An inspectorate of the Department for Work and Pensions.

Report

Charter Mark - Awarded for excellence

Claims administration

2.1 HB and CTB payments help people on low incomes. As these groups of people are vulnerable, their claims should be dealt with quickly and accurately. Additionally, when overpayments occur councils should operate effective procedures for the management and recovery of HB and CTB debt.

2.2 The council achieved Standard in 2 of the 6 performance measures, for which a Standard had been set, and met 6 of the 16 enablers for Claims administration.

Claims processing

2.3 This section reports on the council’s performance in processing new claims and changes of circumstances.

Performance measures

2.4 Figure 2.1 shows Bath and North East Somerset Council’s reported performance for 2004/05 and 2005/06.

Fig. 2.1: Performance measures – claims processing
Performance
Measure 		Description Standard Performance
2004/05 		Performance
2005/06
PM 1 Average time for processing new claims 36 days 51 days 48 days
PM 2 % of new claims outstanding over 50 days 10 % No data available 13%
PM 3 % new claims decided within 14 days of receiving all information 90% 71% 74%
PM 4 % of rent allowance claims paid on time or within 7 days of a decision being made 90% No data available 95%
PM 5 Average time for processing changes of circumstances 9 days 20 days 55 days

Source: Bath and North East Somerset Council

Average time for processing new claims

2.5 This Performance measure (PM1) requires a council to measure and report the average time for processing new claims and sets a target of 36 calendar days. This target measures the time taken to process a claim from the date the claim is received at a designated office to the date a decision is made by the council.

2.6 The council’s reported average time to process new claims at the end of 2004/05 was 51 days. Although we were concerned to find that performance had deteriorated during the first 2 quarters of 2005/06, Figure 2.2 shows performance had improved significantly and was at Standard by quarter 4.

Fig. 2.2: Speed of processing new claims
Performance Measure Quarter 1
2005/06 		Quarter 2
2005/06 		Quarter 3
2005/06 		Quarter 4
2005/06
Average time for processing new claims 56 57 47 36

Source: Bath and North East Somerset Council

2.7 These figures were taken directly from the council’s Benefits IT system before any clerical adjustments had been made. We discuss the validation of reported performance under Data validation, in the Resource management section of this report.

2.8 We analysed a sample of 30 new claims decided between 1 April and 30 November 2005, and found that 2 (7%) should not have been recorded as new claims as they were changes of circumstances. To complete our sample we selected an additional 2 cases.

2.9 To validate reported performance and identify where delays were occurring, we analysed our sample of 30 new claims and identified the time taken for each stage in the new claims process. Our findings are shown in Figure 2.3.

Fig. 2.3: New claims processing – number of days taken for each stage in the process
Work step Average
days 		Range
of days
Date of receipt at designated office to date of first action
22
1 – 60
Date of first action to date all information or evidence available
13
1 – 85
Date of all information or evidence available to date of decision
22
1 – 63
Total days from date claim received to date of decision
49
15 – 101
Date of decision to date of payment
4
1 – 8

Source: BFI analysis

2.10 Only 9 (30%) of the 30 new claims were decided within 36 days and on average, new claims in the sample were decided within 49 days, which was in line with the council’s 2005/06 performance of 48 days. We found that there were significant delays at each stage of the new claims process.

2.11 In 19 (63%) of the 30 new claims the customer had failed to provide all the supporting evidence to enable the claim to be assessed at the point of first contact. The council needs to monitor and analyse cases where further information is requested to establish why customers do not provide the required information and evidence with their claim. (See Recommendation 11.)

2.12 The council accepted an Initial Claim Form as an indication of a customer’s intention to claim benefit. On completion the customer was issued with a claim form and advised to return it within 28 days, along with any supporting evidence. We found 4 (13%) cases where this approach had been used but were concerned that, on average, it was 28 days before a fully completed claim form was returned. (See Recommendation 2.)

2.13 Long delays occurred when cases were referred to the Rent Officer. Our sample showed an average delay of 38 days to make the referral. This meant that the council was not meeting its statutory obligations to make a Rent Officer referral within 3 days of receipt of a claim, or as soon as practicable thereafter. However, we noted that decisions returned from the Rent Officer were implemented promptly. (See Recommendation 2.)

2.14 We also found that the council had made a payment on account in each of the 9 appropriate cases within, on average, 10 days of all information being received.

2.15 It is important to note that our sample of new claims was taken from claims decided whilst the council was in a backlog situation. As overall claims processing times had improved to 36 days by the fourth quarter of 2005/06, it is reasonable to assume that corresponding reductions would have been achieved in the delays at each stage of the process.

Percentage of new claims outstanding over 50 days

2.16 This Performance measure (PM2) was introduced in April 2005 and councils were not required to report performance against this measure before that date. The council told us that 13% of its new claims were outstanding for over 50 days on 31 March 2006.

Percentage of new claims decided within 14 days of receiving all information

2.17 A council has a statutory duty to make a decision on claims within
14 days of receiving all of the necessary information, or as soon as practicable thereafter. Performance Standards require a council to meet this requirement in 90% of new claims decided.

2.18 In 2004/05 the council reported that 71% of claims had been decided within 14 days of receiving all information. The council’s performance of 74% for 2005/06 meant that performance was still significantly below Standard and firmly rooted in the bottom quartile.

2.19 We used our sample to determine how long it took the council to decide a claim after it had received all of the relevant information. Our findings are shown in Figure 2.4.

Fig. 2.4: Percentage of new claims decided within 14 days of receiving all information
Days Number %
0 – 14 13 44
15 – 28 10 33
Over 28 7 23
Total 30 100

Source: BFI analysis

2.20 We were very concerned that 17 (57%) cases in our sample took longer than 14 days to decide. The average processing time for these cases was 28 days, including one case that had taken 63 days. This is poor performance and meant that the council was failing to meet its statutory obligations. (See Recommendation2).

Percentage of rent allowance claims paid on time or within 7 days of decision being made

2.21 This Performance measure (PM4) was introduced in April 2005 and councils were not required to report performance against this measure before that date. The council’s told us that its performance for 2005/06 against this measure was 95%.

2.22 Although we found that rent allowance claims in our sample had been paid, on average, within 4 days of the decision being made, the long delays in processing claims seriously undermined the positive effects of this action.

Average speed of processing changes of circumstances

2.23 This Performance measure (PM5) requires a council to measure and report the average time for processing changes of circumstances, and sets a target of 9 calendar days. This measures the time taken to process changes of circumstances from the date a notification of change is received at a designated office to the date a decision is made by the council.

2.24 The council’s reported average time to process changes of circumstances at the end of 2004/05 was 20 days. Although performance had deteriorated during the first 3 quarters of 2005/06 it had significantly improved by the 4th quarter. However, performance was still significantly below the Standard of 9 days. Figure 2.5 provides the details of quarterly performance.

Fig. 2.5: Speed of processing changes of circumstances
Performance Measure Quarter 1
2005/06 		Quarter 2
2005/06 		Quarter 3
2005/06 		Quarter 4
2005/06
Average time for processing changes of circumstances 42 86 38 19

Source: Bath and North East Somerset Council

2.25 These figures were taken directly from the council’s Benefits IT system before any clerical adjustments had been made. We discuss the validation of reported performance under data validation in the Resource management section of this report.

2.26 We noted that performance in quarter 2 was adversely affected by the inclusion of approximately 1,000 Pension Credit uprating cases, which should not have been included in reported performance. Whilst it is not possible to report the accurate performance figure for that quarter, had the uprating cases not been included average processing time would have been more in line with performance for the first and third quarters.

2.27 We selected a sample of 23 changes of circumstances decided between 1 April and 30 November 2005 and found that 8 (35%) should not have been included as changes of circumstances in the council’s reported performance against this measure. This raised serious doubts about the accuracy of its reported Best Value Performance Indicator for changes of circumstances.

2.28 Analysis of our sample of 15 changes of circumstances showed that only 6 (40%) were processed within 9 days of receipt. Details are shown in Figure 2.6.

Fig. 2.6: Speed of processing changes of circumstances
Days Number %
0 – 9 6 40
10 – 20 0 0
21 – 28 1 7
Over 28 8 53
Total 15 100

Source: BFI analysis

2.29 The average time taken to process changes of circumstances was 45 days, with the longest delay being 123 days. This is poor performance and can result in customers receiving incorrect benefit. In particular, failure to action changes of circumstances promptly often leads to increased amounts of local authority error overpayments, which affect a council’s potential to claim subsidy.

2.30 Further analysis of our overpayments sample of 20 cases showed that it had taken, on average, 105 days to process the associated changes of circumstances. This highlights the need to prioritise work more effectively.

2.31 We recognise that performance had inevitably deteriorated significantly while the council was clearing its backlog. By April 2006 the backlog of work had been cleared. Staff had been set challenging targets for the clearance of incoming post, for example, a target had been set for all changes of circumstances to be cleared within 7 days by 1 June 2006.

Performance enablers

Workload management

2.32 Bath and North East Somerset Council met one (E1) of the 2 enablers.

2.33 Although the council had been in a backlog situation since 1999, it had continued to monitor its workload. As we reported earlier, it had been unable to clear the backlog, until March 2006, due to insufficient resources.

2.34 Benefits Team Leaders actively monitored the volume of post received and work outstanding on an ongoing basis by accessing the document management system and filtering work through to processing staff. Straightforward assessments and work which could be cleared quickly such as diary reports, were passed to the 7 newly recruited staff to alleviate pressure on more experienced processors. This approach had proved instrumental in clearing the backlog of all outstanding processing work by March 2006.

2.35 Benefits Team Leaders worked closely with processing staff, including those working from home, to ensure that individual targets were achievable and being met. Processing staff received work from a number of additional sources, such as pending, urgent cases and telephone enquiries. Team leaders monitored both the volume and complexity of work in each processor’s tray and if appropriate, redistributed work to minimise delays in processing.

2.36 The Control Team also monitored the throughput and clearance of work and at the time we were on site in April 2006, the figures were being reported to the Head of Revenues and Benefits on a daily basis. This information was also used to measure the effectiveness of processing staff and to inform their quarterly and annual staff appraisals.

2.37 From January 2006, the level of staff resources used to answer telephone calls was being monitored and adjusted as necessary to improve customer service. Team Leaders were responsible for achieving the correct balance between the staff deployed to answer telephone calls and process claims. This was being actively monitored and staff told us they were taken off telephone duty if their returned pending and outstanding post needed attention.

2.38 Following the clearance of its backlog, the council was developing a process to monitor the clearance of work by using exception reports to show work nearing target dates. In April 2006, staff were using the incomplete claims report to reduce processing times and Team Leaders were actively checking cases, which were pending and awaiting further information.

2.39 Although there were procedures in place to make extended payments of benefit in appropriate cases, we found that Electronic Data Transfers were not prioritised when they were received from the Department. System reports were not being used to monitor how many extended payments were made or how quickly they were being processed. In addition, the council did not prioritise claims from people moving into work. (See Recommendation 2).

Gathering information

2.40 Bath and North East Somerset Council met 2 (E4 and E6) of the 6 enablers.

2.41 To ensure that claims are paid accurately and on time, it is important that a council identifies the need for additional information from the customer and third parties and takes prompt action to request it.

2.42 We were told that most new claims and changes of circumstances were received through the post, rather than customer service outlets and that less than 10% of claims were ready to process on receipt. Customer service staff issued receipts for evidence collected at the counter and provided customers with a written copy of outstanding evidence required to process their application.

2.43 Despite the prompt action taken by customer service staff, the results of our new claims sampling showed that it took, on average, 22 days from the receipt of a claim at the designated office to the date the council took the first action. This illustrated the long delays in requesting additional information when the claim had been received through the post. Failure to request additional information promptly was directly affecting the council’s speed of processing claims.
(See Recommendation 2.)

2.44 The council had not undertaken any analysis to identify commonly missing items of evidence or educate customers about the need to supply all supporting documentation. We also identified that staff were requesting income and capital details in qualifying benefit cases where there was no requirement to do so, which was creating additional and unnecessary follow-up work.

2.45 Benefits staff were instructed to set diary prompts at 14 days in order
to ensure that follow-up action to obtain additional information was taken within prescribed time limits. The results of our sampling showed that where appropriate a reminder was issued promptly. We were told, and our sampling confirmed, that the telephone was used to request information and to follow up those requests.

2.46 Following clearance of the backlog, Benefits Team Leaders were actively monitoring the collection of additional evidence and information on a daily basis in order to speed up processing times.

2.47 We were told that during the backlog, Benefits Team Leaders had overridden the system controls on the document management system to ensure urgent post and cancellations were prioritised and dealt with quickly. However, the results of our sampling of 20 overpayments showed that massive delays resulting in large local authority error overpayments had still occurred.

2.48 We were also told, and sampling confirmed, that changes of circumstances resulting from interventions work had been neglected. It is important that all changes of circumstances that may result in a reduction or cessation of benefit are dealt with promptly to prevent overpayments occurring or continuing.

2.49 Since clearing the backlog, the council had established a working group to determine the correct priority levels for scanned and indexed post. In addition, it had set a target to action all changes of circumstances within 7 days of receipt by 1 June 2006.

2.50 We found staff were clear about the safeguards to prevent the fraudulent completion of a certificate of earnings form when details of income had been requested from an employer.

Working effectively with landlords to minimise repossessions

2.51 Bath and North East Somerset Council met one (E7) of the 2 enablers.

2.52 The claim form included a comprehensive consent statement that was specific about what a landlord could be told about a customer’s claim. The council also provided information to landlords or the customer’s representative, if the customer had provided written authorisation for it to do so.

2.53 The council had developed a landlords’ leaflet that provided information on the landlord’s responsibilities and the operation of HB and CTB. It also attended an annual Landlords Expo, sharing an information point with other councils in the area.

2.54 As there was no direct point of contact for landlords to access the service, they were not encouraged to contact the council before taking enforcement action to collect arrears of rent. Difficulty in contacting the Benefits service either by telephone or in person proved a barrier to landlords. We were told that as a result customers frequently had to contact the Benefits service when eviction was imminent, to progress their claim for HB and CTB.

2.55 A Benefits processor was unable to pay a new claim until details of the landlord were recorded on the Benefits IT system. This function was undertaken by a Benefits Team Leader once they had checked that the landlord was not already on its ‘Not Fit and Proper’ Landlord List or that the landlord had not:

Quality and reducing error

2.56 Senior officers and Members, who are accountable for the delivery of effective and secure HB and CTB administration, need assurance that the council and counter-fraud efforts are working as planned. Councils should therefore ensure that arrangements are in place to make full use of management information and check data across the full range of benefits activities.

Performance measures

2.57 Figure 2.7 shows the council’s reported performance on the accuracy of benefit calculations for 2004/05 and from April to December 2005.

Fig. 2.7: Performance measure (PM6) – Quality and reducing error
Description Standard Performance
2004/05 		Performance
April to
December 2005
% of cases for which the calculation of the amount of benefit due is correct 98% 96% 98%

Source: Bath and North East Somerset Council

Performance enablers

Quality checks

2.58 Bath and North East Somerset Council met the enabler.

2.59 The council undertook accuracy checks in accordance with HB/CTB circulars S1/2000 and S5/2000 and reported its performance to the Department.

2.60 Performance Standards require a council to perform a minimum 4% sample check across a range of decisions on new claims, changes of circumstances and overpayments calculations.

2.61 The Control Team carried out management checking and a check sheet was used to record the name of the Benefits processor responsible for processing the case, the type of check and the outcome. Although the check sheet needed to be enhanced to include details of the evidence obtained to verify the customer’s residency, our sampling confirmed that this had been verified appropriately in all cases.

2.62 The council had introduced a database in November 2005 to record the results of its risk based management checks. Cases for checking were selected from a Benefits IT system report, produced overnight that included all transactions from the previous day.

2.63 A system was in place to prevent the notification and payment from being issued in those cases selected for checking. Suitably trained staff from the Control Team were responsible for undertaking the check. Results of the check were recorded on the database and where appropriate cases were returned to the processor to correct.

2.64 We also established that an additional 10% post notification check and a 100% check of work completed by external processors and new staff were undertaken.

Using quality checks to improve performance and reduce error

2.65 Bath and North East Somerset Council did not meet the enabler.

2.66 The council told us that the results of its management checks were discussed with staff and used to inform the staff appraisal process. However, it did not use the findings from its management checks to inform future training and development activity. (See Recommendation 12.)

2.67 In addition, the councildid not perform any management checking on fraud investigations and was therefore unable to provide senior managers with the necessary assurance regarding the effectiveness of its counter-fraud activity. (See Recommendation 7.)

Overpayments

2.68 To minimise loss to public funds, councils must effectively process HB and CTB to prevent overpayments occurring. Councils should have clear policies and procedures to manage overpayments and should pursue recovery by the speediest, most cost-effective and efficient methods available, in line with legislation.

Performance measures

2.69 Performance Standards include performance measures for overpayment recovery. Although the Department had not set targets against these measures, it is important that a council reduces the amount and age of its HB overpayment debt.

2.70 We were told that before an upgrade to its Benefits IT system, in January 2006, the council’s reported overpayments performance had been unreliable. However, this situation had been resolved and performance revised and accurately reported for the third quarter of 2005/06.

2.71 The long delays in processing reported changes of circumstances meant that the council’s overpayment debt had continued to rise in the third quarter of 2005/06. In this period, the council had only recovered £228,770 (74%) of HB overpayment debts against £309,989 identified.
(See Recommendation 2.)

2.72 Figure 2.8 details the council’s performance against the overpayments performance measures for the third quarter of 2005/06.

Fig. 2.8: Performance measures – Overpayments
Performance
measure 		Description Performance
3rd Quarter 2005/06
PM 7 The amount of HB overpayments recovered during the period as a % of total amount of HB overpayments identified 73.8%
PM 8 The amount of HB overpayments recovered during the period as a % of total amount of HB overpayment debt outstanding at the start of the period plus amount of HB overpayments identified 7.63%
PM 9 The amount of HB overpayments written off during the period as a % of total amounts of HB overpayment debt outstanding at the start of the period plus amount of HB overpayments identified 0.01%

Source: Bath and North East Somerset Council

2.73 Bath and North East Somerset Council had already identified the need to improve its overpayment performance and had appointed an Overpayments Analyst in May 2005. This officer had been supported by the BFI’s Performance Development Team in the development of a documented overpayments policy and procedures, introducing audit trails and providing training and advice to processing staff. In addition, the Overpayments Analyst had identified other areas for improvement and developed an action plan to address these.

Performance enablers

Managing debt

2.74 Bath and North East Somerset Council met none of the 3 enablers.

2.75 The council had a documented Overpayments Policy that was available to all staff. This set out its approach for ensuring that all overpayments were identified, calculated and classified correctly and that accurate financial records were maintained. A locally produced Overpayment Pro Forma captured details of the overpayment, including an audit trail on classification. This had been completed on all the cases we sampled.

2.76 However, the results from our sample demonstrated a number of weaknesses in its overpayment process including:

Overpayment calculation, classification and recoverability

2.77 We examined 23 cases where an overpayment had been calculated and found that in:

2.78 Although some data cleansing had been undertaken, the high level of error in our sample provided us with major concerns about the accuracy of the council’s subsidy claim.
(See Recommendation 9.)

2.79 Our sample confirmed that, where appropriate, overpayment calculations took into account any underlying entitlement to benefit. This is good practice.

2.80 Although the Overpayments Policy included the need to make a decision on the recoverability of an overpayment, the Benefits IT system did not have a facility to record why an overpayment was recoverable. In addition, the decision notice issued to the customer did not include a statement to inform them why there was a recoverable overpayment. The council was therefore failing to meet its statutory obligations. (See Recommendation 14.)

Write-offs

2.81 Documented write-off procedures provided guidance to staff on the process for writing off overpayments, the different levels of authorisation required and the need to maintain a full audit trail. Benefits Team Leaders were authorised to write-off debts up to £500 and the Overpayments Analyst up to £5,000. Debts over this amount required Committee approval before being written off.

2.82 XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XX. We were told that this was because a customer was always given a new reference number following a change of address, and this facility allowed the transfer of any existing debt to the new claim. Such cases were not subject to the council’s write-off procedures and therefore excluded from our sampling.

2.83 We sampled 10 cases that had been subject to write-off and found that in 5 (50%), there was no audit trail to document why the overpayment had been written off. This included a fraudulent overpayment of £1,841.86 that had been written off without referral to the Overpayments Analyst. The lack of an audit trail meant that the council had no assurance that overpayments were being written off in accordance with its policy and procedures or that all avenues of recovery had been considered.

2.84 The overpayment write-off procedures did not include provision for management checks. We found where management checks had been undertaken these were not effectively targeted, XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX .

Speed of processing cases with overpayments

2.85 Further analysis of our sample of 20 overpayment cases showed that it had taken, on average, 105 days to action the change of circumstances that had resulted in an overpayment. In particular, we found 3 cases where the change was due to a cessation of a Departmental benefit, and a further case where it was identified on a visit that the customer was starting full-time work. These cases had not been prioritised and resulted in a significant increase in the amount of overpayment attributable to local authority error.

2.86 We were told that visiting staff undertaking intervention work did not have sufficient benefit knowledge to identify the significance of changes that would affect benefit entitlement notified during the visit. This meant these cases were not passed to Benefits processors for priority action.

Conclusion

2.87 The council needs to ensure that overpayments are identified promptly, and calculated and classified correctly so that it can establish actual levels of fraud and error and the underlying causes. Debts should be written off in accordance with its procedures. To achieve this it must ensure that all staff are fully trained on the council’s overpayments policy and procedures. In addition, comprehensive management checks on overpayments should be undertaken and the results used to identify areas for improvement. (See Recommendations 1 and 7.)

Recovery

2.88 Bath and North East Somerset Council met one (E16) of the 3 enablers.

2.89 The council had processes in place for the recovery of administrative penalties. Details of any administrative penalties, offered and accepted, were recorded on the Sundry Debt IT system.

2.90 In February 2006, the council had 7 outstanding administrative penalties. We were told that these would be recovered once the related overpayment had been fully recovered.

2.91 Our sample of 20 overpayment cases showed:

2.92 In the other 2 cases, no recovery was taking place because the customers had appealed against the overpayment being recoverable and recovery had been suspended. XXXX XXXX XXXX XXXX XXXX XXXX XXXX X XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XX.

2.93 The council maintained a record of all outstanding overpayments where benefit was no longer in payment. These cases had been invoiced and were dealt with by the Sundry Debt team. We sampled 10 cases and found that recovery from a number of sources was ongoing in 7 cases, including:

2.94 However, we identified one case where HB was in payment again but the outstanding debt had not been transferred back to the Benefits IT system for recovery to recommence. Internal Audit had identified a similar issue in the past, but this had not been effectively addressed as it relied on the vigilance of staff rather than an automated process. This was made more difficult by the need to set up a new case whenever a customer changed address.

2.95 The council monitored the amount of outstanding debt, but the only targets set for managing HB debt were the overpayment performance measures. Although the Benefits service reported against performance measures quarterly to the Overview and Scrutiny Panel, this did not include those relating to overpayments.

2.96 Setting targets to reduce the level and age of debt, as well as monitoring its recovery, will minimise financial loss and increase revenue. Regular reporting to, and monitoring by, Members and senior managers will ensure adequate assurance is in place to recover public funds.
(See Recommendation 6.)

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