Appendix K:
Analysis of deterence issues

Background

There are several components that should be in place which, when combined, form an effective fraud deterrence strategy. These include:

• policies and statements on Richmond’s approach to fraud and corruption
• promoting an anti-fraud culture
• the identification and recovery of overpayments
• undertaking successful prosecutions
• publicity for counter-fraud success.

Deterrence strategy

Richmond has a corporate anti-fraud and corruption policy that sets out its position on all forms of deception against Richmond. This policy is not, however, specifically tailored to address the risks of HB and CTB fraud that Richmond is exposed to. There is a clear need for Richmond to draft documents that relate solely to benefit fraud and specify its:

• counter-fraud objectives
• investigations policy
• prosecution policy.

Each of these documents would need to have members’ support.

Promoting an anti-fraud culture

There are a number of ways in which Richmond could do more to deter fraud through promoting an anti-fraud culture.

Hotline

Richmond subscribes to Fraudwatch as a means to generate referrals, but fails to promote its telephone number actively. The number is displayed in public libraries and on the back of council tax bills, but is not prominently displayed in the reception area of the Civic Offices. An opportunity to promote the anti-fraud message to visitors is therefore missed. This is borne out by the very low number of referrals Richmond receives from Fraudwatch, as previously shown in Figure 3.9 of this report under Detection.

Declaration on HB claim forms

All HB/CTB claim forms carry a declaration that states:

If you give us information that is not true or you do not tell us everything that we need to know to work out your benefit correctly, we pay you money that you are not entitled to. This is an offence under the Thefts Act 1968 & 1978 and the Social Security Act 1986. If you accept benefit that you know you are not entitled to, we could prosecute you.

We have a special team that investigates benefit fraud. If you have any information about false claims, please ring them on 0181 891 7839.

Notwithstanding the reference to legislation that is no longer current (an issue covered at Appendix C), the declaration aims to have a deterrent effect on those potential fraudsters who are unsure whether to make a false claim.

The reference to contacting the Fraud section with information about false claims is an example of good practice, but the telephone number quoted is not that of the Fraudwatch hotline. This may give a confusing message to somebody wanting to report a fraud.

Landlords

Richmond does not hold landlord forums or issue information packs to landlords. Regulation 94 of the Housing Benefit (General) Regulations 1987 specifies circumstances in which LAs may pay rent allowance direct to the landlord. Although some payments are made direct to landlords, it is Richmond’s policy to pay benefit to claimants. Richmond’s view is that the claimant is more likely to notify them of changes of circumstances than the landlord.

Analysis of our sample of 49 WBS claims revealed that 15 cases (31% of the total) related to investigations into cases where the claimant had left the address for which benefit was in payment. Effective liaison with landlords may lead to fraud deterrence and prevention through more active notification of ends of tenancies and tenants’ leaving dates.

Identification and recovery of overpayments

Richmond always tries to identify and notify claimants of overpayments resulting from its counter-fraud activity. We sampled 49 WBS claims, of which 44 related to HB claims with or without CTB. Figure K.1 shows a breakdown of overpayments identified in these 44 cases from our WBS sample where HB was in payment.

Source: BFI analysis

We then looked at the recovery action taken in respect of those 25 cases and our findings are shown in Figure K.2.

Source: BFI analysis

Figure K.2 shows that although Richmond performs well in identifying overpayments, it does not perform as well in recovering the resulting debt. Richmond needs an effective deterrence strategy that ensures that recovery of fraudulent overpayments is given priority. We have raised concerns about the accuracy of Richmond’s classification of fraudulent overpayments under Payment and accounting, Investigation and at Appendix M.

Undertaking successful prosecutions

Richmond achieved 4 successful prosecutions in 1998/99. These convictions were secured through referral to the local police, who prosecute on Richmond’s behalf. We sampled 3 of these 4 cases and, although we commend Richmond in taking forward these prosecutions, we identified a number of key areas for concern:

• Richmond has no prosecution policy in place to inform investigators of the circumstances in which they should consider prosecution action
• there is no requirement for prosecution action to be authorised by a member of management before referral to the police, to ensure that only suitable cases are put forward
• investigators failed to investigate the cases thoroughly or to liaise with BA to establish the full extent of the fraud
• in one case the investigator discussed the offence with the claimant on 3 occasions without administering a caution
• the recovery of overpayments following prosecution is not given the appropriate level of priority:

• in one case over £17,000 had been fraudulently obtained yet Richmond had not recovered any of the overpaid sum
• in a second case only £20 had been recovered since October 1996 towards a total overpayment of more than £6,500.

Publicity for counter-fraud success

A key factor in deterring fraud is convincing potential fraudsters that the risk in making false claims is not worthwhile.

Richmond does not actively publicise its fraud successes. Instead it relies on the court attendance of local news reporters to publicise successful prosecutions. This approach may not always work in Richmond’s favour because:

• Richmond loses control over the content of the report
• the press may also report on cases in which the defendant is acquitted, without asking Richmond for its own view of the case. This could have a negative deterrent effect
• Richmond cannot promote a consistent message about its approach to fraud within the borough
• Richmond misses opportunities to advertise other aspects of counter-fraud activity such as proactive exercises, joint working with BFIS and notifying the public of the amount of taxpayers’ money saved through WBS and overpayment recovery.

Summary

This appendix supports our conclusions under Deterrence within Section 3 of this report. Richmond needs to develop an effective deterrence strategy and we have suggested some ways in which this could be achieved.