An inspectorate of the Department for Work and Pensions.

Report

Charter Mark - Awarded for excellence

Executive summary

1.1 This report assesses Bath and North East Somerset Council’s administration of Housing Benefit (HB) and Council Tax Benefit (CTB) against the Performance Standards. This report should be read in conjunction with the Performance Standards pack, which can be downloaded from the Department for Work and Pensions’ (the Department) website:
http://www.dwp.gov.uk/housingbenefit/publications/perf-stands/index.asp

1.2 The Performance Standards underpin the effective and secure delivery of HB and CTB, and provide a framework for a modern, efficient, effective, secure and customer-focused service.

1.3 The Performance Standards are divided into 4 themes:

1.4 Each theme is made up of:

1.5 A scoring methodology is used to give:

1.6 Where a Standard has been set for a performance measure, it represents the level of performance the Department expects all councils to deliver.

Background

1.7 Bath and North East Somerset Council was originally selected for a Security focused inspection because in 2004/05, it had applied very few sanctions against fraudsters. During the initial on-site phase of the inspection in January 2006, BFI was asked by the Chief Executive to extend the scope of the inspection to cover all aspects of the Benefits service. We subsequently returned to the council in March and April 2006 to complete a full inspection.

1.8 In 2004/05, the council’s HB and CTB expenditure was £34.7 million paid to 11,400 customers. This represented 10% of the council’s gross revenue expenditure of £355 million.

1.9 The Revenues and Benefits Service is part of the Resources Directorate. The Head of Revenues and Benefits is responsible for the day-to-day management of the Benefits service and reports to the Director of Resources.

1.10 Figure 1.1 shows the organisational structure within the Revenues and Benefits Service.

Fig. 1.1: Revenues and Benefits Service

Revenues and Benefits Service organisational chart

Source: Bath and North East Somerset Council

1.11 The Benefits service is located in the council's office in Bath city centre.
In addition it has 3 customer service outlets to deal with all face-to-face enquiries located in:

1.12 Bath and North East Somerset Council told us that it had been in a backlog situation from 1999 to March 2006. The situation became worse in 2002/03 following the introduction of a document management system, the merger of Revenues and Benefits Services, long-term staff absences and the gradual loss of experienced Benefits staff to front line services. In addition, during 2003/04 a new Benefits IT system was introduced and the council implemented the Verification Framework.

1.13 Following a request to the Overview and Scrutiny Panel, additional external contract staff were hired and deployed in July 2004, by which time the backlog of work had been ring-fenced for clearance. Although the work was cleared within a 3-month period, the number of permanent staff was insufficient to deal with the volume of incoming work, and a new backlog quickly developed.

1.14 At its peak in February 2005, over 13,500 items of work were outstanding. The council had experimented with a pre-assessment section in an attempt to gather information from incomplete claims promptly. However, it had decided to disband the section because claims were being double-handled.

1.15 The council recognised in September 2005, that a more permanent solution was needed, and used the results from a Chartered Institute of Public Finance and Accounting benchmarking exercise to identify the necessary staffing levels.

1.16 Following recommendations from the Overview and Scrutiny Panel, the council recruited 7 additional permanent staff. This represented a 50% increase on the existing staffing level of 14 Benefits processors. This had a positive effect on the volumes of outstanding work and reported performance.

1.17 Our work to establish the effectiveness of Bath and North East Somerset Council’s performance included:

1.18 Bath and North East Somerset Council agreed that the findings from our examination of these cases were representative of its caseload for the periods of the samples and that no further sampling was necessary.

1.19 We are grateful to Bath and North East Somerset Council for its help and cooperation throughout this inspection.

Overall performance

1.20 Bath and North East Somerset Council had struggled in the 6 years before our inspection to clear significant backlogs of work. Following the appointment of 7(50%) additional processing staff, the processing of new claims had improved from an average of 56 days in the first quarter of 2005/06 to 36 days in the fourth quarter of that year. This improvement was also reflected in processing changes of circumstances where performance had improved from 42 days to 19 days in the same period.

1.21 The council acknowledged that it had focused most of its efforts on clearing the backlog of new claims but this had been to the detriment of other aspects of the Benefits service where poor performance had gone unchecked.

1.22 Efforts to counter fraud were ineffective. Cases referred for investigation were not being sifted and prioritised to ensure that only those with the best chances of success were pursued. This together with poor investigation techniques and a lack of management intervention and control had resulted in few successful investigations or sanctions being applied.

1.23 Very limited Internal Audit activity and a lack of effective strategic management and control of aspects of the Benefits service meant that Members and senior managers had only limited assurance on the performance of the Benefits service. We were particularly concerned that a number of significant internal security risks had not been identified or dealt with.

1.24 However, the council reacted positively to our findings and took immediate steps to address a number of the issues that we raised.

Claims administration

1.25 Performance for the average speed of processing new claims had shown an improvement from 56 days in the first quarter of 2005/06 to 36 days by the fourth quarter.

1.26 Our sampling clearly showed that, whilst the council had been in a backlog situation, there were delays at key stages of processing claims. The impact was made worse because the council had not prioritised the most urgent cases. For example, delays in referring cases to the Rent Officer meant that the council was failing to meet its statutory obligations. Failure to prioritise changes of circumstances that would lead to a reduction or cessation of benefits resulted in an increase in the number and amount of overpayments. However, as the performance for the fourth quarter of 2005/06 demonstrated overall processing times were improving, which could only have been achieved if delays at key stages were also decreasing.

1.27 There were a number of weaknesses in the overpayments process. Our sample of 23 overpayment cases showed 13 (57%) had errors in either the calculation or classification of the overpayments. We were therefore concerned that this level of error may impact on the accuracy of the council’s subsidy claim.

1.28 XXXX 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 XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX X XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXX XXXX XXXX XXXX XXXX XX.

Security

1.29 There were significant weaknesses in the council’s counter-fraud activities. The lack of an effective referral form for staff to use and no dedicated fraud hotline staffed during office hours, for the public to report suspected fraud, had resulted in a lack of good quality referrals.

1.30 The council was also failing to action referrals effectively. It was not using its risk profiling system to sift out poor quality referrals. This resulted in most referrals being accepted for investigation even if the risk profile indicated that they should not be investigated. Only 40% of the cases we examined should have been accepted for investigation. This is a poor use of investigative resources. In addition, there were long delays in beginning investigative work on referrals and the progress of investigation was not monitored.

1.31 There was a number of instances where the council had failed to comply with legislation or its own prosecution policy in the way it had undertaken investigations and sanction activity.

1.32 Interviews under caution complied with the Police and Criminal Evidence Act 1984 Code of Practice. However, we found 3 cases where an interview under caution would have been appropriate but was not undertaken.

1.33 XXXX 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 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 XXX.

1.34 The use of Authorised Officers powers was not monitored or controlled. Letters to employers requesting information did not identify the authorised officer making the request or the legislation under which the request was being made. Investigators were also able to make and authorise their own enquiries to the National Anti-Fraud Network, providing them with uncontrolled access to potentially intrusive avenues of investigation.

1.35 The council’s prosecution policy did not provide clear guidance on a number of issues. These included how the public interest test or other mitigating factors should be taken into account, or the circumstances in which
a formal caution or administrative penalty might be appropriate. A lack of clear guidance led to inconsistencies in the way the policy was applied.

1.36 A lack of comprehensive checking and interventions on the work of the counter-fraud section meant that the poor practices described above had not been addressed. As a result, the council’s counter-fraud activities were ineffective.

1.37 The results of our new claims sample showed inconsistency in the level
of verification obtained, with instances of inadequate verification of income and capital.

User focus

1.38 The council had a designated and experienced officer dealing with appeals and reconsiderations. However, due to the volume of work and limited staff resources performance was very poor. No appeals were submitted to The Appeals service within 3 months, during the third quarter of 2005/06. However, the council acknowledged its poor performance in this area and had assigned additional staff and set targets to clear outstanding work.

1.39 In January 2006, following customer complaints and low levels of customer satisfaction with the service provided on the telephones, the council began piloting a new system for handling calls. The number of calls dealt with by Revenues and Benefits staff almost doubled in January 2006, compared to November 2005.

Resource management

1.40 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 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 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 XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX .

1.41 The council’s self-assessment against Performance Standards, submitted to the Department in July 2005, was inaccurate. The council assessed itself as meeting 54 (83%) of the 65 enablers, our assessment showed that it only met 19 (29%) of the enablers. There were also some inaccuracies in the new claims and changes of circumstances performance data that the council provided to the Department. This was because claims had been either incorrectly recorded on the Benefits IT system or should not have been included in reported performance data.

1.42 The last comprehensive audit of the Benefits service was in 2001. The latest audit undertaken in 2005 only covered overpayments. We were told this was due to limited Internal Audit resources being available. We were concerned that recommendations from the 2001 audit were still outstanding when the 2005 audit was undertaken.

1.43 We concluded that reasonable steps had not been taken to assure the quality and security of the Benefits service.

Summary of recommendations

1.44 The following tables list the recommendations we have made in this report in priority order.

Recommendations
High priority
We recommend that Bath and North East Somerset Council: Paragraph
1
  • carries out a comprehensive risk assessment of its IT security arrangements to ensure that:
    • XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX X
    • there is adequate segregation of duties
    • debt is written off in accordance with procedures.

2.87, 5.43

2
  • improves performance in key areas of claims administration by:
    • making a decision on new claims within 14 days of receiving all information
    • actioning changes of circumstances within 9 days of receipt
    • requesting any additional information promptly and concurrently from the customer and any third parties
    • prioritising changes of circumstances that may result in a reduction or cessation of benefit
    • prioritising extended payments and claims from people moving into work
    • ensuring referrals are made to The Rent Service in accordance with legislation
    • ensuring its staff fully comply with the requirements of the Verification Framework.

2.12, 2.13,
2.20, 2.39,
2.43, 2.71,
3.15

3
  • develops and ensures staff comply with, procedural guidance for administering sanctions and reviews its prosecution policy to ensure it describes:
    • key roles and responsibilities
    • legislation under which prosecutions will be pursued
    • how public interest or other mitigating factors will be taken into account
    • the circumstances in which a formal caution or an administrative penalty might be appropriate
    • the need to check for previous convictions before issuing sanctions.

3.53, 3.67,
3.68, 3.70

4
  • maximises and improves the quality of fraud referrals from key sources by:
    • introducing a referral form that requires as a minimum details of the suspect and type of alleged fraud
    • developing a programme of fraud awareness training for all staff
    • developing a dedicated fraud hotline which is staffed during working hours
    • XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX X.

3.25, 3.59

5
  • reviews the management, control and security of its counter-fraud function by:
    • monitoring the use of Authorised Officer powers
    • introducing safeguards to ensure compliance with the Regulation of Investigatory Powers Act 2000 Code of Practice
    • ensuring a comprehensive audit trail for investigations, correct recording of informal interviews and retention of evidence
    • providing a discrete and secure operating environment for its counter-fraud team
    • reviewing the procedures for interviewing suspects under caution and transcribing taped interviews.

3.42, 3.43,
3.44, 3.45,
3.46, 3.47,
3.48, 3.51,
3.56, 3.57

6
  • sets and monitors targets to reduce the level and age of debt.

2.96, 5.7

7
  • enhances its management checking arrangements to include regular checks on:
    • current and closed investigations
    • QB50 notebooks
    • overpayment debt written off.

2.67, 2.87,
3.37, 3.55

8
  • ensures that the best use is made of trained counter-fraud resources by:
    • improving its scoring and sift criteria
    • setting stretching targets for sifting referrals and commencing investigations.

3.30, 3.36

9
  • ensures that management information, performance and subsidy claims are reported accurately by:
    • validating the Performance Standards self-assessment
    • undertaking a sample check on quarterly performance measure data
    • calculating and classifying overpayments correctly.

2.78, 5.16,
5.17, 5.52

10
  • ensures that recommendations from both Internal and External Audit are regularly monitored and addressed within agreed timescales.

5.58

Medium priority
We recommend that Bath and North East Somerset Council: Paragraph
11
  • monitors and analyses cases where further information is required to identify and act on any weaknesses.

2.11

12
  • develops a structured training programme which:
    • recognises different skill bases for all areas of Benefits administration
    • is informed by information from management checks.

2.66, 5.22

13
  • ensures that any request for reconsideration, review or appeal are dealt with in a timely way.

4.38

14
  • enhances its written notifications, where appropriate, to inform the customer why an overpayment is recoverable.

2.80

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