Examination of Witnesses (Questions 180-199)
MS RACHEL LOMAX, MR JOHN CODLING AND MS ALEXIS CLEVELAND
MONDAY 4 FEBRUARY 2002
180. Housing benefit is not the subject of this but you mentioned the attempt to deal with Housing Benefit with local authorities and you mentioned it is rather more difficult and complicated than expected. Do you think there is an argument to centralise all Housing Benefit so you could manage global fraud better?
(Ms Lomax) There could be, but we would find it extraordinarily difficult to achieve in the next few years, given all the other things we have got on.
181. It is not something you are asking for.
(Ms Lomax) Certainly not.
182. May I ask whether somebody knows about claims made by dead people?
(Ms Lomax) Ghost claims.
183. Possibly. People who have just died and no-one tells you and their partner continues to claim, that sort of thing. Is that a big problem and do you get the money back or do you feel sorry for the widow or widower?
(Ms Lomax) It is one of the reasons why we get some fraud on retirement pension. In so far as there is fraud on retirement pension, it is this sort of thing.
(Mr Codling) We do recover overpayment of benefit as a result of fraud or error from estates of the deceased.
184. How easy is it? I just went to get a birth certificate and I found that you just go in and you can get them quite easily, can you not? Someone who is living and was born 60 years ago can go in and get one. Are there still cases of people claiming for dead people? Does that happen much?
(Mr Codling) I cannot answer how easy it is to commit the fraud. I can say that it is one of the easier areas to recover it once it is identified.
185. I am sure once you know it, you can recover it. You have a situation where you have 20 separate data systems. Is there a danger of many addresses and one name, people claiming around the country? Do you have a lot of that? Or many names and one address?
(Ms Lomax) Multiple identities is one of the more serious causes of deliberate fraud that we come across and we would prosecute because there is no doubt about that. We do have a central departmental index, so our ability to match across systems is much greater than it was a few years ago.
186. Could somebody who is on the inside, who knows all the shortcomings of the system, knows you have 20 separate systems, begin to work out systems of conspiracy to defraud the exchequer easily?
(Ms Lomax) I am not convinced that it is working with people inside the system that causes problems of multiple identity. We do not have identity cards, do we? There is no unique way of identifying people.
187. Not at the moment, no. Do you get think tanks of people to work out the best way of defrauding the system, people who are perhaps fraudsters themselves or maybe give academic institutions projects to work out how to get through the system?
(Ms Lomax) Yes.
188. Does that generate a lot of good ideas on how to beat the system?
(Ms Lomax) Particularly in the last 15 months, since we have recruited a head of fraud intelligence, we have greatly increased our attention to this sort of thing. The weak points, the loopholes in the system are fed into the policy process.
189. Do you get consultants like Andersen, dare I say, to test you out? They would be very good at it.
(Ms Lomax) I am not sure that Andersen would be the ideal people.
190. They might be ideal by the sound of them, that was my point.
(Ms Lomax) We use all the latest techniques, without giving any secrets away.
Chairman
191. Why do you not prosecute Fred on the first occasion you discover him working and signing on?
(Ms Lomax) I feel I have not been clear about what our prosecution policy is and I think I should say quite clearly that our policy is to prosecute in the biggest cases. Our main priority is to protect the programme expenditure, to stop the benefit where we can. We do not go for prosecutions in the way that Mr Gibb was hoping or as an act just of deterrence.
Mr Gibb
192. Why not?
(Ms Lomax) That is not the policy.
193. Why is it not?
(Ms Lomax) The policy is to protect the programme expenditure, to minimise the amount of loss to the public purse. This is irregular expenditure and that is the key priority. Deterrence is an important issue and that is why we need to minimise the loss.[5]
Mr Rendel
194. I do not think I quite take Mr Gibb's point of view on prosecutions, perhaps Ms Lomax will be pleased to hear, and I understand why there are good reasons why you may not want to prosecute every one of the 184,000 whose benefits you decide to change. Nevertheless there are some interesting issues here and I should like to explore them a little bit further. On the face of it, 10,000 out of 184,000 does look quite a small amount. My assumption is that quite a few of these are cases where a partner has returned.
(Ms Lomax) Yes.
195. I just wonder whether it is correct that perhaps in such cases the person may have gone onto benefit some long while earlier and you tell them at the time that it is important you know who is living with them and the other sources of income and all the rest of it. Then perhaps three or four years later the husband suddenly returns, or whatever, and they may quite genuinely forget that it was ever important that they tell you, even if they have been reminded on a yearly basis when you come up for review. It is not the sort of thing which necessarily is at the forefront of most people's memories in that circumstance, particularly people who are living a fairly tough life on the breadline and suddenly are very happy to get hubby home again but the first thought is not necessarily to get down straight away to the DSS and tell them. Is that the sort of thing that does happen quite a lot?
(Ms Lomax) We would probably take a slightly less forgiving attitude than you imply there. The definition of fraud is "in circumstances where the customer should reasonably have known" and customers do know that they should report changes in circumstances. This is made quite clear to them. It is always open to people to pretend that they could not remember, but that is not necessarily a good defence. What I would say, and the point I was trying to make rather inadequately when I was talking to Mr Gibb, is that a large amount of fraud is opportunistic. They just see a chance, they perhaps even half lie to themselves. There is a difference between opportunistic fraud and deliberate systematic abuse of the system by organised crime. Both sorts of fraud exist and one does need to draw a distinction between them.
196. The point I am interested in—and you may not be able to give me any estimate, but it would be interesting to know if you can—is of the 174,000 who are not taken to court, but whose benefit amounts are changed, how many do you not take to court because you do not think the court would find a case of fraud and how many do you not take to court because you just do not think it is worth it or you are not really sure it is going to do any good, or whatever?
(Ms Lomax) I do not know the answer to that off the top of my head. There are 182,000 people whose benefit rate is simply changed, where the sums of money involved may be small and where the sorts of situation you are describing may very well pertain, where somebody says they did not realise they had to tell us, and where we think they probably did, but it is jolly difficult to prove it. The key thing is to get the amount of benefit right and we just change it. We have applied some form of sanction to 24,000 people, which implies we are more into the Fred category. Perhaps the difference between that 24,000 and the 10,000 we actually take to court is one we might focus on.
197. I guess where I was coming from was the thought that if somebody came to me if I were a magistrate and said they just forgot, it would be very hard to be so convinced in one's own mind that it was not just a question of forgetfulness. I quite understand that you want to classify it as fraud on the grounds that in your view the odds are that this person ought to have known and it probably was not forgetfulness. That is different from what you can do in a court of law, is it not?
(Ms Lomax) Indeed and also in some of these cases of living together as husband and wife, you may be talking about very unstable partnerships. You have to spend three nights with somebody for it to be described as living together as husband and wife. He may be spending so many nights a week round at his mother's or somewhere else. There is a grey area here as well as it being extremely intrusive to establish the facts.[6]
198. This issue of three nights worries me greatly. I often have female friends staying in the house even when my wife is there too. Does that mean I have two wives or something?
(Ms Lomax) Fortunately I do not imagine you are on benefit, or if you are, you have undeclared earnings!
199. We live in a very liberal world. In the cases where you do take people to court I understand that most of those you take to court are convicted; you seem to have a fairly good conviction rate for those you do take to court, so presumably you are only going for those where you are pretty certain of your evidence. Can you tell us what sort of punishments they are usually receiving?
(Ms Lomax) We have a 98 per cent conviction record, which may be too high for some. About 500 people went to prison for benefit offences last year. What happens to the rest of them? Community service of one sort and another is a fairly popular sentence. Fines are not popular for this particular category of offender. It is community service mostly.
5 Ev 20-21, Appendix 1. Back
6 Note by witness: The number of nights may be a material consideration where a decision maker is considering whether the relationship between a man and a woman is the same as that of a husband and wife. However no single factor can decide the question of living together as husband and wife and the decision maker is required to consider a range of issues. Back
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