Select Committee on Social Security Minutes of Evidence


Supplementary evidence submitted by the Department of Social Security

Question 18

  2. The Committee asked for information on the differences in the levels of fraud, from the findings of the Benefit Review of Child Benefit, between parents who were also claiming Income Support and those who were not.

The Sample

  1.1 The sample for the review was made up of:

    —  2,970 customers in receipt of CHB but not IS, of whom 1,468 were getting CHB(LP).

  1.2 Some IS customers choose not to receive CHB or CHB(LP) as these benefits are taken fully into account as income in their IS assessment.

Results

  1.3 The table below sets out the findings on reasons for fraud or high suspicion of fraud according to whether or not the customer was in receipt of IS with their CHB/CHB(LP).


Reason for fraud
CHB/CHB(LP)
only (number of cases)
CHB/CHB(LP)
with IS (number of cases)
High suspicionFraud High suspicionFraud

Child not being cared for13 601
Customer living permanently abroad1 211
Children abroad44 12
Duplicate accounts0 100
Living together/marriage23 57283
Presence test01 00
Child not in further FTE12 12903
Fictitious child21 00
False ID (child)10 10
Not at address (child)2 000
Child claiming benefit1 000
Child on YTS10 10
Family Unit02 00
DLO Cases890 00
Child working30 01
Other66 40
Total cases158209 3611

Total14.2 2.12.20.6

1 (As a percentage of the whole caseload taking account of the sample structure).


  1.4 The table shows the number of times (cases) on which each of the reasons for fraud were found (note: more than one type of fraud may be found on a case). Direct comparisons between one category and another should be avoided because these simple counts of sample cases take no account of the sample structure (i.e. different proportions of cases were sampled in different client groups) and the statistical margins of error will be very wide owing to the relatively small numbers involved.

  1.5 A percentages line has been added to the table which converts the raw data into a statistically valid result. The CHB/CHB(LB) only cases were, for statistical reasons, split into four client groups of roughly 750 customers each. Owing to their purpose one group represented 102,000 customers whereas another represented 3,790,000. The incidence of highly suspected fraud was roughly the same across all of these groups but the incidence of fraud was very low (0.4 per cent) in the group representing 3.79 million customers and high (13.7 per cent) in the group representing 102,000. Necessary adjustments to reflect a statistically accurate picture, resulted in the quoted percentage figures.

  1.6 The levels of fraud and high suspicion of fraud appear to be higher on CHB/CHB(LP) only cases than CHB/CHB(LP) with IS cases. However, as CHB and CHB(LP) are taken fully into account in IS claims, some IS customers choose not to receive CHB/CBH(LP). (1,099 of the 1,523 IS customer sample quoted in first paragraph above were classed as lone parents and 667 of them did not receive CHB(LP)). This can have a significant impact as it effectively reduces the recorded incidence of living together fraud involving CHB/CHB(LP) where IS is in payment, with a corresponding effect on overall fraud levels.

  1.7 Living together/marriage (where two customers of the opposite sex, who may or may not be married to each other, are living together as husband and wife, but claim to have separate households and make separate claims on this (false) basis) is the second most prevalent fraud on CHB only cases. On CHB/CHB(LP) with IS cases, living together/marriage cases provided most high suspicion.

  1.8 On CHB/CHB(LP) only cases, the greatest sources of fraud related to full time education, which includes cases involving child working, child claiming in his/her own right, and child on YTS.

  1.9 Eighty-nine of the cases in the CHB/CHB(LP) only sample were classified as DLO (Dead Letter Office). This classification was used when either documentation posted to a customer was returned by the Post Office marked DLO, or, despite at least two attempts to obtain information, no documentation or contact was ever received from the customer.

Question 42

  2. The Committee asked whether there was some regional variation to the numbers within the 220,000 CHB recipients without NINOs who did not reply to mailshots (issued during the transfer of Child Benefit Accounts to Personal Details Computer System)

  2.1 Child Benefit Centre has been undertaking a programme to verify all Child Benefit accounts before transfer to the Personal Details Computer System. In cases where it was not possible to verify NINOs and personal information from DSS systems, a postal enquiry was sent to CHB recipients. Around 220,000 did not reply to this mailshot.

  2.2 It is not possible to obtain an accurate regional breakdown of the 220,000 CHB accounts from the CHB computer system. However some indication of the likely percentage of cases for each Benefits Agency Area Directorates is available from referrals already sent to DOs, in cases where Child Benefit Recipients had replied to mailshots and further enquiries where necessary.
These cases were divided amongst Directorates as follows:1

Area DirectoratesPercentage

East London and Anglia19
Chilterns (includes London North)21
London South20
West Midlands3
Yorkshire4
West Country9
Mercia3
Wales2
North West Coast5
Greater Manchester7
Tyne Tees2
West Scotland2
East Scotland2

1 Figures do not sum to 100 due to rounding.


  2.3 Initial findings also suggest that NINOs will be traced in approximately half of the 220,000 cases in the first stage of the enquiry procedure. The balance will require more intensive investigation and allocation of NINOs where numbers are not traced.

Question 51

  3. The Committee asked for an estimate of numbers and categories of people without National Insurance Numbers.

  3.1 A National Insurance Number is a single unique personal identifier for both NI contributions and benefit purposes, and is a requirement for current and future information systems being developed by the Department. Most adults in the UK will have been issued with a NINO for National Insurance Contribution and/or benefit purposes. The NINO is not a national identity number and small numbers of people legitimately do not have numbers because there is no DSS business need.

  3.2 At the hearing on 21 July the Committee proposed that young women aged 16 to 17 who had babies might be a category of people who have not been allocated NINOs. In fact most young women would have been included in their parents' Child Benefit claim and would have automatically been allocated a NINO in the Juvenile Registration Process. The take up of Child Benefit is more than 99 per cent. Most of the very small numbers who have not been allocated a NINO in the Juvenile Registration Process would be allocated a NINO when they either make a claim to benefit in their own right, e.g. Child Benefit, Income Support, Job Seeker's Allowance, or when they actively seek employment.

  3.3 The Committee also mentioned adults who have applied for NINOs through the Adult Registration Process and their application are in process. The average length of time to process a NINO application for an adult is approximately eight weeks and there are currently around 9,600 applications in process. The DSS is currently reviewing NINO allocation processes to see if it is feasible for all NINOs to be allocated at the time the application is made.

  3.4 Other groups without NINOs are:

    —  people from abroad (including Asylum Seekers) who are not allocated a NINO unless they claim benefit or start work; and

    —  their dependants.

  3.5 The information to estimate the numbers in each category cannot be easily identified from DSS systems and would require enquiries of other Government Departments in the case of people from abroad. It would be expected that the numbers involved in the first category would be both small and diminishing and estimates of the other groups would be difficult due to the temporary nature of their residency.

  3.6 The work underway to deal with the 220,000 Child Benefit accounts, will provide some data that will inform the numbers and categories of people without NINOs.

Question 52

  4. The Committee asked for information on the allocation of NINOs to adults: The Adult Registration Process

  4.1 An adult, who needs a NINO for a benefit claim, for employment purposes, or to pay voluntary NI contributions applies on form CA5400 at a District Office of the Benefits Agency. Under the BA/Contributions Agency (CA) National Service Statement, Benefits Agency staff deal with applications for both employment and benefit inspired NINOs on a behalf of the CA.

  4.2 When an application for a NINO is received, checks are made on DSS systems to see if the applicant already has a NINO. If a NINO is traced the applicant is informed of the number, subject to satisfactory evidence of identity checks. If a NINO cannot be traced, the procedure for allocating a NINO differs, depending on whether the applicant needs it to claim benefit or needs it for employment purposes. If the number is required for a benefit claim it will be needed immediately to allow benefit to be paid, and is therefore allocated to the applicant by the benefit office using the Departmental Central Index (DCI), subject to satisfactory evidence of identity checks. Following allocation, CA5400 is sent to the CA to register the number on National Insurance Recording System (NIRS). The applicant will receive a NINO card following registration on the NIRS system.

  4.3 In employment or NI Contribution inspired applications, the BA will carry out evidence of identity checks, and send CA5400 to the CA for a NINO to be allocated and registered in NIRS. The customer is notified of their NINO on issue of the NINO card. The National Insurance Registrations section in Newcastle currently processes all employment inspired applications for NINOs. They also ensure that NINOs allocated by DCI in respect of benefit inspired applications are registered on the NIRS system. The Unit also checks all forms CA5400 for accuracy and completeness and logs all applications on a central registry system. Checks are made before registration as follows:

    —  if the applicant has any work or length of stay restrictions shown on supporting documentation, the Home Office is informed that the person has applied for a NINO;

    —  where a UK or Republic of Ireland birth or marriage certificate is used as supporting evidence of identity at the local office, checks are made within NI Registrations section against a database containing the reference numbers of blank missing/stolen birth/marriage certificates.

  Any suspicious cases are referred for investigation.

  4.4 In 1997-98 there were 285,198 adult registrations, 78,297 in connection with benefit claims and 206,901 for employment purposes.

Identity checks

  4.5 Tighter controls over the allocation of NINOs have been introduced including the introduction of more robust evidence of identity interviewing techniques, installation of anti-forgery equipment into all BA offices and CA Compliance Investigation Teams, introduction of new Audit Trail Analysis System rules to improve internal security and introduction of customised training. Three training modules have been introduced to raise general identity and fraud awareness issues, enhancing DCI tracing skills and training to help staff understand their role when interviewing and customers identity, history and documents.

  4.6 These measures complement the procedures introduced pursuant to Section 19 of the Social Security Administration (Fraud) Act 1997 which makes entitlement to benefit conditional on the production of information or evidence required to enable a NINO for the claimant or any person included in the claim to be traced, confirmed or allocated.

  4.7 We do not rely on documentation alone, to check the identity of claimants or NINO applicants. Documentation provides only part of the picture and we confirm information from a number of sources including DSS records, other government departments and organisations which have been mentioned in the documentation.

NI Integrity Plan

  4.8 New work is underway under the NI Integrity Action Plan to examine the NINO allocation process. The work will encompass control and access levels to DCI, reducing the number of staff directly involved in NINO allocation and improving local control of access to NINO allocation dialogues.

8 September 1998



 
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Prepared 29 September 1998