scheme in which the Authority participates, for example the Verification Framework.
(2) The Authority shall fulfil this requirement by ensuring that:
a) a random sample of not less than 10% of the decisions on claims are checked (and appropriate records of the checks kept) by suitably qualified persons who have not made the decisions on claims they are checking; and
b) decisions are revised or superseded where appropriate and all reasonable steps are taken to prevent identified errors from recurring.
No compromise of other Housing Benefit and Council Tax Benefit work
The Authority shall take the action required under paragraphs 1 and 2 of this Direction without adversely affecting the speed and accuracy of its work on entitlement to Housing and Council Tax Benefit not within the scope of paragraph 1.
1.45 Early in 2002 BFI reported, under section 139A(2)(b) of the Social Security Administration Act 1992, on London Borough of Hackney’s response to the Directions. BFI found that except for 4 cases, the known backlog of 39,000 cases outstanding on 19 April 2001 had been cleared by 31 December 2001. London Borough of Hackney had put in place a checking regime to ensure the quality of ongoing work at a level in excess of the minimum 10% requirement. In achieving this London Borough of Hackney did not compromise the speed and accuracy of non-backlog work.
1.46 In 1997 London
Borough of Hackney had awarded a contract to an external contractor to
run the Benefits service for 7 years. The awarding of the contract
followed a period of poor performance in this area. On 2 October 2000
London Borough of Hackney's Policy and Finance Executive Committee
decided to terminate the contract from 31 March 2001 and bring the
services back in-house. Because of a delay in gathering all the
necessary information, the work did not formally pass back to London
Borough of Hackney until
19 April 2001.
1.47 The new Benefits service started at that time with very little reliable management information and with a series of temporary managers.
1.48 By October 2002, when BFI undertook a review of the service as part of the Comprehensive Performance Assessment process, sufficient progress had been made to achieve an assessment that the service provided was ‘fair’ with ‘fair’ prospects of improving.
1.49 The Benefits service was located at Keltan House on Mare Street in Hackney. The Revenues and Benefits Division of the Finance Directorate dealt with processing of claims, overpayments, customer enquiries, subsidy and training. The Audit and Anti-Fraud Division was also part of the Finance Directorate and dealt with intelligence gathering, investigations and verification and welfare visits.
1.50 Figure 1.3 shows that the level of unemployment in the parliamentary constituencies covering the authority was above the national average for England and Wales.
| Parliamentary constituency | % unemployment |
|---|---|
Hackney North and Stoke Newington |
8.6 |
Hackney South and Shoreditch |
9.7 |
Average for England and Wales |
3.4 |
Source: House of Commons Library
1.51 The political make-up of the council at the time of our on-site inspection is shown in Figure 1.4.
| Party | Seats |
|---|---|
Labour |
45 |
Conservative |
9 |
Liberal Democrat |
3 |
Source: London Borough of Hackney
1.52 Figures 1.5 and 1.6 show the benefit expenditure and caseload for the years 2000/01 and 2001/02.
| Benefit | 2000/01 £ |
2001/02 £ |
|---|---|---|
Rent Allowance |
77,456,821 |
95,585,844 |
Rent Rebate |
52,904,129 |
60,170,206 |
CTB |
21,495,464 |
25,676,877 |
Total |
151,856,414 |
181,432,927 |
Source: London Borough of Hackney
| Benefit | 2000/01 | 2001/02 |
|---|---|---|
Rent Allowance |
12,278 |
12,990 |
Rent Rebate |
12,499 |
14,921 |
CTB |
22,274 |
28,273 |
Total |
47,051 |
56,184 |
Source: London Borough of Hackney