Examination of Witnesses (Questions 60-79)
DEPARTMENT FOR
WORK AND
PENSIONS & JOBCENTRE
PLUS
MONDAY 4 FEBRUARY
2008
Q60 Mr Dunne: When were you appointed
to that role?
Ms Trundle: I am trying to remember
precisely when the departmental strategic objectives were published.
I am afraid the date has gone from my mind but it was to coincide
with the creation of that objective.
Q61 Mr Dunne: Was that appointment
made, Sir Leigh, before or after this Report was commissioned
by the NAO?
Sir Leigh Lewis: It was before.
Q62 Mr Dunne: Why is it not referred
to in the Report if you have this responsibility?
Sir Leigh Lewis: Perhaps because
we just did not, commenting extensively on a very complex Report.
Q63 Mr Dunne: You had the opportunity
to comment on this Report and in paragraph 2.17 it specifically
says that the kind of fraud activity spread across the Department
and Jobcentre Plus with six different directorates. This surely
would have been an opportunity for you to have pointed out that
they all report through to Ms Trundle in some way.
Sir Leigh Lewis: That is a very
fair point. Perhaps we could have done better in making that point
but we did discuss the Report with NAO colleagues and we sought
to try and ensure that it was a fair and accurate report, which
I believe it absolutely is. The key, underlying point is that
Shirley Trundle does carry a direct responsibility, reporting
to me and to ministers, for the overall fraud and error reduction
strategy in the Department.
Q64 Mr Dunne: Ms Trundle, perhaps
I could ask you in that case, having read the Report and seeing
some of the criticisms made here about inconsistent delivery across
the country, what are you seeking to do about it?
Ms Trundle: I think the key point
is that we need to translate the very high level objectives for
the Department into a set of coherent targets that will actually
make sense at the appropriate level where they have to be implemented
and managed. Then we need an effective system of reporting back
so that regional differences can be identified and individual
managers can be challenged about those.
Q65 Mr Dunne: Thank you. Sir Leigh,
just turning to Appendix Two, page 39, looking at previous recommendations
of this Committee on this issue, the comments made against the
first conclusion from the 2003 review are that: "Management
information remains generally inconsistent and poor across interventions".
Could you comment on why that remains the case some five years
now after those recommendations were made?
Sir Leigh Lewis: I think our management
information is now better, but we are making a step change improvement
almost as we speak in the fact that the introduction, and it will
be introduced nationwide by the end of this current month, of
FRAIMS (Fraud Referral and Intervention Management System), which
is our new computerised Fraud Management System, will actually
revolutionise not just some of the aspects of the handling of
fraud cases across our network but will dramatically improve our
management information. So it may indeed be that it has taken
a time in coming, although there have been improvements since
the earlier NAO Report, but we are going to have very shortly
at our disposal a very substantially improved management information
system and it does more than that.
Q66 Mr Dunne: My last question is
on the next page there is a recommendation in relation to benchmarking
performance against other countries and the NAO issued a report
in 2006 on this subject. Is there anything you can learn from
international experience which will allow you to persuade the
NAO that the steps you are taking should ensure that your accounts
do not need to be qualified?
Sir Leigh Lewis: It is very much
a venture that we supported the NAO in undertaking. I am a strong
believer in benchmarking because there is always absolutely something
to learn. We have also looked at comparable organisations in the
financial sector of if not quite equivalent scale then of serious
scale here in the UK. I think the point of that report, and it
almost brings us back to our earlier conversation which the Chairman
asked me to write to him to about, is it basically says actually
we have a more robust system of seeking to measure overall levels
of fraud and error than in the comparable countries which the
NAO benchmarked us against, those eight countries, and overall
we have a more effective strategy in seeking to tackle this. What
I think it also says is that there is no country out there which
has any kind of magic wand where they operate in a complex society
with millions of individuals and inevitably complex welfare systems
which has somehow miraculously arrived at levels of fraud and
error which are infinitesimally low. That is why I do want to
move this debate about the qualification of our accounts from
where it is at the moment, which I just regard as a sterile debate,
to a place where we have a set of challenges, which I do not want
to be easy for my Department for one moment but I want them to
be challenges that we are capable of delivering otherwise this
Committee and its successors will be having the same debates with
me, and no doubt my successor and successors, for years and years
to come.
Q67 Chairman: Well, exactly, the
same debates. We said here, and it was referred to by my colleague,
in Appendix Two, "Reliable information on costs and results
is required ..." That was a previous PAC conclusion and you
agreed with that, that the Department intends to put in place
systematic benchmarking. When Mr Touhig put this question to you,
you first of all denied it, and when he referred you to paragraph
1.13 you had to accept what Mr Touhig put to you, that the Department
does not know the exact cost of implementing the strategy. There
is no point just going on a roundabout, is there? Next time we
make these recommendations on the management information systems
you have actually got to carry out what you promise to do otherwise
we are wasting our time, are we not?
Sir Leigh Lewis: Chairman, with
great respect, I think that is a little harsh actually. If you
take the recommendations from the earlier reporting in the round,
in every key respect we have made a lot of progress against those.
Q68 Chairman: Why does it say in
the NAO Report: "Management information remains generally
inconsistent and poor across interventions? Improvements have
been made ..." I agree, but generally it is inconsistent
and poor. How do you explain paragraph 1.13, which is devastating?
Sir Leigh Lewis: Because while
the actual underlying reality is that we have reduced fraud very
substantially, we have not progressed as far as you would have
wished and I would have wished in setting out and improving our
management information though, as the Report says, improvements
have been made. Although it may have taken too long, the introduction
of our FRAIMS system, which is not jam tomorrow, which will now
be in place country-wide by the end of this month, will bring
about a step change in the quality of our management information.
Q69 Chairman: Okay. I just want to
ensure that these reports really are meaty and when you accept
them then something happens. I am sure you agree with that, do
you not?
Sir Leigh Lewis: I do and I hope,
Chairman, that your experience of this Department, and of me as
its Accounting Officer, is that I do take the recommendations
from the NAO Reports very seriously.
Chairman: Thank you for that.
Q70 Geraldine Smith: Can I begin
by congratulating you, I think you have made some good progress.
I accept that some of it is down to redefining what is classed
as fraud but, even so, it is very, very difficult because you
deal with very complex benefits at times. I think the problem
we have got is if you cannot tackle benefit fraud then it undermines
our welfare state. Sometimes out there the public think everyone
who is claiming benefit is doing something a bit dodgy, a bit
like MPs at the moment I guess. How do we change this perception
to get across to the public that the vast majority of people are
entitled to the benefits that they are claiming?
Sir Leigh Lewis: I agree with
a great deal of your question and I have no more a magic wand
to wave in answer to it than I suspect you have yourself. I think
there are two things that we can and should do, all of us. There
are many responsibilities here. One, first of all, is to seek
to persuade and reassure the public that we are being as effective
and as rigorous in bringing to justice those people—a very,
very significant minority of people—who are seeking to defraud
the system. The public are entitled to believe that is the case.
Secondly, we then need to put that into context in terms of the
proportion of total individuals claiming benefits and total expenditure
on benefits that is being spent fraudulently or claimed fraudulently
by those individuals. We have to go on, for want of better, telling
it as it is actually. I share your frustrations at times, that
it is not told as it is.
Q71 Geraldine Smith: I am quite shocked
because you spent quite a lot of money, £154 million in 2006-07
on the counter-fraud strategy, and recovered £106 million.
That is not very good value for money. A couple of weeks ago we
were looking at Corporation Tax in this Committee and we found
that they only spent £28 million on staff costs and they
retrieved £23 billion in Corporation Tax. We also found that
there are hundreds of companies not paying any. I think maybe
we should be increasing their staff and reducing yours if there
is such an imbalance here. Again, I am not blaming you because
you are dealing with very complex benefits and large numbers of
people, and I do accept that, but what more can we do to prove
to the public that this money is being well spent?
Sir Leigh Lewis: I do, of course,
accept the underlying thrust of your question but can I just say
once again, at the risk of wearying the Committee, that one-liner
that a fraud investigator said to me personally last week, "The
better we get, the less overpayment we record". It is not
a perfect measure. Overpayment takes no account of the deterrent
impact of our activities. Overpayment takes no account of the
future benefits we stop from being paid fraudulently. It only
records the amount being paid up to now. In many ways, I think
this Committee would want in the future to see our overpayments
falling rather than rising. It is a curious measure in that sense.
If that was going to be combined with future estimates from ourselves
validated by the NAO and it showed overall benefit fraud continuing
to fall you would expect overpayments to continue to fall. It
is an important measure, I am not in any sense decrying its importance,
but it is not, and I want to say this very clearly, the sole test
of value for money, as the Report makes clear.
Q72 Geraldine Smith: Can I ask you
about a few specific benefits. Housing Benefit to me seems to
be a benefit that could be wide open to abuse and, indeed, in
my own town, a seaside town, I have seen not evidence but suspicions
where it has been abused and sometimes on a large scale. Is it
a good benefit? Is it the benefit that really needs changing here?
Sir Leigh Lewis: I do not think
I would want to attempt to go into the wider question of the nature
of Housing Benefit. What I can do is say that it is very important
for all the reasons you have said. We have a separate stream of
work which focuses on Housing Benefit fraud. It is separate because
Housing Benefit is administered primarily by local authorities
so they have their own investigators in local authorities and
we work very much to support them and with them. The overall level
of Housing Benefit fraud has almost halved since the baseline
year for which we have numbers, which is 2003. It was then at
about 1.9% of total Housing Benefit and it is now at about 1%.
We have seen an improvement there just as we have seen an improvement
in other benefits. We have a separate strategy with local authorities
for reducing Housing Benefit fraud still further, but it is too
high, it remains too high, and we and local authorities want to
see it lowered.
Q73 Geraldine Smith: Another area
of concern to the public is about people living together and claiming
not to be. What can you do about this? Again, it is a difficult
area but I think it is an area that really concerns the public
and does get their backs up if they are working very hard and
they think there may be people who are abusing the system.
Sir Leigh Lewis: Just to echo
something which I think Neil Couling said, we take this very seriously.
We are devoting probably more resources than ever before to tackling
this kind of fraud and we are bringing very substantial numbers
of prosecutions and imposing other sanctions in such cases. It
is more difficult because you are delving into one of the greyer
areas of human behaviour here. If you will, let us suppose there
is a single parent who is receiving benefit as a single parent.
There is the spectrum from that single parent occasionally welcoming
someone else into their home for an evening, if you see what I
mean, right to the other extreme where to every intent and purpose
they are living with that other person as a single household.
It is not always easy to actually establish where on that spectrum
a particular case lies. That is why it is one of the skills of
our investigators, but also at times difficult, to identify where
those cases are clearly fraudulent. Be in no doubt that where
they are then absolutely we will prosecute.
Q74 Geraldine Smith: I find that
advertising must be very important because, again, it is sending
out the message that you are serious about dealing with benefit
fraud where it occurs and you want the welfare system to work
for the people who need it. Should you not be doing more in terms
of advertising? Do you do enough?
Sir Leigh Lewis: We are doing
a huge amount. I doubt there is a Member of the Committee who
has not seen or heard one of our "No ifs, no buts" advertisements
in recent months. If there is such a Member of the Committee I
would suggest rather humbly that they probably have not been watching
any television or listening to any radio. There are posters and
door-drops as well. Advertising is very important. To date, we
have spent just over £8 million on the current campaign,
"No ifs, no buts". There is a lot of evaluation evidence
coming through that it has been very effective. It is aimed really
at trying to deter people from going ahead who may be on the cusp
of committing fraud, or those people who may be acting fraudulently
but who have, as everybody has, an opportunity to stop. It makes
it very clear, one, that we will not accept lame excuses as to
why someone was acting fraudulently and, two, that we are very
effective and the chances of you being caught and sanctions or
prosecution taken against you if you are acting fraudulently are
very high. It is interesting, just to give you one statistic from
the evaluation, that the proportion of people thinking benefit
fraud is "easy to get away with", which was at about
40% of respondents at the start of the current campaign, is now
down to barely over 30%, so there is some real evaluation evidence
that this campaign is having an impact.
Q75 Geraldine Smith: Finally, can
I just ask you about DLA. That seems hard for you to monitor because
people's health may improve. What sort of follow-up is there to
look at people who claim DLA?
Sir Leigh Lewis: Again, we discussed
this earlier in this hearing. DLA is inevitably a benefit in which
there is a greater degree of subjectivity than in some others,
but increasingly our Disability and Carers Service, which administers
DLA, does operate a range of checks and controls to try and ensure
two things: one, that people who are entitled to DLA do receive
it and at the rate to which they are entitled because, like all
benefits, there is an opposite problem of people who may be entitled
who are not receiving it, and we should not ever ignore that;
but, two, equally that people who may not have been entitled ever
properly, or whose entitlement may have changed because thankfully
their condition has improved, cease to claim or claim a different
rate of benefit where appropriate.
Q76 Angela Browning: My first question
is actually for the NAO. I wonder if you could look at Figure
6 on page 15. Attendance Allowance is not listed there and I wonder
if it has been rolled up with DLA as it is effectively the DLA
for people of pensionable age.
Mr Lonsdale: I think it is under
the "Other unreviewed benefits".
Q77 Angela Browning: Sorry?
Mr Burr: "Other unreviewed
benefits", the last line.
Q78 Angela Browning: I just wanted
to check that the DLA figure, which is what I want to ask Sir
Leigh about, is just DLA or whether it includes the other as well,
but it is just DLA. Sir Leigh, could I ask you about the Disability
Living Allowance. I have noticed in my casework quite a change
in this benefit in recent years inasmuch as far more people are
being encouraged to apply for it, very often for reasons which
I find I would not have recommended they apply for it because
if they have a period of disability it is quite clearly only a
temporary situation. In the small footnote, footnote 6 on the
opposite page, page 14, it states: "The Department changed
its fraud and error measurement methodology around Disability
Living Allowance, whereby it identified a specific group of cases
in which payments were correctly made based on the case information
..." et cetera. Could you just explain to me what
it is you have done to identify fraud in DLA that prompts that
footnote?
Sir Leigh Lewis: Let me seek to
do that. First of all, that was a definitional change, the one
we have discussed in this hearing, whereby some benefit payment
which had previously been classed as either fraud or error, was
agreed by ourselves and the NAO, as our auditors, was no longer
right and it should be classed neither as fraud nor error because
at the point of its receipt it was neither and it was only at
the point where, if you will, we and the customer became aware
that there was a significant change in their condition that it
could be reclassified and their DLA entitlement should be reviewed.
On the wider question of DLA, and I ought to say honestly to you
that I do not regard myself as a huge expert on a very complex
benefit so it may be I should write to you if your questions reach
a level where I cannot properly answer them, DLA is a complex
benefit. We want a balance, do we not, a line. It is absolutely
right, as I was just saying, that where someone has an entitlement
to a benefit that they are not claiming we should, as a society,
do everything we can to make them aware of that benefit and to
help them claim it, and I have appeared before this Committee
talking about Pension Credit, for example, on just that basis.
It is also true that we live in a world where there are some people
and some organisations who will say, "There's a benefit,
let's see if you can get it", if you see what I mean, and
that can be a perfectly legitimate thing but at times it can stray
over a boundary to be a less legitimate thing if there is any
suggestion that people are being encouraged to give information
that may not be entirely appropriate. What we are seeking to do,
and this is where I would probably need to write to you if you
wanted me to go into greater detail, is both at the initial point
where an application for DLA is made and subsequently more rigorously
during the time when a person is on DLA to seek to establish that
they are and remain entitled to that benefit. This is a complex
benefit, and I do not want to overdo on one week's experience
working on a helpline, but when I did that you did become aware
that the complexity of individuals and their circumstances can
be very great and it can be quite difficult to understand every
complexity of somebody's circumstances and conditions.
Q79 Angela Browning: If I may just
offer you an observation, which I hope you take on board, and
that is, although it is encapsulated in your literature and on
the claim form that this is a benefit about identifying things
that impact on people's ability to cope with everyday living,
both on the care side and on the mobility element, I do not think
that is flagged up well enough. I think there are far too many
people who think because they have a diagnosis or a condition
that is the trigger for DLA and an awful lot of time is wasted
on people applying for it, and I am quite sure quite a lot of
those people get through the net and subsequently become the people
you identify. Equally, I would say there are people with lifelong
conditions that are not always obvious but in terms of their ability
to cope with day-to-day living get discarded rather than get a
successful application. I do not think the balance is right yet
with DLA and I think you could do something about that if you
looked at how it is initially presented to people, both professionals
and claimants. I have noted quite a shift in emphasis on it. I
would like to come to that same graph on page 15 which shows Income
Support right at the top because, of course, in DLA, which is
the highest in terms of estimated fraud, £40 million on the
periodically reviewed benefits, where we are looking at DLA that
is a non means-tested benefit. I do wonder what conclusions you
make between that and the point I have just been making about
the qualification being health-based as opposed to financially-based
compared to Income Support right at the top of that graph, which
is clearly way ahead of the others at £210 million but is
a means-tested benefit, and what analysis you have made and how
it might be affecting the strategy and how you go about identifying
and chasing fraud as to whether you regard Income Support as one
of those trigger benefits that not only is subject to fraud, as
we see here, but also, because it triggers other benefits, leads
to packages of benefit fraud and how strategically you might be
going to tackle that, or if you are already tackling it? Have
I explained that?
Sir Leigh Lewis: Yes, you have,
very clearly. As you will recognise, there was a lot of complexity
bound up in that question. Let me try and help as best I can.
First of all, I will state the obvious: we take any kind of fraud
case in any benefit seriously. There are different potential areas
of fraud in those benefits. Income Support will often be about
whether somebody is declaring their full circumstances, declaring
any savings they may have, whether they are carrying out work
when they apparently are not. Disability Living Allowance, for
the reasons you say, some of those things might just be relevant
although, as you say, it is not a means-tested benefit, is more
about whether somebody is genuinely in the position which they
have told us they are and that position is continuing. There are,
I think, few but high profile cases of people who appear to be
claiming those benefits because they have, for example, very severe
restrictions on mobility and yet, and we are quite sophisticated
in what we do, we have videos of them loading goods into the back
of a transit. Our efforts are devoted to tackling two things.
One is to try and make sure that people are not unwittingly misleading
us and themselves because, and this is error territory, they do
not understand their need to tell us of changes or we are not
being sufficiently proactive in helping them to do so. The second
is to actually investigate very, very robustly when we do have
information which can come from the hotline, it can come from
other routes, that someone claiming DLA is not entitled to it.
What I would like to say, because I am certainly at the threshold
of my detailed knowledge on this benefit, being straightforward
with you, is if you would like us to provide you, and of course
the same offer goes to any Member of the Committee, with a more
detailed briefing from the Department on some of those issues
then I would be happy to make that available.[4]
4 Note by witness: DWP does not target Income
Support fraud specifically because it can be a gateway for other
benefits, although all fraud investigations seek to establish
the full extent of any offending. Rather, DWP investigates more
Income Support cases simply because more of this type of fraud
is reported by the public and is uncovered by data matching. Back
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