Examination of Witnesses (Questions 80-99)
DEPARTMENT FOR
WORK AND
PENSIONS & JOBCENTRE
PLUS
MONDAY 4 FEBRUARY
2008
Q80 Angela Browning: I would be grateful
if you would, Sir Leigh, because the point about Income Support
is that so much of it is about the fact find at the beginning,
which is fundamentally financial as opposed to the other subject
with DLA which is fundamentally about people's state of health
or mobility. They are two quite distinct things. The reason I
use the word "trigger" in terms of Income Support is
that Income Support triggers other benefits. When you get Income
Support you are entitled to apply for other types of benefit,
so people on Income Support very often find they accumulate a
package of benefits and, therefore, if fraud was there the amount
of money that the taxpayer is losing is more significant, not
just the amount of Income Support. Because it is right at the
top of your list, I wonder if strategically you have looked at
Income Support and the fraud associated with Income Support being
the trigger for losing a lot more by way of fraud than, say, someone
who just applies for one of these other benefits in that chart.
Sir Leigh Lewis: I agree, and
that is one of the reasons why we take fraud in Income Support
very seriously indeed, not least because, as figure 6 suggests,
the level of the estimated fraud as a percentage of total expenditure
is over 2% and that is substantially higher than the level of
fraud against other benefits overall. That said, let us not forget,
however, that DLA is a benefit that can be in payment for a very
long time indeed, so if someone is claiming it fraudulently and
we do not detect and stop that then that fraud will continue for
a very substantial period of time.[5]
Q81 Angela Browning: In the case of Income
Support, do these figures reflect people going in and out of Income
Support, therefore if there is fraud sometimes it is difficult
to identify because it is sporadic?
Sir Leigh Lewis: The way the figures
are calculated is by looking at a moment in time. A set of cases,
a rather large sample, is assessed as to whether there is any
evidence of fraud at that point in that claim. It is not necessarily
charting the entire history of someone through the benefit system,
it is looking at that case at that point.
Q82 Angela Browning: I do not know
if Shirley Trundle would like to come in on this. What I am really
looking for is to see if there are any patterns that you have
identified where certain benefits, particularly those at the top
which are responsible for the larger amounts of fraud, actually
trigger a pattern of behaviour which is perhaps where you should
strategically be focusing your resources. For example, when you
identify fraud in Income Support or Jobseeker's Allowance, which
is still a lot but is significantly below it, is that the way
in which you can recoup more, or if you were to go just for Income
Support would you be able to mop up a lot of other cases? That
is really what I am asking.
Ms Trundle: We have done a great
deal of work looking at what we know about the nature of fraud
and the types of claims which have a higher risk of letting fraud
into the system and use those risk profiles to target the sorts
of interventions that we make on cases. We are learning all the
time from one benefit and then translating that experience over
into other benefits. Of course, because we recognise that in a
lot of cases fraud in one benefit may then passport somebody to
entitlement in other benefits, we have got all the data matching
that we do between different benefits to identify any discrepancies
in information and if, for example, we find fraud in one benefit
we will then make sure all the benefits that person is receiving
are looked at together.
Angela Browning: Thank you. My time is
up but I would just focus on the initial fact find when people
apply for Income Support. Thank you.
Q83 Phil Wilson: This figure of 0.6%
of the total budget that is lost through fraud, how much lower
do you think you can get that? Eventually it becomes the law of
diminishing returns because this anti-fraud strategy has cost
an estimated £154 million. If you got that figure down to
0.3% you would save £400 million but you would have to spend
over £600 million to recoup that. Obviously we have got to
keep on top of this, no-one is saying because of that we should
stop chasing these people who are defrauding the system, but how
much lower do you think you can get that figure?
Sir Leigh Lewis: Just to start
with the actual Report itself, on page five in the preface the
Report says: "Having reduced estimated levels of fraud to
0.6% of benefit expenditure, it is likely that the Department
will find it increasingly difficult to secure significant further
year-on-year reductions". I do not ever want to sit here
before this Committee, because it could so easily be misinterpreted,
and say, "I do not believe it is realistically possible to
drive that number down any further". As the Chairman very
rightly said at the beginning, £800 million, it may be 0.6%
but it is a very serious amount of money being lost to the public
purse. Nevertheless, there has to be a reality which is that no
benefit system anywhere in the world will ever be immune from
a group of people who will seek to defraud it, and at a certain
point you have to ask yourself how much more effort and resource
is it cost-effective to put in to seek to take that 0.6% down
to 0.58%, 0.57%, 0.56%. I think we have to go on doing everything
we can to run an effective counter-fraud and anti-fraud strategy
in the Department but also, because it has been a theme of this
hearing, we have to look at error because the amounts being lost
to error, both customer error and official error, are significantly
larger and I think it may be the case that we have greater gains
to make for the public purse. Now, having said that, there is
a different reason, is there not, why we should continue to be
incredibly vigorous in relation to fraud, and that is because
people who commit fraud are, in effect, defrauding society and
the taxpayer and, as I said in answer to other colleagues, I think
the public want to believe that everything possible is being done
to prevent that fraud.
Q84 Phil Wilson: Looking at the preface
again, talking about the customer compliance system, it says it
has improved in the recent past but they still think there are
further improvements that can be made. It says one of the problem
is they do not think there is any kind of communication between
districts, that the communication between districts has dissipated
and there is little general sense of a counter-fraud community,
that people are working together to get on top of this. Do you
agree with that premise? If you do, what are you doing to change
it?
Sir Leigh Lewis: I certainly do
not dispute any of the statements in the Report because I have
agreed the Report as the Accounting Officer. First of all, I would
say that in any complex organisation, and DWP is undoubtedly a
complex organisation, there will always be room and scope for
improving communication within the organisation and establishing
a greater sense of community. Having said that, I was really encouraged
by my discussion, and again I do not want to over-generalise from
it, with a dozen very experienced fraud investigators in West
London last week, where I said, "Tell me what's not good.
Tell me where it's not working. What are your relationships like
with the prosecution division in the Department?" and they
said, "There will always be cases where we think, as the
investigator, that somebody should be prosecuted and the prosecutor
thinks there is not enough evidence to bring that prosecution.
Overall, relationships are good and improving. We talk to each
other, we have a grown-up relationship". On customer compliance,
I think it is worth saying, and this is not to take issue with
the report in any shape or form, this is quite new. This was only
introduced in April 2006, so the period that the Report was looking
at was its first year of operation. All the evidence we have got
is that year two is seriously improving in every respect on year
one. This was a very major shift. You do not get it absolutely
right on day one, these things take time to bed down.
Q85 Chairman: You have got to try
and keep your answers a little bit shorter. You have been going
for an hour and 35 minutes and you are doing extremely well.
Sir Leigh Lewis: I will stop there,
Chairman.
Q86 Phil Wilson: The other thing
is on the Housing Benefit and Income Support, Incapacity Benefit,
et cetera, which one do you think produces the most organised
crime, the most organised amount of defrauding the system?
Sir Leigh Lewis: I am not sure
I have got an answer to that that I would feel confident of giving
to you actually. Organised fraud can take many, many forms, as
we have seen. It can take the form of identity fraud, making multiple
claims. It can take the form, as Neil Couling has said, of Giro
cheque fraud, serially altering Giro cheques, et cetera.
It tends to be less benefit specific in the sense that serious
fraudsters will go for any point of what they perceive to be weakness
in the system as a whole and ruthlessly seek to exploit it.
Q87 Phil Wilson: What about Housing
Benefit? What kind of organised crime do we have on Housing Benefit?
Sir Leigh Lewis: I am not sure
I do have a good answer to that.
Ms Trundle: Again, it would be
difficult to give an answer quite in the terms you are seeking,
but we certainly know that some of the big organised frauds that
have already been mentioned, for example the one where there were
people with multiple identities, they were claiming Housing Benefit
as well as other benefits, once you have got that kind of organised
fraud people will seek to exploit a range of benefits and often
make multiple claims.
Sir Leigh Lewis: My understanding,
and I hope you will find it helpful, is in a very welcome change
from April of this current year Housing Benefit fraud investigators
will be able to prosecute certain frauds against some departmental
benefits, so where there is a case where somebody is defrauding
the local authority in relation to their Housing Benefit but also
defrauding us in relation to JSA or Income Support, for example,
we are going to be joined-up in a way that we have not been previously.
Q88 Phil Wilson: One last question.
The Report also points to the report that the NAO did in 2006
about how well you compared with the international scene and recommended
that you went abroad and spread the good news basically. What
have you been doing in that regard?
Sir Leigh Lewis: We have been
doing a fair bit actually. I cannot say that I have said to my
Department I think it is an absolute priority for everyone in
my Department to get on aeroplanes and fly around the world to
talk to other countries, because we have enough challenges of
our own, but we are very welcoming to visitors. We have had quite
a number of visitors, interestingly. The Netherlands have been
very interested in what we are doing and believe that they have
some lessons to learn from us. We have spoken at various international
fora and conferences. Again, I do not want to overdo this but
it was a very encouraging Report and I just pick up the quote
from the Report that: "The UK has levels of social security
fraud and error which are similar to those in comparable countries,
but, ... the Department has a better understanding than other
nations of the problems and ... is doing more to tackle them".
I do think this is an area where we do not need to be bashful
about our performance in any respect compared with other major
industrialised countries.
Q89 Mr Davidson: Can I start off
by asking about the cut in instruments of payment fraud that you
mentioned in relation to direct payments in bank accounts. How
much has that saved?
Sir Leigh Lewis: I am not sure
I can give you a figure as to how much it has saved in fraud,
but the number of referrals has gone down from a high point of
around 150,000 a year to around 6,000.
Q90 Mr Davidson: That is very helpful.
Presumably the same figure, or something similar. would apply
to fraud relating to Pensions and Pension Credit as well, or was
that included?
Sir Leigh Lewis: I think that
includes all payment instrument fraud. Of course, this has been
a hugely beneficial change in other respects. Leaving fraud aside
just for one moment, it has saved the taxpayer masses amount of
money.
Q91 Mr Davidson: I am aware of all
that. I think it would be helpful if you give us a note on that,
also indicating how much in total you think the taxpayer has been
saved. Where has that money gone?
Sir Leigh Lewis: It has effectively
gone into meeting the efficiency challenge faced by our Department,
which is very substantial.[6]
Q92 Mr Davidson: So the Treasury got
it? There was no recycling?
Sir Leigh Lewis: I think the Government
has got it.
Q93 Mr Davidson: Ah, yes.
Sir Leigh Lewis: I am part of
one indivisible Government.
Q94 Mr Davidson: An interesting theory.
Can I just ask about your data matching which you mentioned. What
is wrong with your data matching system when you still have, I
think it is, £3 million of fraud from people in prison?
Sir Leigh Lewis: We have actually
improved the data matching service that we have when people enter
prison. I am speaking from memory and if I get this wrong I will
write to the Committee afterwards. We now run a weekly scan in
relation to people who are entering prison to make sure that we
know when somebody—
Q95 Mr Davidson: So that should go
down to nothing. A weekly scan for a weekly scam presumably. A
figure of nothing there is reasonable.
Sir Leigh Lewis: I think it is
very, very hard ever—
Q96 Mr Davidson: Nothing-ish.
Sir Leigh Lewis: I would be happy
with nothing-ish rather than nothing.
Q97 Mr Davidson: Okay. In terms of
the data checking, you mentioned, and I think I have seen it in
the Report, you have difficulty getting money off people who were
paying back benefit overpayments but who have then gone into work.
Surely if you have a data matching system you would be able to
find them.
Sir Leigh Lewis: Yes. We can in
certain circumstances use attachment of earnings orders, and we
do use those. We do routinely match data on DWP with—
Q98 Mr Davidson: I am sorry, time
is short. If I remember correctly, either in the Report or you
said, something like 90% of those who owed and moved into work
you had difficulty in collecting the money. That does seem a trifle
high, does it not?
Sir Leigh Lewis: Yes, and I think
we could do better at collecting money from people who move into
work. We are getting seriously more effective at doing so but
there is a long way further to go.
Q99 Mr Davidson: Abroad fraud, which
is mentioned on page 13, you mentioned there were two categories
there, one was death and the other was people travelling abroad
continuing to claim. When you have got on page 15 an estimate
of State Pension fraud as being nil, how do those two tie together?
If there is no State Pension fraud how can they still be claiming,
as it were?
Sir Leigh Lewis: It may well be
in another category or it may be a group of frauds that we need
to understand. There inevitably is some fraud in relation to people
continuing to receive benefit. Remember, we are talking—
5 Note by witness: In seeking to establish
that someone has acted with fraudulent intent, DWP needs to establish
that they knew the conditions of entitlement for receipt of the
benefit, and the need to report changes and then put to them the
evidence gathered during the course of an investigation. Back
6
Note by witness: The move from order books to Direct Payment
will have saved the taxpayer around £1billion between 2005
and 2010 because of the much lower payment costs of Direct Payment
compared with the alternatives of DWP cheques or, previously,
order books. Back
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