11.Audit & Internal Control - Benefit Fraud Annual Report

AUDIT COMMITTEE – 11 SEPTEMBER 2006

PART I - DELEGATED

11.AUDIT & INTERNAL CONTROL - BENEFIT FRAUD ANNUAL REPORT

(DCR)

1.Summary

1.1This report informs members of the work of the Fraud Section for the financial year 2005/2006 and provides updates on developments for the current financial year.

2.Details

Background

2.1Whilst the Department for Works and Pensions (DWP) has overall responsibility for the scope and structure of Housing Benefit and Council Tax Benefit schemes, Three Rivers has the day to day responsibility for their administration. This remit includes the prevention, detection and prosecution, where appropriate, of benefit fraud.

2.2Three Rivers is committed to providing an Anti Fraud Service which is supported by an efficient Anti Fraud Policy which reflects legislative changes. The purpose is to ensure fraud against these benefits is kept to a minimum.

Where fraud does occur, it should be detected and stopped efficiently and effectively.

2.3The duty to protect Housing Benefit by the Investigations Section is discharged by;

(a)Preventing fraud and error from entering the system.

(b)Identifying fraudulent claims and minimising losses.

(c)Maximising the availability of subsidy under prevailing regulations.

(d)Issuing formal cautions and administration penalties

(e)Prosecution of offenders having regard to the Council’s Prosecution Policy.

(f)Joint working with the DWP and other authorities.

2.4The DWP Security Against Fraud and Error (Safe) scheme is a major component within the Government’s strategy to reduce fraud and error in Housing Benefit. Safe rewards the Council for identifying fraud and error in benefit claims, correcting those errors and administering sanctions and prosecutions. This scheme complements the Verification Framework (VF).

2.5The purpose of VF is to help to prevent fraud and error entering the system at the start and to detect changes occurring during the life of the claim through data matching and risk analysis. Measures in place to prevent fraud entering the system at the start of a claim include viewing original documentation and seeking evidence of a high standard to support a claim. Risk-based samples of live claims are drawn throughout the year and the claims reviewed either by visit or by post.

2005/2006 Report

2.6One element of the Safe scheme is the Weekly Incorrect Benefit (Wib). A Wib is the difference between housing and council tax benefit paid in the last week of an eligible overpayment compared to the amount that should have been paid. Wibs may only be claimed for errors identified by pro-active action. There are varying reward bands dependant on the amount of the Wib as shown in the table below.

Level of Wib / Reward
£4.99 or below / Nil
£5.00 to £20.00 / £15.00
£20.01 and above / £70.00

2.7In 2005/2006 Wibs resulted in awards of £22,830.

2.8Additionally, the Council benefited from fraud investigations that led to a sanction or prosecution. The table below details the rewards applicable to each action.

Action / Reward
£
Administrative Penalty issued and accepted. / 1,200
Formal Caution issued and accepted / 1,200
Information is laid at Court and issues a summons / 1,200
Successful prosecution / 2,000

If appropriate, more than one reward may be claimed for the same case. For example, a successful prosecution could earn a reward of £3,200 being £1,200 for issuing a summons and £2,000 for the successful prosecution.

2.9During 2005/2006 rewards totalling £66,400 were achieved for issuing sanctions and prosecutions as follows;

Action / No. of cases / Reward
£
Administrative Penalty issued and accepted. / 5 / 6,000
Formal Caution issued and accepted / 2 / 2,400
Information is laid at Court and issues a summons / 15 / 18,000
Successful prosecution / 20 / 40,000
Total / 66,400

2.10In 2005/2006 337 referrals for investigation were received . A total of 265 investigations were completed. The remainder are either on going or simply did not warrant investigation.

2.11The Council has continued to work jointly with the DWP on a number of cases. It has also had successful prosecution cases resulting from joint working with Watford BC and the Police.

2.12The DWP required Three Rivers to conduct 880 visits in 2005/2006 to specific client groups identified through risk based methodology. This forms part of the VF visits element described in paragraph 2.5. In 2005/2006 a total of 980 visits were conducted.

2006/2007 -Action to date

2.13The Council is continuing to work jointly with various investigative bodies including the Police, Watford BC and the DWP.

2.14Since April 2006 we have secured a further 5 prosecutions, 3 cautions and 4 administration penalties.

2.15The Investigation Section continues to comprise of one Investigations Manager and two investigations officers.

2.16 From 2006/2007 the funding regime has changed. The VF and Safe schemes are now included within the Administrative elements of Subsidy. The new administration grant will replace additional subsidy previously paid for VF compliance and Safe rewards.

3.Options/Reasons for Recommendation

3.1The purpose of this report is to inform Members of the work of the Fraud Section for 2005/06.

4.Policy/Budget Implications

4.1The work of the Fraud Section contributes to the Council’s aim of working towards Prosperous Communities.

5Financial Implications

5.1In 2005/2006 we budgeted to earn £59,000 from incentive subsidies and achieved £89,230 income. We have again budgeted to earn £59,000 in 2006/2007. Any variations will be included in monthly budget monitoring reports.

6.Risk Management Implications

6.1There are no risks associated with the decision members are being asked to take.

7.Legal, Equal Opportunities, Staffing, Environmental, Community Safety, Customer Services Centre, and Website Implications

7.1None specific.

8.Recommendation

8.1That the Committee notes the details of the work of the Fraud Section as contained in this report.

Background Papers

Subsidy returns

Report prepared by:Garry Turner, Investigations Manager

APPENDICES / ATTACHMENTS

None.

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