WBS performance

4.184 The LA’s WBS performance against its threshold target for 1996/97 in comparison with the Scottish and GB averages is shown in Fig. 4.10.

Source: DSS (from returns made by LAs)

4.185 The above table illustrates that Inverclyde Council has performed significantly poorer in WBS achievement than the averages for both Scotland and GB as a whole. This performance reflects the level of resources that the LA has invested in counter-fraud work.

4.186 Although comparative data for 1997/98 is not yet available, information given to us by the LA indicates that it only achieved savings of £173,156 against a threshold of £202,075. The savings figure achieved by the LA in 1997/98 is around 86% of that year’s threshold target and not significantly in excess of the 75% subsidy penalty level (the penalty level for 1996/97 was 50% of the threshold target).

4.187 The figures confirm our view that the LA is only investing sufficient resources to avoid incurring subsidy penalties. We make comments on the validity of the WBS claims at paragraphs 4.207 – 4.211 below.

Results analysis

4.188 Given that the LA does not analyse its counter-fraud performance in any meaningful way, the results of fraud investigations are not used to inform the LA on the types of fraud being found in the area it covers.

4.189 In the past, the LA’s investigation work has been mainly reactive, although there has been some joint visiting conducted with BIS staff. Hopefully, the recent appointment of a visiting officer, now appointed as a DFO, will increase the proportion of proactive work undertaken.

Data matching

4.190 Inverclyde Council has not participated in any internal or external data matching exercises to date. Officials from the LA did attend presentations about the new HBMS, but the LA was unable to participate due to compatibility problems with the previous IT system. Now that the LA is using the First Software system, such compatibility problems should disappear and we were told that the LA intends to use HBMS in the near future.

4.191 The LA has made no attempts to match employee payroll details against its HB/CTB records. During our sampling of WBS cases, we came across 2 instances of successful investigations involving casual employees of the LA. We therefore strongly recommend that this would be a useful data match for the LA to undertake.

Liaison with BA

4.192 Inverclyde Council has a current SLA with BA’s BIS that was last reviewed in September 1997. The SLA is based on the national model, but it leaves out the important requirement to exchange information concerning investigations. In our view, apart from setting out responsibilities, the document does not encourage joint working. Day-to-day liaison with BIS is on an informal basis that allows scope for duplicate investigations. Appendix C3 deals with liaison arrangements with BA in broad terms.

4.193 With regard to the adjustment of other SS benefits, liaison between the LA’s DFO and the local BA District Office is usually by telephone. Little documentation is retained by either party. As a result of our inspection, we have now arranged with BA for a named contact point for the LA’s DFO. Given this development, the DFO now uses the recognised SLA forms setting out details of the investigation to justify why other SS benefits should be withdrawn or re-assessed. In turn, BA has agreed to respond, in writing, with relevant details within the timescales set down in the current SLA.

4.194 The DFO stated that a check is made with BIS records to establish whether it is currently conducting an investigation into the same claimant. We established that this check is not always made and, when it is carried out, does not extend to any previous investigations of that person. By checking our sample of 44 WBS cases against BIS records, we established that in 4 cases there had been a previous BIS interest that may have been of assistance to the DFO.

4.195 We also confirmed that BIS does not keep a record of cases that the DFO decides to investigate. This could result in BIS carrying out a subsequent investigation in ignorance of the DFO’s prior involvement.

4.196 An examination of 24 referrals closed by BIS as No Fraud Action (NFA), because no benefit was currently in payment by BA, revealed that 6 should have been forwarded to the LA as HB/CTB was in payment. This is an issue that could be resolved by the automatic referral of NFA cases to the LA for continued action to investigate entitlement to HB/CTB.

4.197 Evidence suggests that BIS does not include HB/CTB overpayments in cases that it refers for prosecution because of delays in obtaining the relevant details from Inverclyde Council. Our examination of the overpayment processes within the LA shows this to be true. Failure to present details of the total loss to public funds to the Court diminishes both the seriousness of the charge and the likelihood of an appropriate penalty.

4.198 Other features of the liaison between the LA and BIS that are worthy of comment are:

• although BIS attends the quarterly liaison meetings with the LA, there are no meetings specific to fraud issues
• although some joint visiting with BIS staff has taken place, there have been no joint exercises targeting particular client groups or employers
• BIS has a specialist team that investigates collusive landlord fraud and the LA has co-operated with this important area of fraud detection work by supplying relevant details. No outcomes have yet been communicated to the LA.

4.199 In overall terms, the LA has a good working relationship with BIS albeit on an informal basis. Our conclusion is that this good working relationship can be built upon to the mutual advantage of both parties.

Liaison with others

4.200 Inverclyde Council has limited contact with other LAs with regard to counter-fraud issues. The LA does not attend any meetings for DFOs. Meetings can be useful forums for sharing ideas, experiences, problems and spreading best practice. We have suggested the LA considers joining the LAIOG. This group meets quarterly and is a useful forum for DFOs at a cost of around £20 per meeting.

4.201 Contact with the local police is also limited and only extends to discussions around individual cases. The LA has not given any consideration to seeking advice from the police and PF on prosecutions. However, the DFO has recently established that there is an LA liaison officer attached to the local police station and intends to make contact soon.

Investigation

4.202 Investigation is the working methods employed by the LA to establish whether fraud or irregularity exists.

Resourcing and management of investigations

4.203 The LA’s response towards the resourcing and management of counter-fraud activity has been less than adequate. We found the commitment being shown by the DFO to be commendable, but there is a lack of overall management structure and administrative support. The LA has no case management system, either manual or IT-based, and the general quality of record keeping is poor. In our view, the historical emphasis has been clearly on quantity rather than quality with ‘quick wins’ the order of the day.

4.204 From our examination of the investigative process used within the LA we established the following facts:

• there are no documented procedures in place to guide the DFO on aspects such as:

- recording referrals
- undertaking visits and interviews
- maintaining separate fraud files
- forward planning and prioritisation of work

• there is no management checking of files or controls on work
• there is no validation of WBS claims
• there has been no risk analysis undertaken
• there are no suitable interviewing facilities
• there is no specific determination officer that the DFO can refer cases to for an independent adjudication
• management does not consider the VfM aspects of the DFO’s work
• there is a lack of paperwork exchanged between the DFO and BA/BIS
• no separate record is kept of investigations that do not result in a WBS claim.

4.205 Currently, the new IT system only records WBS data. We understand that First Software is planning to introduce a case management system for LA fraud officers. During our visit, we let the LA see some examples of a manual case management system used by another LA. We suggested this be introduced, suitably amended for local needs and preferences, until the First Software option is available. An efficient case management system would:

• provide data on outputs against targets
• produce management reports together with standard forms and letters
• analyse data for trends, repeat offenders, and so on.

4.206 We would emphasise the importance of having proper investigative procedures in place. As the Audit Commission has pointed out:

The procedures used to undertake and record investigations, from referral, while in progress and on completion, are vital to the effective working of the unit. Poor recording of the process of the investigation, the evidence obtained and its outcome makes it difficult to support decisions if challenged, by other investigators, assessors or claimants, reducing the credibility of the unit and making it impossible to bring prosecutions (Countering Housing Benefit Fraud – A Management Handbook )

4.207 Our conclusion is that the LA should review its procedures and methods of investigation as a matter of urgency. More detail on the LA’s investigation processes is set out in Appendix C14.

Fraud visits

4.208 The DFO estimates that 40% of his time is spent visiting claimants, but no visiting records are kept to support this assertion. This is a weakness that needs addressing from both a VfM and an internal security perspective.

Weekly Benefit Savings

4.209 As part of our inspection of the LA’s counter-fraud effort, we examined 40 WBS claims for 1997/98 out of a total of 108. We also examined 4 WBS claims from the current year. In each of the cases we considered both the quality of the investigation and the evidence gathered to support the WBS claim.

4.210 As a result of our sampling, we concluded that 50% of the 1997/98 WBS claims could not be justified for reasons such as:

• insufficient evidence held on file
• evidence of fraud not established
• no intervention by the DFO
• investigations carried out by BIS with no involvement by the DFO.

4.211 The total value of the WBS claimed for these dubious claims was £35,363 and adjustment of the 1997/98 subsidy return will reduce the WBSv total for the year from £173,156 to £137,793. This will result in the LA’s WBS achievement for 1997/98 falling below 75% of its annual threshold target of £202,075, thereby incurring penalties.

4.212 The current year’s cases we examined were all in order and this supported our general observation that there has been a steady improvement in the quality of the DFO’s work since he was first appointed.

4.213 As a result of our inspection, the LA has asked its internal audit department to examine all 108 WBS claims from 1997/98 to inform amendments to its subsidy claim for that year. Taking into account the size of our sample, it is possible that as many as 68 of the 108 cases may be in doubt. Further information on our examination of all 44 WBS claims is given at Appendix C12.

Training

4.214 Since his initial appointment, the LA’s DFO has received limited training. However, there are indications that this situation is improving. The DFO has attended 2 courses run by BA:

• Living Together as Husband and Wife (LTAHAW)
• Interviewing for WBS.

4.215 In the future, the DFO will be attending BA’s Effective Investigations course. The new DFO visiting officer has also attended the first 2 courses named above.

4.216 In addition to formal training, the DFO was involved in a joint visiting exercise with BIS staff in January and February of 1998. This was a useful learning experience for the DFO and will hopefully be the start of further joint working with BIS as the LA becomes more proactive in its approach to counter-fraud work.