House of Commons - Public Accounts - Twenty-Seventh Report

Select Committee on Public Accounts Twenty-Seventh Report

MEASURES TO COMBAT HOUSING BENEFIT FRAUD

CO -OPERATION BETWEEN THE BENEFITS AGENCY AND LOCAL AUTHORITIES

75. The Department attach importance to effective co-operation between the Benefits Agency and local authorities in combating Housing Benefit fraud. However, the Comptroller and Auditor General reported serious problems with day to day exchange of information, with co- operation on individual cases, and in involving local authorities in initiatives such as the "Spotlight on Benefit Cheats" campaigns.[80]

76. The Department confirmed to us that close liaison was very important in tackling fraud. Service level agreements between the Benefits Agency and each local authority had been in place for some years, but they had not always been monitored and carried through as well as they ought. There was now a drive in the Benefits Agency to update the service level agreements, and make them work.[81]

77. If a local authority discovers a fraud which involves Income Support as well as Housing Benefit, before the Benefits Agency do, they can claim weekly benefit savings in respect of both benefits. To enable the local authority to claim the savings the Benefit Agency is expected to notify the authority of the Income Support element of fraudulent cases. These arrangements, known as "finders keepers" appeared to be a major factor in the poor levels of co-operation between the Benefits Agency and local authorities because they have introduced significant competition in the pursuit of weekly benefit savings.[82]

78. The Department told us that "finders-keepers" had been devised in 1993 as an attempt to introduce co-operation where there had previously been none. They accepted that it had some undesirable results because it had introduced a competitive edge to things and they were looking at whether they could produce a better system either by reverting to more of a free-for-all or by having some kind of sharing arrangement. The Benefits Agency would be running trials, starting in the New Year. The Department were however reluctant to ditch "finders-keepers" without knowing they had something else that would work, and while they hoped to be able to find alternatives they could not be absolutely sure that they would.[83]

79. In April 1996 the Benefits Agency began a series of "Spotlight on Benefit Cheats" campaigns which are month long anti-fraud drives in particular areas, with the aims of encouraging those who had drifted into abusing the benefits system to put their claims right, to detect and deter fraud, and to pursue the recovery of overpayments. The total weekly benefit savings reported in the first year were £101 million from 42 separate "Spotlight" campaigns. However, local authority involvement in the campaigns has varied considerably.[84]

80. The Department told us that some authorities did not want to join in the "Spotlight" campaigns either because they did not like the nature of the beast or because they did not feel there was enough time to plan. However, others had been involved with some success. They added that there had also been a number of locally-planned joint drives where authorities could participate fully with the Benefits Agency and they had been quite successful. They thought that this was the way ahead and that they needed to do more.[85]

81. The exchange of information between the Benefits Agency and local authorities on benefit claims and overpayments is currently paper-based. The Department have estimated that between 22 million and 30 million forms pass between Benefits Agency offices and local authorities each year. In 1993-94 the Department piloted the use of remote access terminals which gave local authorities direct access to the Income Support computer system, thereby enabling authorities to bypass the usual cumbersome and unreliable paperflows. Although the pilots showed that the terminals improved liaison and provided authorities with instant access to information only a few terminals have since been installed.[86] In response to our enquiries, the Department told us that they were currently running trials in a small number of local authorities with the aim of making terminals available nationally from April 1998.[87]

82. There are about 135 different Housing Benefit information technology systems in local authorities. We asked the Department what they were doing to use electronic information to try and standardise procedures in applying the complex Housing Benefit regulations. They told us that their own systems were quite old, and still need to be linked to each other before they could look at local authority access to them. Linking up local authority systems with their own system was a difficult and long-term aim because they would either have to link the 135 different local authority systems into their system or they would have to have a new system which local authorities bought into. There were also difficulties, because Housing Benefit was only one aspect of local authority systems, which at a local level were plugged into other aspects of their business such as housing and council tax.[88]

83. The Department added that a step towards the electronic exchange of information was the data matching systems run by the Department and by the Audit Commission, which enabled local authorities to match their benefits data with data on other benefits and against data in other parts of local authorities, such as student awards.[89]

Conclusions

84. Close liaison between the Benefits Agency and local authorities is essential if Housing Benefit fraud is to be tackled effectively. Service level agreements between the Benefits Agency and local authorities are in principle a good idea but we consider it extremely unsatisfactory that these agreements have not been monitored and enforced. If the current arrangements for administering Housing Benefit are to continue, it is essential that the service level agreements are updated and then made to work.

85. There has also been insufficient involvement of local authorities in the Benefits Agency's local "Spotlight on Benefit Cheats" anti-fraud drives despite the substantial returns they offer. The Benefits Agency must take primary responsibility for these failures, and we expect to see the current initiatives to improve co-operation bear fruit quickly.

86. The "finders keepers" system requires the Benefits Agency to inform local authorities of related Income Support fraud in cases where the authority has detected Housing Benefit fraud, so that the authority may claim savings in respect of both benefits. This arrangement encourages competition not co-operation. We await with interest the results of the Benefits Agency's pilots of alternatives.

87. The effective delivery of Housing Benefit currently depends on the exchange of over 20 million pieces of paper between local authorities and the Benefits Agency. This is incredible in this computer age. While we recognise the complexity of the Department's computer systems, we view with despair their view of the state of their own systems and that close integration with those of local authorities is a distant prospect. This makes it even more important that other solutions to help the electronic exchange of data are successful.

88. One of these solutions is the installation of Remote Access Terminals in each local authority. It is unacceptable that more than four years since first piloting these terminals, further piloting is only now underway with the aim of making terminals available nationally from April 1998. On the presumption that these terminals are operating satisfactorily, we expect the Department to roll them out to all authorities without further delay.



© Parliamentary copyright 1998	Prepared 26 March 1998