Executive summary

Background

1.1 The role of the Benefit Fraud Inspectorate (BFI) is to inspect benefits administration and counter-fraud activity within the Department for Work and Pensions' (the Department’s) agencies and local authorities. The findings from our inspections are reported to the Secretary of State.

1.2 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. It helps one in 6 households meet the cost of their housing at an annual cost of £11.5 billion. There are over 4.6 million people in receipt of CTB at a cost of over £2.8 billion.

1.3 In its response to the Housing Green Paper of November 2000 the Department agreed to develop a performance framework for HB and CTB. BFI played a major role when HB and CTB Performance Standards were launched and published in April 2002. Each local authority was sent a copy of the Standards at that time, and encouraged to complete a self-assessment against them.

1.4 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 the Standards the Department expects local authorities to aspire to in time.

1.5 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 the Standards will need to be met by local authorities.

1.6 This report assesses London Borough of Barking and Dagenham’s administration of HB and CTB and counter-fraud work against Performance Standards. The findings in this report should be read in conjunction with the Performance Standards pack. This can be downloaded from the Department’s website, www.dwp.gov.uk/housingbenefit/publications.

1.7 We are grateful to London Borough of Barking and Dagenham for its help and co-operation throughout this inspection.

Overall performance

1.8 Before our inspection, London Borough of Barking and Dagenham had undertaken a self-assessment of its HB and CTB administration and
counter-fraud work, which was completed in September 2003.

1.9 London Borough of Barking and Dagenham's self-assessment showed its performance to be below Standard in all 7 of the functional areas. In our assessment against Standards we found performance for Strategic Management and Counter-fraud to be significantly weaker than had been identified by London Borough of Barking and Dagenham.

Fig. 1.1: London Borough of Barking and Dagenham’s performance against Standards

Source: BFI inspection assessment

This and all subsequent radar graphs show the levels of performance for each of the facets of individual Performance Standards. The Standard score is the number of levels of performance that need to be achieved for the local authority to be at Standard. The BFI assessment is the number of levels of performance that have been achieved. Where the inner line is outside the outer line, the local authority is performing above Standard.

1.10 Figure 1.1 is a radar graph that provides an illustration of London Borough of Barking and Dagenham’s performance against the 7 functional areas of Performance Standards. The outside line shows the Standard level of performance, the inside line is BFI’s assessment of London Borough of Barking and Dagenham’s performance at the time of our on-site inspection in November 2003.

1.11 Our inspection took place at a time when Revenues Services, of which the Benefits service is a part, was embarking on a major programme of change that included:

· improving performance management across the service

· planning for the replacement of its benefits IT and Council Tax IT systems

· planning for the procurement of an electronic document management system

· reviewing its staffing structure.

1.12 In the 2 years prior to our inspection the council reviewed its senior management structure for the Benefits service. During 2003 the Head of Service post became vacant and interim management arrangements were in place while a permanent appointment to the post took place. The council also experienced turnover in the post of Rents and Benefits Manager and again made interim arrangements prior to starting recruitment to the post on a permanent basis.

1.13 Managers and staff told us that after years of insularity the Benefits service at London Borough of Barking and Dagenham had, with the appointment of its Rents and Benefits Manager, started to look outwards and learn from best practice. There were also signs of a move from a focus on the process to more recognition of the needs of customers. We saw the Head of Revenues, who was appointed in October 2003, taking steps to further develop the service along these lines.

1.14 Following the Comprehensive Performance Assessment of the Benefits service in 2002, senior officers and Members provided additional support to the service through increased financial resource in 2003/04 and by obtaining an understanding of the issues faced by the service. Officers in the service produced an Improvement Plan for Revenues, this included improvement plans for the Benefits service.

Performance against Standards

1.15 Our inspection was based on validation of London Borough of Barking and Dagenham's self-assessment and our own assessment of the council’s performance.

Strategic Management

1.16 London Borough of Barking and Dagenham was not at Standard in this area. Historically, Best Value Performance Indicators were the only measure of the performance of the Benefits service available to Members and senior officers. The BFI assessment, as part of the Comprehensive Performance Assessment process, revealed that the Benefits service focused on these indicators rather than addressing the wider aspects contained in Performance Standards.

1.17 There were wide gaps between corporate policies and procedures and their application in the Benefits service. For example, in relation to:

· staff induction, training and development

· use of plain English in communications with customers

· reviewing and monitoring policies in respect of impact on race equality.

1.18 Within the Benefits service we had a number of concerns, for example:

· there was no structured approach to the training and development of staff

· ineffective performance monitoring

· an absence of documented procedures to support staff and ensure consistency of approach

· the IT system in operation hindered rather than supported the development of the service.

1.19 London Borough of Barking and Dagenham's Improvement Plan for Revenues included actions to address some of these weaknesses. However, operational planning was not wholly effective. For example, 2 IT systems had been procured to support the counter-fraud area but had not been used until 12 months following their purchase.

1.20 The organisational structure in place at the time of our inspection was hindering secure and effective delivery of the service particularly because of the high level of specialisation of tasks. This meant that no one was seeing the whole picture and opportunities to improve in all areas were being missed. The council had recognised this problem and was planning to address it as part of its review of the organisational structure of the service.

1.21 To achieve Standard in this area the authority needs to:

· ensure that the review of its organisational structure is completed as a matter of urgency

· effectively link the work of the Benefits service to corporate priorities and adopt corporate procedures particularly in relation to the staff development scheme

· support staff by documenting procedures and by developing and delivering effective training and development

· improve operational planning

· ensure that its IT systems support the delivery of the service including the provision of timely and accurate management information.

Customer Services

1.22 London Borough of Barking and Dagenham was not at Standard in this area.

1.23 Following a Best Value review of its public interfaces in 2001/02, London Borough of Barking and Dagenham identified a need to improve many of its public interfaces including the Benefits service Customer Services reception environment and telephone service. A corporate Customer First initiative was developed and in October 2003 a business plan was produced. This was the start of a project planned to be concluded in 2006. Progress improving the Customer Services reception environment in the benefits office at 90 Stour Road was hindered by the physical constraints of the room and the longer term decisions on preferred points of service delivery under the Customer First initiative. The council told us it was seeking to ensure a long-term value for money option.

1.24 Our main concerns were that customers of the Benefits service were often required to attend the offices on more than one occasion because they had not been asked to provide all the necessary information at the first point of contact. It was also difficult for them to get through on the telephones. The quality of London Borough of Barking and Dagenham’s claim forms and decision letters needed to improve to provide clearer guidance and information to customers.

1.25 There had been limited work on benefit take-up for those who were not council tenants. We also found London Borough of Barking and Dagenham did not deal effectively with requests for reconsideration and appeals.

1.26 To achieve Standard in this area the authority needs to:

· improve accessibility to the Benefits service by telephone

· ensure all necessary information is obtained at the first point of contact

· ensure that its claim forms meet the standards of the Department's model form

· improve the quality of its decision letters.

Processing of Claims

1.27 London Borough of Barking and Dagenham was not at Standard in this area. Although it performed well in relation to the verification of evidence to support claims in line with the Verification Framework, there were inconsistencies. These could be reduced if:

· staff were provided with clear documented guidance to assist them in their duties

· management checking of all benefit work was undertaken and the results used to feed into staff training and development and reviews of procedures.

1.28 The average time taken to process new claims was 43 days, against the Performance Standards target of 36 days, and 90% of new claims were processed within 14 days of receiving all information. Our main concerns were in the delays in dealing with changes of circumstances and appeals. The Assessment team worked on documentation or post received without reference to any previous documents that might be on file. Payments on account were not made in all appropriate cases and when they were made there was no monitoring to ensure that a final decision was made promptly.

1.29 To achieve Standard in this area the authority needs to:

· introduce processes that ensure that all stages of processing are carried out promptly allowing it to reduce the time taken to decide claims

· carry out management checking

· make payments on account in accordance with the regulations.

Working with Landlords

1.30 London Borough of Barking and Dagenham was not at Standard in this area. It had implemented some practical initiatives to support council tenants but these had not been extended to registered social landlord or private tenants. However, it had a low proportion of such tenants in its benefits caseload.

1.31 Our main concerns were that payments where direct payment was requested were made with no consideration of whether the landlord was a fit and proper person to receive such payments. London Borough of Barking and Dagenham did not provide information to landlords on the operation of the benefits scheme.

1.32 To achieve Standard in this area the authority needs to:

· ensure, where direct payment is requested, due consideration is given to whether the landlord is a fit and proper person to receive such payments

· provide information packs to landlords.

Internal Security

1.33 London Borough of Barking and Dagenham was not at Standard in this area. Our main concerns were weaknesses in document management with staff being unable to locate paperwork resulting in further enquiries to customers. London Borough of Barking and Dagenham's post opening arrangement did not conform to best practice.

1.34 To achieve Standard in this area the authority needs to:

· update its system information and access controls

· improve the security of its post opening arrangements

· improve its management of documentation.

Counter-fraud

1.35 London Borough of Barking and Dagenham was not at Standard in this area. London Borough of Barking and Dagenham had started to address weaknesses with the appointment of experienced Counter-fraud officers. However, we found no systems in place to enable it to provide effective counter-fraud activity.

1.36 London Borough of Barking and Dagenham was unable to tell us the number, source, or type of fraud referrals it had received in 2001/02, 2002/03 and 2003/04. It had a risk assessment system to score incoming referrals. However, it told us it had abandoned the risk assessment system in July 2003, XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX X
XXXX XXXX XXXX XXXX XXXX XX London Borough of Barking and Dagenham told us this was due to a lack of staff resources caused by staff turnover and problems recruiting to new posts created within the Counter-fraud team.

1.37 XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXX 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 XXXX XXXX XXXX XXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX X

1.38 To achieve Standard in this area the authority needs to:

· manage its counter-fraud activity

· obtain and act upon management information in relation to this important area

· XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX X

Overpayments

1.39 London Borough of Barking and Dagenham was not at Standard in this area.

1.40 Our main concerns were London Borough of Barking and Dagenham's inability to provide verifiable performance information relating to all overpayments. No single officer had overall control of overpayment recovery. Those managers involved had limited access to performance or work outstanding reports and did not make routine use of reports that were available. London Borough of Barking and Dagenham did not use the full range of recovery methods available.

1.41 To achieve Standard in this area the authority needs to:

· ensure it has accurate management information on all aspects of overpayment recovery work and makes effective use of this information

· ensure cases where recovery from ongoing benefit is appropriate are promptly identified and recovery started

· use the full range of overpayment recovery methods.

London Borough of Barking and Dagenham

1.42 London Borough of Barking and Dagenham serves a population of 164,000 people. It is situated on the north bank of the Thames to the east of London within the M25 London Orbital motorway. There are 69,000 households. Local authority managed housing accounts for 33% of the housing stock with 3% managed by registered social landlords and
64% owner-occupiers.

1.43 It has a relatively poor population. Though levels of unemployment compare favourably with inner London averages, income levels are among the lowest in the capital.

1.44 Figure 1.2 shows that for September 2003 the average unemployment rate across London Borough of Barking and Dagenham's parliamentary constituencies was above the UK average of 3.2%.

Fig. 1.2: London Borough of Barking and Dagenham unemployment levels – September 2003
Parliamentary constituency	% unemployment
Barking	4.8
Dagenham	4.5
Average for the UK	3.2

Source: House of Commons Library

1.45 London Borough of Barking and Dagenham's Community Strategy identified that the borough had high levels of deprivation, the 7th highest in London and the 24th highest nationally. Unlike many other parts of London this deprivation was almost uniformly spread with 17 of the 20 wards in the most deprived 20% nationally.

1.46 Despite considerable achievements in improving educational attainment in schools within the borough since 1997, skills remain low amongst adults. A survey in 2002 by the Basic Skills Agency estimated that 31% of the population aged 16 - 60 had low levels of educational attainment in relation to literacy and numeracy skills.

1.47 Approximately 12% of the population were from ethnic minority groups. This had increased from 6.8% in 1991.

1.48 London Borough of Barking and Dagenham had 51 Members of whom 41 were Labour, 4 Chadwell Heath Residents Association, 3 Liberal Democrat and 3 Conservative. A modernised political structure was introduced in pilot form in May 2000 and formally adopted in January 2002. An Executive was formed with each Member's portfolio corresponding to one of the council's
7 cross-cutting Community Priorities.

1.49 The council was embarking on a major regeneration programme that would include high numbers of new homes. It was planned that an area of the borough known as Barking Reach would accommodate 5,000 - 6,000 new homes by 2016. Barking town centre and south Dagenham would also be the subject of significant growth. The council was intent on ensuring that this accommodation contained a high proportion of affordable housing.

1.50 Following the election of a different Leader in 1998 and the appointment of a new Chief Executive in May 2000, the council had significantly increased its level of ambition. Overall, services had improved from being the worst in the country to average performance over the last 3 - 4 years. The council had sought to establish better service focus through the introduction of a balanced scorecard approach in April 2002. The balanced scorecard system was designed to support and monitor progress on its achievements against the
7 Community Priorities.

1.51 The council had a good financial base in revenue and capital terms and had been debt free for a number of years.

The Benefits service

1.52 The Benefits service is part of the council's Revenues Services, which in turn is part of the Finance Department. The Head of Revenues reported directly to the Director of Finance who was the council's Section 151 Officer.

1.53 The Benefits service was located at 90 Stour Road in Dagenham, opposite the Civic Centre. The Benefits service occupied 2 floors. On the first floor was the main open plan Revenues Services office. Located on the ground floor was the:

· Customer Services team

· Customer Services reception area

· Call Centre operated by the Customer Services team

· Counter-fraud team

· filing area.

1.54 In addition, London Borough of Barking and Dagenham had designated 4 other offices to which claim forms could be sent and changes of circumstances notified. These were 2 local housing offices in Dagenham, one in Barking and the Civic Centre in Dagenham. However, none of these addresses were advertised to customers as places where forms could be taken.

1.55 The benefits IT system in operation was an in-house mainframe system. Early in 2003, London Borough of Barking and Dagenham had identified the need to replace this system. It had found anomalies that showed severe deficiencies in the content and original specification of the computer applications, particularly internal checks and control and the integrity of data.

1.56 A report to Members in June 2003 stated that due to the constraints of its IT systems, Revenues Services was:

· seriously constrained by the inflexibility of support systems

· XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX

· unable to fully develop management information systems

· unable to introduce comprehensive performance management and monitoring

· heavily reliant on manual intervention

· powerless to take advantage of current technology

· slow to respond to customer friendly initiatives

· delivering a mediocre service to the community

· open to increasing levels of inspection by government departments and agencies and a possible increase in customer dissatisfaction

· not offering Value for Money.

1.57 As a consequence, at the time of our inspection, London Borough of Barking and Dagenham had begun work to procure a new benefits IT system and an electronic document management system.

1.58 In 1999, London Borough of Barking and Dagenham was one of the first local authorities to adopt the Department’s Verification Framework. It also joined the Department's registered social landlord verification pilot in the second wave, in January 2002.

Benefit expenditure and caseload

1.59 Figures 1.3 and 1.4 illustrate the authority’s HB and CTB expenditure and caseload.

Fig. 1.3: HB and CTB expenditure 2000/01, 2001/02 and 2002/03
	Rent rebate £ million	Rent allowance £ million	CTB £ million	Total £ million
2000/01	34	14	10.5	58.5
2001/02	35	14.4	11.3	60.7
2002/03	36.3	17	12.1	65.4

Source: London Borough of Barking and Dagenham

Fig. 1.4: HB and CTB caseload 2002/03 and 2003/04
	Rent rebate	Rent allowance	CTB	Total
2002/03	12,442	3,233	18,383	34,058
2003/04	12,392	3,380	18,614	34,386