2 Cost and quality of Grant administration
10. Under current administrative arrangements, the
Agency's Decision Makers check each application form received
with internal records to determine applicants' eligibility and
priority for grants. The decision making process is largely paper-based
and does not typically involve face to face contact with applicants.
Decision Makers can contact individuals by telephone to ascertain
whether they meet qualifying conditions or to seek further evidence
or clarification, but the Agency does not monitor how frequently
this is done.[15]
11. The White Paper on welfare reform published in
November 2010 proposed devolving responsibility for scheme administration
to local authorities. Local administration could result in financial
savings by improving the targeting of support, although this might
be offset by higher administrative costs from increasing the number
of organisations involved. The Agency therefore needs to demonstrate
that moving to local grant administration would be cost effective
and that local authorities will be properly resourced to deliver
the Grant.[16]
12. The quality of existing decision making under
the scheme is a significant concern. A large proportion of cases
are subject to review each year. The Agency processed 582,000
applications in 2008-09 and made an initial award in 252,000 cases.
In that year, there were around 107,700 requests for the Agency
to review its decision making, of which approximately 49% led
to a change in the outcome of the application. Around 17,000 cases
went to the further appeal stage conducted by the Independent
Review Service, and 51% of those appeals resulted in a change
to the original decision. In total, some 61,000 appeals against
original decisions were successful: over 50% of the 107,700 requests
for review.[17]
13. The two main types of errors made by Decision
Makers are the failure to ask applicants the right questions and
inadequate record keeping to back up the decisions taken. If Decision
Makers do not ask appropriate questions or sufficiently challenge
statements from applicants, potentially fraudulent claims may
be accepted or genuine need ignored. Statistics provided by the
Independent Review Service indicate that some Agency district
offices are much more likely to make mistakes than others, as
Figure 2 shows.
| Figure 2: Percentage of errors made by each benefit district office in 2009-10
|
| Budget Area
| Error rate (%)
| Budget Area
| Error rate (%)
|
| Balham (West London) |
77.8 | Sunderland
| 45.3 |
| Balham (London South) |
77.6 | Inverness
| 45.2 |
| Balham (Central and East London)
| 74.2 |
Newcastle | 44.1
|
| Balham (North and North East London)
| 73.6 |
Springburn | 43.6
|
| Bristol | 68.6
| Milton Keynes 2 | 43.3
|
| Perry Barr | 62.2
| Bradford | 42.2
|
| Llanelli | 55.6
| Nottingham | 39.6
|
| Norwich | 53.9
| Sheffield | 38.8
|
| Chorlton | 51.5
| Belle Vale | 34.4
|
| Milton Keynes 1 | 50.9
| Stockton | 31.3
|
| Chesterfield | 45.7
| Basildon (Essex) |
29.4 |
| Newport | 45.5
| National | 54.3
|
| Source: Ev 20
|
Note: This table refers
to 'important' errors. These are defined as errors occurring at
one of the key stages of the decision making process which make
the rationale for the decision incorrect. However, it is possible
that a case could contain an important error without affecting
the validity of the original decision.
14. Since 2009, the Agency has implemented a Quality
Assurance Framework to check selected cases and provide guidance
and training to staff, and an accreditation programme for Decision
Makers. So far, these measures do not appear to have improved
the quality of decision making; for example, the number of appeals
to the Independent Review Service as a percentage of all grant
applications actually increased in 2009-10 compared to
2008-09.[18] Given the
recent introduction of these changes, it may take time for the
impact on decision making quality to be seen.[19]
In light of the Government's proposals to devolve grant administration
to local authorities, the Department needs to provide assurances
that training and quality measures will not be cut and to clarify
how its quality improvement measures will apply to local administrators.
15. The failure to keep adequate records is extremely
costly and undermines the rigour of the decision making process.
The £17.1 million cost of administrative errors identified
by the National Audit Office in 2008-09 represented over 12% of
total Grant funds distributed. This contributed to the Comptroller
and Auditor General qualifying his opinion on the Social Fund
accounts that year. Some £15.7 million of the administrative
error (92%) was attributed to missing files or inadequate documentation.
16. The Agency does not check how funds are used
by people receiving grants. Grants are awarded to recipients so
they can purchase items requested, but there is no obligation
to keep receipts and no follow up visits to confirm whether the
requested items were in fact purchased. A 2003-04 pilot of home
visits to check claims found that 70% of initial awards were incorrect
and 44% of customers had overstated their needs.[20]
Despite the obvious need for checks indicated by these findings,
the Agency has not implemented a programme of physical spot checks
and does not monitor the extent of fraud and error by customers.
The Agency has, however, begun a further pilot of home visits
in the East Midlands and will amend the grant application form
to stipulate that receipts may be required.[21]
17. The estimated £19 million cost of administering
the scheme is very high. Administration costs are equivalent to
13% of the £141 million paid out in grants. Moreover, the
£19 million figure may be an underestimate as it excludes
direct costs of transferring cash to recipients, amortised IT
costs and some overheads. The Agency accepts that the overall
cost of administering the Grant is too high and has undertaken
to conduct an end to end review of the grant administration process
to identify where costs could be reduced.[22]
The findings of this review, to be conducted in January 2011,
will be useful for however long the scheme remains centrally administered.
They could also be used in future to benchmark the costs of local
authorities' administration of the Grant, once the Government's
proposals to devolve scheme delivery are implemented.
18. Further savings could be made by purchasing frequently
requested items centrally and providing goods directly to recipients.
According to the Office of Government Commerce, savings of around
£14 million a year could be generated by negotiating bulk
discounts from central purchasing contracts.[23]
This would also ensure that items purchased are of serviceable
quality and could lessen the extent of fraud. The Independent
Review Service supports this proposal, and believes that voluntary
sector organisations would also be in favour.[24]
Replacing cash awards with payment cards is another option for
reducing fraud while maintaining the dignity of applicants. The
Agency confirmed that it would explore both options to improve
how goods are purchased under the scheme.[25]
15 Qq 31-33, 97-99, 109; C&AG's report, paras 7,
3.1 Back
16
C&AG's report, paras 16c, 3.12; Department for Work and Pensions,
Universal Credit: Welfare that Works Back
17
Department for Work and Pensions, Annual Report on the Social
Fund 2008/2009, Cm 7677, July 2009, Appendix 11 Back
18
Independent Review Service for the Social Fund, The Social
Fund Commissioner's Annual Report 2008/2009 and 2009/2010;
Q 101; C&AG's report, Figure 2 Back
19
Qq 12, 96-104, 108; Independent Review Service for the Social
Fund, The Social Fund Commissioner's Annual Report 2008/2009
and 2009/2010 Back
20
C&AG's report, para 3.6 Back
21
Qq 92, 96, 111-13 Back
22
Qq 34, 80 Back
23
C&AG's report, para 4.13 Back
24
Qq 20 Back
25
Qq 92, 114 Back
|
