Appendix N:
Analysis of WBS Claims

Background

Stoke’s Visits and Investigation team recorded 313 WBS cases between April 1998 and November 1999. This equalled a total saving of £451,000. We sampled 50 (16%) of these cases and found 22 where WBS had been incorrectly claimed by Stoke. Our sample size allows us to express 95% confidence in our findings.

The following should be noted:

• our examination does not include 34 WBS claims made by IA – IA’s WBS record was not brought to our attention until almost the end of our inspection
• numbers of cases and WBS we have quoted relate solely to the LA’s Visits and Investigation team
• a weekly average WBS of £45 per claim, excluding the 32 week multiplier, is used in our financial estimate – this is based on the Visits and Investigation team’s declared performance for the period examined
• monetary values are rounded, up or down, to the nearest pound
• measurement against profile is based on a 1998/99 threshold of £699,000.

A breakdown of our calculation and projection process is outlined at the end of this appendix.

Analysis of WBS sample

In financial 1998/99 year, Stoke achieved WBS in 2 ways:

• its normal day to day counter fraud activity
• specially targeted activity, funded through the government’s ‘Challenge Fund’ initiative.

We found error in the WBS claimed by both methods.

Of the 50 WBS claims sampled, we consider:

• 22 do not qualify for WBS
• 12 claims need a downward adjustment, as they only qualify under the new subsidy rules for 1998/99 surrounding ‘gone away’ claims.

This means that WBS recorded by Stoke for the financial year to date are overstated. Both the LA‘s subsidy claim and its estimation of performance against Challenge Fund, are inflated. The Figure below shows the sample results and the potential impact our findings would have on WBS currently recorded by Stoke.

Source: Stoke WBS records

Invalid WBS

The majority (18) of the 22 WBS claims we consider inappropriate relate to ‘gone away’ claimants – the specific area where the LA’s Challenge funded activity is being targeted.

Our sample contained 30 ‘gone away’ WBS claims, 23 of these were achieved through the Challenge scheme. Fraud had not been established in any of the [30] claims and in the 18 we consider inappropriate, Schedule 5 of the Subsidy Order as recently amended was not met. Therefore, they do not attract WBS (14 of these 18 were as a result of Challenge funded activity).

Of the 4 remaining incorrect WBS claims:

• in 2 no overpayment was raised
• one had no DFO intervention
• the other did not result in a reduction in benefit.

Supporting documentation

We have given our reasons for classifying 22 WBS claims as inaccurate. However, all cases would have been classified as doubtful due to the inadequate documentation used to evidence the WBS claim.

A further 9 cases had poor documentation. However, we have given the LA the benefit of the doubt as we consider appropriate evidence would have been available.

Further adjustment

A further and final adjustment to the LA’s figures is appropriate. If fraud has not been established in ‘gone away’ cases, the amount of subsidy that can be claimed is 75% not 100%. Therefore, the final adjustment in the Figure above reduces WBS for these cases by 25%.

Our findings allow us to show how these errors could affect the LA’s estimated level of performance against its1998/99 threshold of £699,000. Based on the figures recorded by the LA, it would expect to be performing at 102% at the end of the financial year. Our adjusted figure would reduce this to 51%, potentially resulting in a subsidy adjustment.

Based on the LA’s current figures, the return for its Challenge initiative would be around £328,000. Our adjustment would reduce this estimate to £96,000.

Other findings

Other findings from the WBS analysis are below. Appendix O covers these findings from an operational perspective and provides possible solutions for the remainder of this year and the future.

Sources of referral

Our sample by referral source was:

Source: BFI analysis

This Figure shows that the majority of WBS claims came from referrals by the Visits and Investigation team and the Benefit section.

Very few referrals come from other sources. There were no referrals from:

• BA
• data matching.

BFIS’s records show that it receives an average of 320 referrals a month from the public. Records at Stoke for a similar period shows only one case came from the public. These differences emphasise the benefits Stoke would realise through widening its publicity.

We believe Stoke has opportunities to broaden the scope of its source of fraud referrals.

Claim types

We analysed our sample to establish the type of claim in payment:

Source: BFI analysis

The Figure shows that cases where the claimant receives both rent allowance and IS are the most common types of referral.

Our sample only included cases that had been claimed as successful by the Visits and Investigation team. Therefore, we cannot comment on the ratio of private to council property tenant referrals and whether or not a reasonable proportion of rent rebate cases are also accepted for investigation.

Figures provided by the LA show that 50% of its claimants receive rent rebate. This would suggest that we should have found a higher proportion of these cases in our WBS sample. Stoke may wish to examine its approach to referrals to assure itself that the current ratio is correct.

Income Support WBS

Stoke does not usually claim WBS from IS. In both 1996/97 and 1997/98, Stoke claimed IS WBS in only 13 cases. In our sample, see the Figure above, 74% of Stoke 1998/99 WBS cases were in receipt of IS/JSA(IB), yet the IS WBS element was only claimed in 4 cases. This suggests a lack of liaison with BFIS and is supported by our observation that use of form SLA1 to inform BFIS about Stoke’s fraud investigations is poor.

Finders keepers

We consider that Stoke is failing to claim a large amount of potential WBS by not using the ‘finders keepers’ procedures. Finders keepers means the organisation, LA or BFIS, which first receives indication of and investigates a fraud retains all WBS achieved. We suggest that, based on National Audit Office (NAO) figures for average LA performance, finders keepers could potentially increase Stoke’s IS WBS claims by around 660%. Failure to implement ‘finders keepers’ also has serious implications for the BA. If BA remains uninformed by Stoke, IS could continue to be wrongly paid.

One reason for poor communications with BFIS may be because Stoke thinks that its own investigative work on non-resident checks and changes of address:

• does not affect the amount of IS in payment
• would gain little return on its investment.

Stoke now plans to use forms SLA1/SLA3 to communicate with BFIS. The recent introduction of FIMS will reinforce this commitment, as it identifies appropriate cases and automatically issues the forms.

Conclusions

Our analysis of WBS at Stoke shows that it may incur a subsidy adjustment for 1998/99 and needs to:

• review its criteria for claiming WBS
• check WBS achieved to date for ‘gone away’ cases, ensuring it meets the changes outlined in Subsidy Order 1998
• implement ‘finders keepers’ to claim potential IS WBS
• widen its approach to fraud investigations in general.

Recommendations relating to WBS are contained in sections 4 and 5 of this Report.