Examination of Witnesses (Questions 60-79)
DEPARTMENT OF
WORK AND
PENSIONS
9 MARCH 2005
Q60 Jon Trickett: It is
convenient in this case they have rounded it to the nearest half
billion, which leaves eight and a half billion unrecovered, rounding
it to the nearest half billion. How much do you spend on debt
recovery? What staff have you got and what do they cost?
Mr Codling: We have approximately
2,600 staff employed on debt recovery in the Department. I do
not know that I have the actual cost of employment of those staff
to hand.
Q61 Jon Trickett: For
every pound you spend, how much do you recover?
Mr Codling: It costs us 23 pence
per pound recovered in terms of our operations.
Q62 Jon Trickett: Do you
think the more staff you employed the more you would recover?
It is a ratio of four to one, is it?
Mr Codling: Yes. I think we have
other improvements in train, which should increase recovery rather
than throwing additional staff at it in the first instance. It
is not necessarily the case that as of today if we employed more
staff we would recover more debt.
Q63 Jon Trickett: It would
be handy to get the cost of the debt recovery service as it is
now.
Sir Richard Mottram: Around £48
million.
Q64 Jon Trickett: In order
to recover £170-180 million a year?
Sir Richard Mottram: Yes. £190
million.
Q65 Jon Trickett: Why
do you not spend more money and recover more debt?
Mr Codling: We can recover more
debt by implementation of new systems.
Q66 Jon Trickett: You
could do both. I just want you to answer this; it is a simple
question.
Sir Richard Mottram: I will give
you a simple answer. We are in the framework of a competing set
of priorities, as we discussed earlier. We have an agreed set
of resources, and the way in which those resources are deployed
reflects the priorities we agreed with our Ministers.
Q67 Jon Trickett: Have
you bid on the invest-to-save schemes to spend more money, because
for every pound you are spending you are putting £4 back,
which seems like a good deal to me? Have you bid for additional
resources for that?
Mr Codling: We have been given
a small amount of resource, £2 million (per annum) over three
years, for a pilot scheme for private sector debt collection,
and this is being used for off-benefit debt; that is our clients
who are no longer in receipt of benefits.
Q68 Jon Trickett: Is the
Department really saying that it is not a spending priority to
recover £4 for every pound?
Sir Richard Mottram: I said it
was one of our priorities, but it would not be the only one.
Q69 Jon Trickett: Surely
you would look to fund additional enhancements in other areas
if you were to recover £4 for every £1 that you spent—or
presumably there would be a curve where at some point you would
get less than £4, but still . . .
Mr Codling: We are investing over
£100 million in new arrangements for debt recovery.
Q70 Jon Trickett: Let
us move to your new systems, because you are keen to move us on
to that—and I think you are wriggling on this set of questions.
How many of the 2,600 staff are due to be cut that are currently
involved in debt recovery under the Department's economies?
Mr Codling: There are no staffing
reductions in the debt recovery service emanating from the announcement
last year in terms of—
Q71 Jon Trickett: In three
years time will it be 2,500 or more debt recovery staff?
Mr Codling: That order of size,
yes. Our numbers in debt recovery have moved around the 2,600-2,700
range. Essentially that staff is taking on more debt-recovery
work as we centralise debt recovery from a previously inefficient
system distributed around the country.
Q72 Jon Trickett: In terms
of the balance in all the payments between that which is fraudulent
and that which is done by error, either customer or staff, are
you able to tell us how much recovered from debt is from fraud,
and how much is customer or staffing error?
Mr Codling: It is basically on
fraud and customer error as far as—
Q73 Jon Trickett: What
about the balance between the two? The largest amount of money
that is leaching out the system is from fraud, according to the
figures we have here.
Mr Codling: We do not keep a record
of the source of the debt recovery. We would have to imply that
statistic from the total fraud and error—
Q74 Jon Trickett: You
do not pursue fraud any more rigorously than you do customer error
or staff error.
Mr Codling: No, we pursue customer
over-payments, although the maximum recoverable for a case which
arises from fraud is a little higher; it is £11 something
per week, as opposed to the £8 something per week.
Q75 Jon Trickett: Given
that fraud is villainy, wouldn't anybody looking at the Department
expect you to be more rigorous and work harder on the fraud issue
than on the customer error issue?
Mr Codling: We would be expecting
to recover as much recoverable debt as we could.
Q76 Jon Trickett: In one
case, you have a citizen out there who is an innocent victim of
error, and you tell me you have pursued him or her as hard as
somebody who has done it with villainous or criminal intent. You
make no differentiation in your mind between an innocent citizen
and one who is a criminal in effect.
Mr Codling: I think your question
is, do we make a distinction in our systems rather than—
Q77 Jon Trickett: In terms
of debt recovery do you pursue fraud harder? You have no idea
on the balance between fraud and error.
Mr Codling: It is the same balance
as the balance in our statistical estimates of fraud and error
that Sir Richard was relating to.
Q78 Jon Trickett: So you
do not pursue fraud any harder than you do error?
Sir Richard Mottram: We need to
make two points clear. Customer error and customer fraud are different
to official error, which is the point we made earlier; so there
are different rules for getting back over-payments due to mistakes
by our officials; so to that extent we are focusing much more
on customer error and fraud; and then obviously debt recovery
in relation to fraud is just one aspect of how we deal with fraud.
No-one who was seeking to defraud the Department should assume
that the only contact they will subsequently have is with debt
recovery; they will face sanctions, prosecution and imprisonment.
Q79 Jon Trickett: I think
you are wriggling on this.
Sir Richard Mottram: It is not
disingenuous; it is fact.
Mr Codling: The maximum amount
we can recover from a debtor is £11.20 for fraud cases and
£8.40 for error cases, but those are for Income Support and
Jobseeker's Allowance debt.
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