House of Commons - Public Accounts

Select Committee on Public Accounts Fifty-Eighth Report

APPROPRIATION ACCOUNTS 1996-97: CLASS XII, VOTE 1 (ADMINISTERED SOCIAL SECURITY BENEFITS AND OTHER PAYMENTS)

THE ACCURACY OF BENEFIT AWARDS

Income Support

51. This is the ninth successive year that the C&AG has qualified his opinion on the account because of errors in income support,[47] and the C&AG told us that he thought he would have to qualify for years into the future.[48]

52. The Agency's target accuracy level for income support awards was 87 per cent, and in 1996-97 they achieved an accuracy rate of some 80 per cent. The Agency told us that the target reflected the extreme complexity of the benefit—a weekly benefit in which the adjudication officer might have to consider up to 60 different pieces of information such as housing costs and children. As a result, it was very difficult to identify changes in circumstances impacting on the level of entitlement.[49]

53. As regards outturn in 1996-97, the Agency accepted that the level of inaccuracy was unacceptable, and the Chief Executive added that he had been horrified at the size of the numbers when he took up post two years ago. They pointed out that as much of the 20 per cent of the error rate in individual cases related to procedural errors with little or no monetary impact; that some 30 per cent of errors were less than £1 in value; and that the total monetary value of error had fallen to 3.3 per cent.[50]

54. The Agency told us that they had taken action to improve accuracy across a wide front, including visits, reviews, data matching and co-operation with other parties. They had improved guidance and training to staff and introduced quality support teams to check claims. They explained that within the overall accuracy figures, there was a wide variation in accuracy rates between areas and district offices. By setting specific area and district level targets, there had been a consistent upward movement in accuracy rates. Looking forward, they were concentrating on making further improvements in accuracy year on year.[51]

55. As regards staff training, we were concerned about suggestions that their investment had recently been falling. They assured us that there had not been significant cutbacks.[52] Their total expenditure on training had fallen from £46.5 million in 1995-96 to just over £38 million in 1996-97, a decrease of some 18 per cent. But the Agency said that this was in part due to a significant decrease in recruitment in 1996-97, and hence in new-entrant training, combined with better targeting of training flowing from the Agency's drive for the Investors in People award.[53]

56. In 1996, the Department told the Committee that they were undertaking a fundamental review of the processes involved in awarding income support, with a view to simplifying them.[54] We asked the Agency about progress. They told us they had made limited progress, for example in the treatment of mortgages. Some other changes, which came out of input from people in the field, had not yet been made because they needed to change regulations. And other simplifications needed changes to computer systems. But overall, they thought that income support would continue to be one of the more complex benefits.[55]

Disability Living Allowance

57. In our questioning about the level of fraud and error in disability living allowance, the Agency told us that their benefit review had indicated an overall level of inaccuracy, including fraud, of 27 per cent.[56] We asked the Agency about the reasons for this. The Agency told us that the complexity of the benefit was one factor, together with the fact that claimants with a similar condition could be affected in different ways, and therefore be entitled to varying rates of benefit. Self-assessment was another factor, given that decisions were made on information provided by the individual on the claim form describing how the condition affected their life on a day to day basis.[57]

58. When we examined the administration of disability living allowance in Northern Ireland earlier in February 1998, we were told that one of the problems was the vague wording of some of the assessment criteria on the self-assessment forms. We asked the Agency whether this was also a problem in the Great Britain. They told us that had been complaints, but that they had worked with disability groups to see how the claim form could be improved.[58]

59. In his report, the C&AG's Report noted that when disability living allowance was introduced in 1992 there were at least 160,000 old mobility allowance cases absorbed by the new benefit. He also reported that the Agency had not reviewed some of these cases for over 20 years.[59] We asked the how they could justify this. They agreed that the situation could not be justified, but had arisen because they did not have a definite rolling programme of reviewing every case.[60] They added that those mobility allowance cases where the recipients were also in receipt of the middle or higher rate of the care component of disability living allowance would, however, be reviewed as part of the Benefit Integrity Project .[61]

60. In his report, the C&AG noted that the Agency expected to secure savings of £67 million over two years from the Benefit Integrity Project from an investment of £23 million.[62] We asked whether there would be a return to the Agency overall, given the difficulties with the project. They were unable to give us a categorical assurance, until the results of their review of the project and the further evidence that would now be sought following the Secretary of State's announcement on 9 February.[63]

Jobseeker's Allowance

61. The other principal element of error in benefit awards that led the C&AG to qualify his opinion was on jobseeker's allowance, which was introduced in October 1996 to replace employment benefit and income support payable to the unemployed.[64] The C&AG estimated that the total value of error on the benefit in 1996-97 was £137 million, representing some 6.2 per cent of expenditure. Some £46 million of this error was accounted for by errors in awards calculated manually rather than by computer.[65]

62. The Committee asked the Agency whether this was good enough. They agreed it was not. They told us that there had been teething problems with the new allowance, including problems with computer systems, for example the interface with other benefits failed to work properly in the first months of operation. There were also mistakes because they had to train 79,000 staff over a long period. The computer problems led to the initial high number of clerical cases—25,000—although they had fixed some items and the number was now down to some 10,000 cases, representing 0.7 per cent of the case load.[66] The Agency added that they were initiating action to assess and measure the current scale of error in the accuracy of clerical awards to establish a baseline. They would then be in a position to devise targets that would represent genuine improvements in clerical accuracy. These should be implemented by the early months of the 1998-99 reporting year.[67]

Over and Under Payments

63. In 1996, the Committee expressed concern about the level of cash overpayments in income support—£546 million - which represented public money that should not have been spent, and underpayments of £185 million, errors which might cause real hardship to claimants.[68]

64. As regards overpayments across benefits in general, in his report the C&AG noted that the Agency were pursuing recovery of £530 million from claimants at 31 March 1997. He also noted that during 1996-97 the Agency had recovered £93 million, but had written off overpayments of £77.3 million, £62.5 million of which was due to official error. The C&AG also reported that the Agency had 285,000 cases awaiting investigation into whether an overpayment had occurred and had failed to achieve their target for reducing the number of outstanding overpayment cases to 235,000 by 31 March 1997. He noted, though, that the Agency was taking action to reduce the backlog to 165,000 cases by 31 March 1998.[69]

65. We asked the Agency how confident they were that they would meet the target at 31 March 1998. They confirmed this was achievable but that it would require a real effort in the last part of the year. They had not been paying sufficient attention to overpayments, and their systems to identify and account for overpayments had been weak. They had also faced a significant rise in the number of overpayment cases being identified, partly as a result of their increased activity on visits to new claimants and targeted reviews. The monthly average number of new cases had increased from 7,000 in 1995-96, to 16,500 in 1997-98, and was forecast to be 23,000 in 1998-99. However, they had now put in place better accounting and software systems, as well as producing work plans at both area and district level.[70]

66. As regards underpayments, the results of the Agency's Quality Assurance Team's work put the estimate at £127.8 million on income support and the National Audit Office estimated underpayments of £2.3 million on jobseeker's allowance, although these figures were subject to quite wide margins of accuracy as they were based on sampling.[71] The Agency told us that they did not have specific targets for either the take-up of benefit by those who might be entitled to it, or for reducing underpayments to those already claiming benefits. But where cases were examined under a targeted review (for income support or jobseeker's allowance) or the Benefit Integrity Project (for disability living allowance) they would reassess a claim up to the correct level where this was appropriate.[72] And in nearly 1000 cases they had examined under the Benefit Integrity Project, entitlement had already been increased.[73]

Conclusions

67. This is the ninth year in which the C&AG has found it necessary to qualify his opinion because of the level of errors in benefit awards, particularly income support, and the C&AG cannot foresee a time when the account will not be qualified. In our view this demonstrates a significant failure of management and commitment over a long period.

68. Even now, 20 per cent of all income support payments contain error and even if the Secretary of State's accuracy target had been met, one in eight payments would have been wrong. We note the range of actions taken by the Agency to improve accuracy rates and their confidence that accuracy will improve over time. But we have had these assurances before, and by any standards the Agency's performance is poor.

69. We are concerned at the Agency's lack of progress in simplifying the income support regulations and other measures to improve the accuracy of income support. As we have said on Child Support and housing benefit, the complexity of regulations is a cause of confusion and error. In benefits such as income support it opens the door to fraud. So we urge the Agency to look again at the scope for simplifying the rules.

70. We note that self-assessment nature of disability living allowance may be a cause of inaccuracy, which at 27 per cent of claims is excessively high. Claimants, particularly those who are disadvantaged, need clear rules and forms, supported by guidance and help, if they are to claim sums due and not under or over claim. We look to the Agency to improve the clarity of information available to claimants to help them with the self-assessment element of disability living allowance.

71. We find it incredible that there are some old mobility allowance cases still in payment that may not have been reviewed for over 20 years. We are not satisfied with the Agency's approach of dealing with these cases when they come up for review, and expect the Agency to establish a programme to review all of these cases within two years.

72. We are very concerned at the teething problems experienced by the Agency in the first six months of jobseeker's allowance, and by the part played once again by problems in computer systems. Given historic levels of error in other benefits, and the effort needed to investigate and correct inaccurate payments, the Agency's aim must be to get benefit right first time.

73. We are disturbed that the Agency are still seeking to recover overpayments of £530 million, and have written off overpayments of £77 million. As we have said before, these sums represent public money that should not have been spent. We are also disappointed that the Agency failed to meet their target for reducing the backlog of outstanding cases of possible overpayment, and that 285,000 cases were awaiting investigation at 31 March 1997. We note the Agency's target for reducing the backlog to 165,000 by 31 March 1998, but urge them to speed up this process because delay means the continued diversion of public funds and increased risk of failure to recover the sums involved.

74. We continue to be dismayed at the high level of underpayment errors within benefit awards, given these errors mean that genuine claimants are not receiving their full benefit entitlement, and may suffer hardship.

47 C&AG's Report (HC 251-XII of Session 1997-98), para 23 Back

48 Q66 Back

49 C&AG's Report (HC 251-XII of Session 1997-98), para 19; Q7 Back

50 Qs 7, 28-29, Evidence, Appendix 1, p18 Back

51 Qs 7, 27, 42-43 Back

52 Qs 72-74 Back

53 Evidence, Appendix 1, p18 Back

54 19th Report, Session 1995-96 (HC 224) Back

55 Qs 106-107 Back

56 Q5 Back

57 Qs 8, 14 Back

58 Qs 33-34 Back