Examination of Witnesses (Questions 100-119)
DEPARTMENT FOR
WORK AND
PENSIONS & JOBCENTRE
PLUS
MONDAY 4 FEBRUARY
2008
Q100 Mr Davidson: Let me just deal
with the death fraud, as it were, first of all. If they are dead
and they are claiming their State Pensions as part of the abroad
fraud, how can it be that you have State Pension fraud down as
nil on Figure 6?
Sir Leigh Lewis: I think what
we are talking about is you have to look at it in the context
of the total expenditure on State Pension which is over £50
billion, if you see what I mean. In the most recent sample of
cases that was extensively checked for fraud, and it was a fairly
recent sample, no frauds appeared.
Q101 Mr Davidson: So the £74
million which is collected by customers living abroad, apart from
the fact that some of them will not be living abroad but dying
abroad, as it were, the rest of it then is those who are claiming
in this country and travelling abroad. I am aware of substantial
numbers of people in my constituency and nearby who travel regularly
to the Indian subcontinent and come back again and I have no doubt
that a number of those are on benefits and continue to claim.
What steps are taken to do risk assessments of which sections
of the community are most prevalent in this sort of fraud? How
do you avoid the accusations of racism and so on when you do profiling?
Sir Leigh Lewis: We avoid accusations
of racism because we are not interested in someone's race or ethnic
background, we are only interested in whether they are claiming
the benefit they are receiving accurately. If you will indulge
me for just half a minute, I might just tell you one or two of
the things that we are doing to tackle abroad fraud. We are tackling
it through increased data matching with other countries, for example
the US and New Zealand, where we have access to their death records,
so if someone dies and it is recorded on one of their systems—
Q102 Mr Davidson: I am not dealing
with deaths now, I am dealing with the question of people who
go abroad for family holidays, working abroad, who have a business
here, a business there, I want to deal with that section.
Sir Leigh Lewis: Sorry, I am probably
trying your patience.
Q103 Mr Davidson: I am not dealing
with Australia or New Zealand either, I am dealing with people
who go to the Indian subcontinent.
Sir Leigh Lewis: Specifically,
things that we are doing that should help are we have recruited
locally engaged staff in a number of key countries, including
India and Pakistan, and we work with the Royal Mail to identify
possible cases where customers appear from Royal Mail records
no longer to be in the UK.
Q104 Mr Davidson: Some of that does
not work if it is a member of a family, the family remains and
they keep their mail. You responded to the bit about race by saying
you do not distinguish on the basis of race, but if you are doing
a genuine risk assessment and genuine profiling of risk then surely
race or ethnic origin is something entirely legitimate to be taken
into account.
Sir Leigh Lewis: As my colleagues
here will know, because both were present, I have instituted a
review of my own within the Department into abroad fraud because
I am not yet fully satisfied that we are responding rigorously
to every category of abroad fraud as we should, both of the categories
we have discussed. For example, we are looking at stronger proof
of residence tests for those people who apparently are still in
the UK and we are looking at proof of life checks from those apparently
still alive and claiming from abroad. I do think that we need
to look at this more thoroughly yet than we are already, it is
a serious issue.
Q105 Mr Davidson: Passport data transfer,
passports going in and out of the country, do you have access
to that information?
Sir Leigh Lewis: I am afraid I
just do not know offhand, so I will have to write to you.[7]
Q106 Mr Davidson: Maybe you could pursue
that for us. Clearly if somebody's passport is indicating they
have left the country then that might be an indication they are
not entitled to claim. Can I ask about the overlap between organised
crime and organised fraud and the extent to which you co-operate
with the police? This is one of the areas which undermines public
confidence when known criminals and fraudsters are known to be
claiming benefits and yet nothing seems to be done.
Sir Leigh Lewis: I will ask Neil
Couling to give you the detail, but the very top headline is we
co-operate increasingly closely not just with the police but also
with SOCA, the Serious Organised Crime Agency.
Mr Couling: That is the headline
and I went out on a combined operation with the Metropolitan Police
last January. They are very impressed with the quality of—
Q107 Mr Davidson: Time is limited.
Okay, some work is being done. I think it would be helpful to
give us a note on that particularly dealing with gangs operating
multiple identity frauds. Again, to what extent is their profiling
and risk assessment made on this?
Sir Leigh Lewis: Within our Fraud
Investigation Service we have specialised organised crime units,
and they are very specialised indeed, they are intelligence led,
as is all policing, and they will use those kinds of techniques
and will work in very close co-operation with the police and with
SOCA, and I know from my time in the Home Office that that can
be very effective.[8]
Q108 Mr Davidson: You mentioned asset
recovery and at one point you seized £6 million. Where does
that go?
Sir Leigh Lewis: There is a complex
formula and—
Q109 Mr Davidson: Life is short.
Do you get it or does the Government take it?
Sir Leigh Lewis: Headline, we
get a third of it.
Q110 Mr Davidson: You get a third
of it. That is helpful. Housing Benefit: I saw there was a growth
in error. To some extent this brings me back to the question of
your desire to change the targets because you are not matching
them, which I would tend to resist. To what extent are Housing
Benefit and some of the other benefits an area where the answer
ought to be simplification rather than simply changing the targets?
Sir Leigh Lewis: I do need very,
very slightly to respond to what you first said. My position on
our overall qualification is not simply we need to change the
targets because we are not meeting them—I have offered the
Chairman a letter—it is a much more complex issue than that.
In relation to Housing Benefit and complexity, I said in answer
to colleagues, and I believe it to be the case, that there is
an inevitable relationship between complexity and error. I think
that comes out of every study. The NAO did a report about benefit
simplification and I have appeared before this Committee.
Q111 Mr Davidson: I understand that,
but if you want to achieve your targets surely the answer is not
simply to change the targets but to pursue more vigorously the
question of simplification.
Sir Leigh Lewis: If you want to
bring error down that is the case but, as I said to a colleague,
I do not actually believe that is relevant to fraud. The defined
characteristic of fraud, let us remember, is someone who deliberately
knows that they are defrauding the system. That means they are
not confused, they are not unsure, they are deliberately committing
fraud. Error is very different.
Q112 Mr Davidson: The final point
I want to raise is your figures have gone down for fraud, but
to what extent is that due to the Government's economic policy
which has got more people into work? Certainly in my constituency
unemployment has more than halved and, therefore, there have got
to be more people not claiming or fewer people claiming these
benefits and, therefore, automatically there are going to be fewer
people likely to have an opportunity to commit fraud.
Sir Leigh Lewis: The confidence
you can have that we are genuinely reducing is the figure which
shows the proportion of total benefit expenditure which is happening
to fraud and that too is falling, it is now at 0.6%, the lowest
since we have recorded.
Q113 Mr Bacon: Sir Leigh, your last
point about 0.6%, which is at the bottom right-hand corner of
the chart on page 15, Figure 6, brings me neatly on to my first
question. It would have been a more fulsome and even more helpful
chart if it had also included official error and customer error.
While I am at it, could I ask you about Box 1. You see on page
6, and you were talking about the definition of fraud just a moment
ago: "The Department defines fraud as those cases
where customers deliberately claim money ... Customer error
occurs when customers provide information ..." You will see
that the words "fraud" and "customer error"
are both in bold type. I looked in vain for the words "official
error" in bold type, and the words "official error"
are there. Can you explain why the words "official error"
are not in bold type? Did somebody from your Department manage
to get hold of the PDF and tweak it?
Sir Leigh Lewis: Not to the best
of my knowledge and belief.
Q114 Mr Bacon: So, as far as you
are aware, that was an error, an official error?
Sir Leigh Lewis: I am responsible
for many, many things, but I am not sure I am responsible for
the words that appear in bold type or not in the NAO's Report.
Q115 Mr Bacon: Nonetheless, it was
an interesting error. Could you possibly send us for publication
an extended version of Figure 6, which includes, in addition to
expenditure, estimated fraud as a percentage of expenditure? Add
on six more columns, in other words estimate official error and
the percentage, customer error and the percentage, and then the
total and the percentage.
Sir Leigh Lewis: Of course I can.
It is worth saying that the NAO have said that they intend to
review and report on error as a separate subject, but of course
I can do that.[9]
Q116 Mr Bacon: I realise this is a report
on fraud but you were very interesting when you said that there
are more gains to the public purse through tackling error. If
you add up the numbers which are there buried in different parts
of the report, that line for Housing Benefit, which Geraldine
Smith and Mr Davidson also referred to, shows that official error
had gone up significantly and customer error had gone up significantly.
I think if you add up the three, 1%, 1.4% and 2.8%, you get over
5%, 5.2% in total. What I would like to see is a chart which shows
all of that because it is quite a powerful illustration of the
scale of the problem you face. Of these four, which are two-thirds
of all fraud—Income Support and Jobseeker's Allowance, Pension
Credit and Housing Benefit—which is the most pernicious
or the most difficult for you to come to terms with? I realise
that the figures here might suggest Income Support with the 2.3%
but there may be other reasons for that. Which is proving the
most troublesome to tackle?
Sir Leigh Lewis: I honestly have
not got an easy answer for you there. Much as I might be tempted
to say it is this one or that one, I do not think (a) I am capable
of giving you an answer and (b) I am not sure I want to in a way
because actually what matters here is people who are seriously
defrauding the public purse and in all four of these, with the
exception of Housing Benefit, which is at 1.0, we have more than
1% of expenditure going in fraud. These are serious amounts of
public money. Often, of course, fraudsters may move. Some people
go on Jobseeker's Allowance and then Income Support, for example,
and they can also be claiming Housing Benefit . When somebody
is acting completely fraudulently their fraud can show up in at
least three of these at the same time.
Q117 Mr Bacon: There is a difference
between Housing Benefit and the others in that Housing Benefit
is administered by local authorities.
Sir Leigh Lewis: It is.
Q118 Mr Bacon: The NAO several years
ago now did a report on Housing Benefit specifically when Sir
Richard Mottram was Permanent Secretary, so a while ago, and it
showed that the Department was unable to say then whether Housing
Benefit fraud was going up or down, which was the same answer
five years prior to that, so at least you have made some progress
in that area. I am wondering if there is not a systemic problem
arising from the fact that you have got to deal with N number
of local authorities around the country and their skills, their
capacity and their success which will inevitably be variable.
Sir Leigh Lewis: It is obviously
more complex when we are dealing with several hundred local authorities
than when we are dealing with one Department and its own agencies,
but I really would say that the co-operation that exists between
the Department and local authorities, and of course the LGA represents
and supports local authorities as a whole, is I think a step change
better than then. I am not sure of the precise time when Sir Richard
would have appeared before you but we are much clearer about measurement.
We are much clearer about the way we work together. I gave an
example earlier in response to a colleague where we have changed
the law so that local authorities will be able to prosecute fraud
against not only their benefits but also some of ours from this
April. There is a much closer integration than ever there was.
Q119 Mr Bacon: Would the disadvantages
of centralising the payment of Housing Benefit, perhaps the lack
of local knowledge or whatever, outweigh any gains from doing
that? Is it better structurally the way it is?
Sir Leigh Lewis: This issue has
been debated at times over my time in government and I think this
could be argued either way. What I would say is two things, if
you will indulge me. One, for there to be a simple and straight
switch would be a massive administrative change at a time when
there is huge pressure on the system. Secondly, and perhaps for
another day,—
7 Note by witness: When DWP has suspicion of
fraud in individual cases-and in joint investigations, involving
Borders and Immigration, the Passport Service, Special Branch
etc-DWP has access to this information. The Home Office "e-Borders"
project will start to collect passenger entry and exit data this
year. As no legal gateway yet exists DWP would have to obtain
a legal gateway that would enable DWP to obtain "e-Borders"
data in the future. Back
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