Select Committee on Social Security Second Report



APPENDIX

BENEFIT REVIEW — FAMILY CREDIT — REPORT ON PILOT STUDY BY BA SECURITY (SECURITY RESEARCH GROUP) JANUARY 1998

Contact:    BA Security
(Security Research Group)
Room 8
Warwick House
Leeds
LS2 8NL

1. EXECUTIVE SUMMARY

1.1  This report describes a pilot exercise, conducted by BA Security, to review a small sample of Family Credit (FAMC) cases in order to test a methodology and to inform a decision on whether to undertake a full, statistically valid, review.

Background

1.2  Fraud within the benefits system has been an issue for governments for some time now and the BA's Security and Control Programme, focused attention on benefit fraud and highlighted the lack of quantitative information on the scale of fraud and error in the benefits system. The Benefit Review was initiated as a mechanism to measure the extent of fraud and incorrectness across all the major benefits. This began with a review of Income Support and Unemployment Benefit in 1994 and progressed through reviews of Housing Benefit, Retirement Pension, Invalid Care Allowance, Disability Living Allowance and, most recently, a second review of Income Support. In January 1997 Ministers at that time gave approval to pilot a methodology for a review of FAMC.

Design of the Pilot

1.3  FAMC is very different from most other benefits. Awards are made at the same rate for 26 weeks and any subsequent changes in circumstances within that period do not normally affect the current award. In order to prove the existence of fraud therefore, it is necessary to show that a customer's circumstances were different to those declared at the time of the claim.

1.4  The methodology used was designed by BA Security with assistance from the FAMC Unit and in consultation with DSS Policy Group. The approach was to interview a sample of FAMC customers in their homes to gather information about their current and (recent) past circumstances which could be compared to the information already held about them and upon which benefit had been awarded. Employers were also visited in order to check details of earnings. Where discrepancies were noted they were probed in more detail. All cases were examined to establish whether a review of entitlement was appropriate and, where necessary, referred for adjudication at the FAMC Unit. All information was recorded to allow the production of statistics on the levels of any fraud and incorrectness found.

1.5  A research-type approach was taken with the use of a questionnaire to ensure a standard interview format. Interviewers were recruited from the field and provided with comprehensive training. During the exercise advice and guidance was available from the centre through a helpdesk.

Sampling

1.6  A total of 300 FAMC cases were selected at random for the exercise. Fifteen office areas from Dunfermline to Penzance were represented, with 20 cases selected from each.

Results

1.7  The pilot identified 32 instances of proven fraud and a further 50 instances of high suspicion of fraud. Allowing for weighting in the sample, the rate of fraud detected is 10 per cent and the rate of high suspicion of fraud is 16 per cent. In addition the pilot successfully identified other types of incorrectness, including customer and departmental error. It is stressed that these findings are not statistically valid.

1.8  The pilot also successfully addressed the sensitivities surrounding the exercise, there having been no customer complaints.

Conclusions

1.9  The pilot served its purpose in testing the methodology for a main review; however this exercise produced margins of error around the findings which are too wide for them to be statistically valid.


 
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Prepared 4 February 1999