A. LOCAL ARRANGEMENTS FOR JOBSEEKER'S ALLOWANCE (JSA) IN LEICESTER (QUESTION 168)

  1. One of the objectives of JSA was to, as far as possible, provide all services to the Jobseeker from the Jobcentre, including advice on relevant benefits. It is the joint responsibility of the Benefits Agency (BA) and the Employment Service (ES) to advise customers on benefit queries and both agencies are resourced to do this.

  2. At Leicester ES and BA have an agreement which sets out the questions which BA are responsible for answering. Initially customers are seen by ES staff who answer general enquiries, such as, whether or not a payment has been issued, or information relating to a change of circumstance. Complex queries, such as, how the benefit payment has been calculated and what effect a change of circumstances will have on their benefit are passed to a BA member of staff.

  3. Both ES and BA offices in Leicester have been involved in piloting an initiative to improve JSA customer service. The work focuses on some key areas where there are known common weaknesses. The issues which have been addressed are:

—  getting claims information right first time;

—  handling enquiries;

—  processing changes of circumstances.

  4. BA in Leicester have recently reorganised from two sites to one. This has already improved processing times and reduced enquiries. Following a workshop at the end of March an action plan has been produced to:

—  improve information given to and collected from the customer at first contact;

—  reduced instances where forms go missing between the two teams;

—  set up a meeting to look at and refine telephone access;

—  to review and refine the points and processes where a customer's enquiry is handed from ES to BA.

  5. Work is ongoing, and changes have already been made. Local managers are reviewing the action plans on a monthly basis. In the longer term it is recognised that it could be beneficial to have more staff at the Charles Street site. The action plan deals with this proposal from September onwards to allow for the necessary staff training and evaluation of current changes already underway.

  6. Both ES and BA staff recognise the need to provide a quality customer service and are working together in order to maximise service provision to customers.

B. FAMILY CREDIT FRAUD (QUESTION 186)

  7. Since 1996 the Family Credit (FC) Unit has worked with the other Agency's Benefit Fraud Investigation Service (BFIS), as well as the other Departmental Agencies and the local authorities on a series of proactive fraud initiatives including the Spotlight on Benefit Cheats Campaigns. Closer working with other agencies is essential in counter fraud activity, particularly in relation to fraud by collusive employers.

  8. In 1997 the Agency's Security Branch conducted a pilot Benefit Review to estimate levels of fraud in FC in preparation for a main review. Work on the main Benefit Review of FC has been suspended, for the present, following the announcement of plans to move to a Working Families Tax Credit in 1999. However, BA is in discussion with the Inland Revenue over the results of the pilot review of FC and to explore whether any additional work is needed to further assist and inform the security of Working Families Tax Credit. Work was put in hand to identify ways to make FC more secure.

  9. Within FC, the Securing Family Credit Project (SFC) has been instrumental in providing an effective and coherent strategy for fraud prevention. The project, funded by the Agency's Security and Control Programme (SCP) began in January 1998 and is currently staffed by 42 FC employees. The project is currently testing different approaches in the following areas:

—  the most effective time to carry out review interviews and the best method of carrying out visits;

—  the advantages of inviting customers to local BA offices to be interviewed by fraud investigators and local office staff;

—  introducing further checks on customers personal details at the point of claim;

—  The Family Credit Security Investigation Strand (FAMSIS) is focusing on work previously performed by the London Investigation Project (LIP). LIP was set up in June 1997 to address the problem of identity fraud which was shown to be prevalent within Family Credit, particularly in the London area. The project was successful in identifying and intercepting false claims from both London and Birmingham. Additionally the strand will be looking at Instrument of Payment fraud in the London area.

  10. All the information gathered from the various initiatives will be recorded and analyzed to inform future anti-fraud work within FC.

Fraud involving collusive employers

  11. Anecdotal evidence confirms that employers who collude with benefit recipients often perpetrate other sorts of fraud, such as, making false statements to the Inland Revenue and Contributions Agency. Fraud or abuse perpetrated against FC with the involvement of the customer's employer falls in to two distinct categories:

—  active collusion by both parties (i.e. employer and employee) can result in cash in hand additional payments, payments in kind and suppression of earnings for the purposes of claiming additional amounts of benefit;

—  decisions made by employers, either directly or indirectly, knowing that they can keep wages artificially low and that FC will pick up the shortfall. This is often recognised by an active "pushing" of FC by the employer.

  12. Departmental policy is to prosecute all collusive employers where evidence is available. This indicates the seriousness with which BA views collusion and demonstrates the determination to tackle this problem. During 1996-97, 202 cases were authorised and submitted for prosecution with weekly benefit savings (WBS) of £16.05 million. In 1997-98 335 cases were authorised and submitted for prosecution with WBS of £26.68 million.

  13. All cases of suspected collusion involving all benefits (including FC) are referred to the Collusive Employers Project. The project was introduced in April 1996 following the success of a pilot scheme and aims to provide a focus on the most productive and effective approach to tackling the problem of collusive employment. It also provides valuable publicity for successful prosecutions which can act as a deterrent in stopping employers from colluding with benefit recipients.

  14. All BA Area Directorates are involved in the national exercise. Each area has a dedicated team of officers to investigate collusive employers. Close links have been forged with other agencies and government departments in order to establish a comprehensive approach to the problem.

  15. The types of fraud shown are difficult to prove. Successful FC investigations into collusive employers need to be accompanied by a full financial examination of company records and a complete audit of cash flow in order to prove any impropriety. In many cases the company records are incomplete, missing, unavailable or lacking in sufficient detail to provide the evidence required.

  16. Experience gained from the Agency's Spotlight on Benefit Cheats campaigns highlighted that closer working and data sharing with other agencies can help to uncover misrepresentation by customers and employers. Work is currently underway to set up a multi-agency initiative with Customs and Excise—other potential partners include Contributions Agency, Child Support Agency, Inland Revenue and Local Authorities. The proposed activity involves identifying traders who suppress evidence of cash sales, to avoid VAT registration. Traders would have to suppress wages to maintain the ratio between earnings and turnover and may coerce employees to declare lower earnings on claims for Family Credit.

C. THE CHANGE PROGRAMME—REDUCTIONS IN STAFFING (QUESTION 193)

  17. No staff have been made redundant as a result of the Change Programme. However, a voluntary exit scheme for Executive Officers and above operated across the Department as a whole in 1997-98. This information corrects evidence given to the Committee.

  18. In 1997-98, 1,869 staff left the BA under this scheme. The following table shows the breakdown by payband but a breakdown by length of service is not available

  19. Flexible Early Retirement (FER) applies to those staff aged 50 and above, Flexible Early Severance (FES) to the under 50s. FER is attractive to staff although expensive to the organisation—as it carries the entitlement to the immediate payment of a lump sum and an ongoing Annual Compensation Payment. With FES the only immediate compensation is a lump sum; the superannuation lump sum and pension are preserved until the individual reaches 60.

1997-98 BA exits
Payband	Final exit Numbers	FER	FES
D1 (Grade 7)	6	n/a	n/a
C4 (SEO)	36	n/a	n/a
C3 (HEO)	207	n/a	n/a
B3 (EO)	1,620	n/a	n/a
Total	1,869	791	1,078

D. HOME VISITS FOR 1995-96, 1996-97 AND 1997-98 (QUESTIONS 208 AND 212)

  20. The majority of home visits to claimants are undertaken as part of two initiatives funded through the BA's Security and Control Programme, New Claims Activity (NCA) and Targeted Reviews (TR). Other visits are funded from the BA core budget and do not attract benefit savings. Details of activity for the past three years are shown in the following table.

  21. NCA and TR comprise of home visits, office and telephone interviews and postal enquiries. Their purpose is to identify benefit incorrectness, prevent and deter benefit fraud. This is achieved by checking all the information supplied in connection with claims.

  22. The selection for the activity is based on series of criteria, derived from the Benefit Review Programme, which are identified as leading to the greatest degree of incorrectness in claims, including customer fraud, BA error, and under claiming of benefits. The criteria are reviewed annually. The majority of TRs are selected by using the Generalised Matching Service (GMS) tool, which checks information held on the Income Support Computer System (ISCS) and Jobseekers Allowance Processing system (JSAPs) against the selected criteria. In addition to cases selected by GMS, District Offices can select up to 25 per cent. of their TR activity based on local knowledge.

  23. New claims visits were introduced in July 1995 on Income Support (IS) claims. The programme was expanded to include Jobseekers Allowance Income Based (JSA(IB)) from October 1996. New claims interviews were added to the programme from April 1997 and New claim telephone interviews were added from April 1998.

  24. Targeted Reviews by visit and by post were introduced in July 1995 on IS claims and expanded to include JSA(IB) cases from October 1996. TRs by interview were added from April 1997.

New claims and targeted review activity—measured in WBS
	1995-96	1996-97	1997-98
New claim activity
Allocation	£16.2m	£18.3m	£48.7m
Savings	£162.7m	£291.9m	£540.3m
Number of visits	274,450	654,279	1,755,000
Number of interviews	—	—	195,000
Total activity	274,450	654,279	1,759,989
Total staff engaged on NCA visits	468	780	2,728
Total number of new income support claims	3,939,655	4,198,600	4,372,800 incl. 2,688,000 JSA
Targeted reviews
Allocation	£6.5m	£24.5m	£29.7m
Savings	£79.2m	£177.3m	£284.5m
Number of visits	122,922	247,604	320,326
Number of telephone reviews	86,536	124,353	189,766
Number of postal reviews	338,705	817,676	1,100,504
Activity	548,163	1,189,648	1,610,596
Total staff engaged on TRs	841	1,518	1,979
Income support live load	5.813m	5.648m	13.986m
1 IS live load only (A&P cases)

  25. Home visits are also carried out as part of the Benefit Integrity Project (BIP) which is a strand of the BA's Security and Control Programme. Visits are made to Disability Living Allowance customers who are in receipt of both the higher rate mobility component and the highest rate care component unless they are in one of the excluded categories.

  26. Visits began in July 1997 and some changes have been made to the selection criteria, particularly in relation to extending the categories of cases which are excluded.

  27. Up the end of March 1998 (latest validated statistics) the activity has been as follows:

Number of visits completed	17,478
Savings	£2.6 million
Costs	£829,156

  28. Cost of the visits only based on an average cost of £47.44 per visit. It does not include the administration before the visit or the action taken after the visit, including adjudication. This is not readily available as visiting is only one strand of BIP.

E. FRAUD REFERRALS BY MEMBERS OF PARLIAMENT (QUESTION 220)

  29. Current legislation covering disclosure of information is contained within the Common Law of confidentiality and Section 123 of the Social Security Administration Act. Both laws are definitive in providing guidance for Government Departments regarding disclosure of information. There is no exception made for Members of Parliament.

  30. Section 123 of the Social Security Administration Act states a person is guilty of an offence if he discloses, without lawful authority, any information which he acquired in the course of his employment and which relates to a particular person.

  31. The Common Law of confidentiality constrains both the disclosure of personal information and requires that information obtained for one purpose is not used for another without lawful authority.

  32. In essence the law states that information obtained about a person's claim cannot be passed to a third party without the person's consent.

  33. Such information which has come to light about a person's claim during a criminal prosecution may be disclosed to a third party, on completion of the prosecution.

  34. The action taken by Benefits Agency Investigation Services (BFIS) in not disclosing details of fraud referrals to MPs is in line with the law. The Agency treats very seriously all referrals of suspected fraud and follows up all such referrals.

F. DETAILS OF THE BUDGET FOR THE CURRENT INFORMATION AND ADVICE INITIATIVE (PROJECT ACCESS) (QUESTION 232)

  35. The Benefits Agency publicity allocation for 1997-98 is £3,641,000. Project Access products will be phased in during this financial year to replace existing products. It is anticipated Project Access development costs, specifically research and consultation expenditure, to be £120,000.

G. EXPLANATION OF THE FRAUD SAVINGS TARGET (QUESTION 225)

  36. The fraud savings target for 1998-99 is £2.3 billion. It has its basis in the fraud savings estimates which formed part of the PES 1996 arithmetic. For 1998-99 overall savings of £2.4 billion were estimated. This included savings not only by the BA but by local authorities and additional revenue from extra activity on National Insurance compliance. The lion's share though was the BA's.

  37. The savings targets are in a different currency to those in PES. The target sets the amount of weekly benefit savings (WBS) to be achieved by the various activities. The figures in PES are based on WBS, but have been converted to "cash" to align them more closely with the public expenditure process. This reflects the fact that savings from fraud detected in a particular year can accrue in the following year.

  38. Shortly after the General Election, the National Audit Office, at the request of the Chancellor of the Exchequer, reviewed the assumptions used for public finance projections, including those underpinning Departments' Spend to Save expenditure measures. The Comptroller and Auditor General's Report "National Audit Office Report on the Audit of the Budget Assumptions" was published on 19 June 1997 (Cm 3693). No consequential alteration was made to DSS estimates. The "Spend to Save" package was one element within the total benefit fraud savings estimates.

  39. We accept that, whilst some projects may under-achieve against individual savings expectations, others may over-achieve. Whilst all strive for success our main driver is combined performance from all anti-fraud and security activity. Individual project performance is constantly reviewed and future investment reassessed in the light of an under achievement.

  40. Numerous activities have made up the BA's projections. These include visits and interviews on new claims to Income Support and Job Seekers Allowance, reviews of existing claims targeted on those considered to be of high risk, traditional investigative activity by the Benefit Fraud Investigative Service (BFIS), and the BA's Security Investigative Service (BASIS) (formerly Organised Fraud), datamatching, and investigative action on employers. The table below shows the breakdown of the £2.3 billion and details the components of BA's Security and Control Programme.

  41. Whilst savings from the Benefit Integrity Project (BIP) remain below projected levels they are still significant and offer value for money. The value of BIP activity is not predominantly focused on savings, which only make up around 1 per cent of total savings from all anti-fraud and security activity, but rather on the integrity of the benefit.

Anti-Fraud and Security Activity 1998-99
Security and Control Programme	Savings Target (£ million)
Infrastructure	114.782
New Claims Activity	732.780
Targeted Reviews	360.650
Data Matching and investigation	500.778
Benefit Integrity Project	37.000
Other SCP	35.693
Total SCP	1,781.683
BFIS/BASIS	539.000
Overall total	2,320.683
SofS Target	2,300.000

H. LEWISHAM PROTOTYPE (QUESTION 247)

  42. In the prototype, customers will be directed to staff by initial reception where it is clear that there are joint DSS/LA benefit matters to be dealt with. Therefore if someone has an enquiry about both Housing Benefit and, for example, Income Support they can be seen by a member of the prototype team, BA or LA. Training, including on eligible rent and the role of rent officers, will be given to enable the BA staff involved to give general advice about HB applications, entitlement, payments and restrictions.

  43. Information on any rent restrictions may be given as part of general information on Housing Benefit. The extent to which the prototype team will be involved in the "rent restriction process" is limited to providing this information where appropriate. The prototype teams will not be involved either in making decisions on applications received which are subject to rent restriction, or in the process of making decisions on the level of rent restrictions to be set. Their provision of information on this aspect of housing benefit is simply as a consequence of their information provision role.

  44. Where more detailed information is required on a specific application, and its likely outcome, it may be that this information will be supplied by a local authority specialist. The detailed business processes for the prototype are still being developed, including decisions on the point at which general enquiries should turn into specialist interviews. The latter will always be taken forward by the appropriate Agency staff. The depth that the BA staff member would be able to go into on complex and specialist housing benefit areas, such as some rent restriction cases, will be limited by the training considered appropriate for prototype staff.

I. LETTER ISSUED TO BENEFITS AGENCY STAFF FOLLOWING THE PRESS SPECULATION REGARDING ADAPT (QUESTION 198)

  Some of you will be aware that a number of today's newspapers have published articles about the involvement of the private sector in BA's operations and have referred specifically to the Area Directorate and Partnering Team Project (ADAPT). In view of the speculation which these articles have created, I wanted to write to you to give you up to date information about what is happening with ADAPT and to correct the many misleading statements which have been made.

  Eisis, one of our private sector partners (PSPs) has recently put forward an idea for modernising the way BA administers its benefit services across a number of ADs. The idea indicated that this could be achieved either with staff transferring to the private sector or with them remaining as Civil Servants. It also included their views on the savings which they could deliver. These largely related to savings in programme expenditure. These figures were unsupported by evidence and largely speculative.

  BAMT have considered this idea and concluded that it is not an acceptable proposition. The idea does not measure up well against Ministers' criteria and is likely to provide a constraint to changes in welfare administration. Large scale transfer of responsibility represents high risk to continued provision of services and is not acceptable.

  However, my BAMT colleagues and I fully recognise the value of the work that the PSPs have done so far and support the involvement of the private sector in BA's business where they can add value. We believe that the private sector has an important role to play in delivering Ministers' policies and providing support to BA. We intend to continue with ADAPT but to work more collaboratively with the PSPs to develop ideas which more appropriately meet Ministers objectives.

  I have made it clear from the outset that all ideas will be fully evaluated and that there is no predetermined outcome to the Project.

  The Project has consulted with BATUS throughout on a commercial in confidence basis. They were given a copy of the Eisis idea but were restricted in their use of this information by the sensitivity marking of the document.

  Finally, I would like you all to be aware of my strong objections to newspaper references to DSS inefficiency. The BA can demonstrate an impressive record, particularly over recent years, in significantly reducing costs, improving performance and bearing down on fraud. All three partners have recognised this and the considerable achievements BA has made to date. In particular they recognise, as I certainly do, the commitment and dedication of staff.

Peter Mathison

14 May 1998