House of Commons - Public Accounts

Select Committee on Public Accounts Forty-Fourth Report

NORTHERN IRELAND SOCIAL SECURITY AGENCY: THE ADMINISTRATION OF DISABILITY LIVING ALLOWANCE

EXAMINATION OF CLAIMS BY NIAO

46. NIAO undertook reperformance audits on a sample of claims that the Agency had assessed in 1995-96. A sample of appeal cases was also examined to determine what lessons, if any, could be learned.

47. Of £245 million expenditure on DLA in 1995-96 approximately £59 million was on claims assessed in that year (the remainder relates to claims assessed in earlier years). The testing of cases assessed in 1995-96, when extrapolated, revealed that errors (both over and underpayments) amounted to some £7 million out of the £59 million. In addition, valid claims that were rejected by the Agency could amount to £5 million in the same year.[37]

48. The Agency said that it accepted the errors found by NIAO where there had been a wrong decision or where the Adjudication Officer should clearly have sought more evidence. However, as with the Central Adjudication Service testing (see paragraph 34) the Agency did not accept as errors those cases in which insufficient evidence was an issue. NIAO has recognised that there can be doubt about whether a claimant has submitted sufficient evidence but considered that in the cases it had examined the Agency should have sought more evidence before putting them into payment. NIAO considered that its findings and those of the Central Adjudication Service pointed to a situation in which the level of financial error in the total expenditure of £245 million in 1995-96 was significant and was a matter of some concern.[38]

49. Further testing by NIAO in the 1996-97 year revealed that overpayment errors in DLA, when extrapolated, could amount to £17.8 million in that year. The Agency's response to these findings was that it was appointing a Senior Adjudication Officer who had the sole responsibility for improving standards of adjudication.[39] The Agency also drew attention to the difficulties that self assessment, adjudicated upon by lay staff, had created and said that it believed that too much was expected from its staff. It added that the benefit had been difficult to administer and had not been as successful as envisaged at the outset.[40]

50. Notwithstanding these difficulties the overall conclusion of NIAO was that there was a substantial doubt about the number of claimants whose claim to benefit was rejected and could have been met; the number of claimants who were not receiving the correct level of benefit; and the number of claimants who should not be in receipt of the benefit at all.[41]

51. The Committee questioned the Agency at length about the very poor standard of accuracy that it had been achieving and was told that it had put a programme of work into place to improve standards. This included an adjudication quality council and specific working groups to look at issues such as insufficient evidence and errors of law which are two major problem areas and it had increased training. The Agency's Chief Executive told us that more than anything else there was a need for a change of culture in the whole organisation.[42]

52. The Agency accepted that there were too many cases that had been incorrectly assessed and that in the case of insufficient evidence it needs to perform much better. While it fully expected to see improvements soon it did not think that there would be a dramatic early change in the situation.[43]

53. We asked the Agency about its policy on home visits to claimants in order that it can check on the claimant's circumstances and were told that while such visits are expensive the Agency was planning to extend this work starting with high risk cases. The Agency later informed us that based on the experience in Great Britain the estimated DLA benefit savings could be between £3.8 and £5.9 million per annum if all claimants were visited at least every five years except those whose condition was clearly not going to change. However, the Agency added that as adjudication standards improved the scope for savings would reduce.[44]

54. The NIAO report showed that, from a random sample of appeal cases decided in 1995-96, additional medical evidence had been obtained in 92 per cent of the cases and that the Appeals Tribunal ruled in the claimant's favour in 40 per cent of the sample tested.[45]

55. We asked the Agency whether it had a target figure for appeal cases and were told that it does not have a target for winning appeals as it does not see the matter as an adversarial one. However, the Agency accepted that if a large number of appeals were being granted then, somewhere in the system, it was making errors of judgement.[46]

Conclusions

56. It is clear that the Agency's staff face difficulties making adjudication decisions with the question of sufficient evidence being the major problem for its Adjudication Officers. However, we consider that the testing carried out by NIAO has revealed a level of error in the decisions made by the Agency that has cost the taxpayer many millions of pounds.

57. It is completely unacceptable to the Committee that payments to the disabled have been determined in such an unreliable way. The taxpayer has the right to expect that the Agency will take steps to ensure that both fraud and inaccurate payments are minimised. The Committee therefore urges the Agency to take immediate action to improve the level of payment accuracy that it is achieving. There are fundamental problems with a system in which over and underpayments are so commonplace and where so many claimants have had legitimate claims turned down.

58. We particularly welcome the Agency's decision to increase the number of home visits to claimants as such visits should enable the Agency to better assess the claimant's entitlement to benefit. Such visits are also likely to deter fraudulent claimants. We recommend that the Agency should consider, in conjunction with the Benefits Agency (GB), the merits of a rolling programme of visits over a number of years as it seems clear that savings arising from such a policy would more than meet the running costs.

59. We expect the Agency to be more diligent in ensuring that it has obtained all the necessary evidence earlier in the process thereby reducing the likely number of appeals and the associated cost to the taxpayer.

QUALITY OF SERVICE

60. One of the Agency's overall aims is to provide a good quality of service to all its customers. It pursues this goal through a number of initiatives, including the achievement of targets. It has external targets set by the Minister and internal targets set by management. On external targets, the Agency had performed slightly better than the Benefits Agency (GB) in recent years whereas the Benefits Agency has normally outperformed the Agency on internal targets.[47]

61. We questioned the Agency about the achievement of targets and were interested to know if there is pressure to meet targets whether the clearing of cases had been at the expense of accuracy. The Agency acknowledged that there is clearly a tension for Adjudication Officers trying to balance their duty to deal with claims in a reasonable time and to ensure that all the evidence required has been obtained.[48]

62. In 1993 the Agency introduced a compensation scheme for customers who had experienced unacceptable delays before receiving benefit payments. At 31 May 1997, £98,206 had been paid to claimants but 3,789 cases remained outstanding. The backlog had largely been cleared by December 1997.[49] We asked the Agency why certain claimants had experienced unacceptable delays and were told that while the Agency had paid out a large sum in compensation to some claimants, such payments largely related to the early period of the scheme and that the on-going number of such claims was quite small.[50]

63. Overpayments to claimants detected by the Agency up to March 1996 amounted to £591,000 of which only £23,000 was recoverable. The Agency said that many overpayments had been written-off mainly because it had destroyed the paid orders and cashed girocheques and were therefore not available as evidence. Without this evidence the overpayments could not be recovered.[51] We asked the Agency to explain how it was currently dealing with overpayments and what it was doing to ensure that giros would be available if needed in the future. The Agency said that it had set up a special debt recovery unit in August 1995 with demanding targets. The target for 1997-98 was £4 million for all benefits but we were told that it did not expect to meet this figure.[52]

64. NIAO calculated that savings in administrative costs of up to £1.8 million may have been possible if claims that were successful at review and appeal stages had been accepted at new claim stage. The report also showed that the cost of administering DLA appeared to be much more expensive in Northern Ireland than in GB.[53] The Agency told us that it agreed with the view that savings in administration costs could be achieved and that it was bench-marking itself against the Benefits Agency in GB to understand why unit costs were higher in Northern Ireland.[54]

Conclusions

65. The Committee sees great value in performance targets but would be concerned if the Agency placed more emphasis on achieving its targets for clearance times than on obtaining a high level of accuracy. The level of error that was found in 1995-96 and 1996-97 suggests that this could be happening and the Committee expects the Agency to work in future to balance both goals.

66. It is disappointing that it has been necessary to pay compensation to claimants because of delays by the Agency in dealing with claims. However we note that the number of such claims at present is small and we expect such payments should be rare in the future.

67. We are concerned that the Agency's record on overpayments recovery is so poor. We expect the Agency to achieve a much higher recovery rate in the future. It is essential that the Agency ensures that vital evidence, girocheques and paid orders, are not destroyed.

68. The Committee welcomes the Agency's acceptance that savings are possible in its administrative costs and also its plans to benchmark its costs against the Benefits Agency in GB.

THE SECURITY OF THE DLA SYSTEM

69. NIAO examined the action taken by the Agency to secure the integrity of the DLA system. The examination was conducted in the light of recommendations made by our predecessors on the control of social security fraud and action being taken by the Benefits Agency in GB.[55] In March 1996 the Agency produced a report setting out a proposed security strategy that would involve a four year programme of work and which replicated the range of initiatives that the Benefits Agency had adopted. In the main, the strategy would involve a review of benefits; greater emphasis on prevention of fraud; more effective recovery of overpayments; and greater integrity of the benefit process.[56]

70. While the Agency had addressed the security of the system, it had not undertaken a review, similar to that carried out by the Benefits Agency, to establish the level of fraud and inaccuracy in DLA.[57]

71. We questioned the Agency about the delay in developing its security strategy and why it had fallen behind the Benefits Agency. The Agency told us that it saw merit in taking advantage of work that had been done in Great Britain in developing methodologies and in piloting exercises rather than develop such initiatives itself. However, the Agency admitted that it needed to give its security strategy more impetus and it needed to develop a more innovative approach. It told the Committee that it had recently put such plans into action.[58]

Conclusion

72. The Committee is concerned that improvements that have been developed in Great Britain have not all been implemented in Northern Ireland. We reiterate the view of our predecessors that they "expect the Agency to ensure that it keeps fully abreast of the Benefits Agency in Great Britain regarding development of ways of preventing and reducing fraud". The Committee welcomes the Agency's plans to make its security strategy more innovative and will be interested to learn about its progress in developing its security strategy.

37 C&AG (NI)'s Report paras 4.1-4.6 Back

38 C&AG (NI)'s Report paras 4.8-4.10 Back

39 C&AG (NI)'s Report para 4.11 Back

40 C&AG (NI)'s Report para 4.21 Back

41 C&AG (NI)'s Report para 4.24 Back

42 Q13-16, Q37-41, Q68-70, Q79-Q84, Q102-103 Back

43 Q40; Q45; Q79, Q94-Q98 and Q114 Back

44 Q77-78 and footnote Back

45 C&AG (NI)'s Report paras 4.12-4.18 Back

46 Q117-118 Back

47 C&AG (NI)'s Report paras 5.1-5.5 Back

48 Q5-6, Q10 and Q64 Back