Meeting documents

Councillor Mordue

Cabinet Member for Resources, Governance and Compliance

To consider the attached report.

Contact Officer:  Debbie White (01296) 585021

(a)          Decision(s)

(1)  That the process of Risk Based Verification (RBV) for verifying housing benefit and council tax reduction claims, as outlined in the Cabinet report, be approved and adopted.

(2)   That RBV be implemented in accordance with the policy described in the Cabinet report.

(b)       Reason(s) for Decision(s)

To facilitate the introduction of a more efficient policy for dealing with the evidence requirements associated with the assessment of housing benefit and council tax reduction claims.

(c)        Alternative Options Considered

None.

(d)       Relevant Scrutiny Committee

Finance and Services.  That Committee had received a similar report at its meeting on 5 September, 2017.  The Chairman of that Committee attended Cabinet and reported that the Committee was fully supportive of the proposal.

(e)        Conflicts of Interest / Dispensation(s)

None.

The Housing Benefit and Council Tax Reduction Schemes were the cornerstones of the Welfare State.  Nationally, nearly £25 billion was paid out in total per annum.  As at November, 2011, the total number of housing benefit claimants was 4.94 million, with 5.87 million people claiming Council tax reduction.

In the early 1990s the Department of Work and Pensions (DWP) had introduced a "verification framework policy" for administering housing and council tax benefit claims.  This was a voluntary policy that strongly recommended that local councils should obtain a substantial amount of documentary evidence, and carry out numerous pre-payment checks and visits before making any payment.

The verification framework had proved to be costly and had caused significant delays in processing.  It had to be applied to all claims and there was little scope for local discretion.  Although it had been abandoned in 2006 by the DWP, most authorities, including AVDC had continued to use at least some of the guidelines set out in the framework.

In 2011, the DWP had allowed a number of councils to pilot a different type of scheme to try to reduce fraud and error.  This had been on risk based verification (RBV) principles.  This concentrated on the risk profile of each claimant.  Resources could then be targeted at the higher risk groups where most of the fraud and error would be.  It was an approach used by many public services as well as businesses, the police and immigration authorities.  The pilots had been a success and the DWP had confirmed that all councils could now adopt this approach.  It was intended that RBV would apply to new housing benefit claims, council tax reduction and changes in circumstances.  However once implemented, it could be used for reviews and overpayments.

The benefits Service had conducted a fundamental service review over the last year.  The implementation of RBV was a recommendation from that process.  This was to reduce the burden on customers to provide excessive evidence, and reduce the cost of administering claims by reducing the correspondence with customers in chasing evidence, and the scanning of that evidence.  It was intended that RBV should be implemented for new claims by the Council from October, 2017.  It was believed that this step would provide an improved service for customers and contribute to a significant reduction in costs.

AVDC had to adhere to housing benefit legislation.  The Regulations within the legislation did not specify what information and evidence they should obtain from a benefit customer.  However, it did require an authority to have information which allowed an accurate assessment of a claimant’s entitlement, both when a claim was first made and when the claim was reviewed.  The legislation was supplemented by detailed guidance from Government which had to be applied.  Failure to do so would lead to an adverse inspection report, possible audit sanctions and loss of subsidy.  Given those requirements, quality assurance and detection of fraud were key aspects of the assessment process.  This had led over a period of time to a complex and demanding process of verification.

Risk based verification was a method of applying different levels of checks to different circumstances depending on a complex mathematical risk profile given to each customer.  The associated risk matrix was based on many years of experience and statistical information about what type of claim represented what type of risk.  The higher the deemed risk, the higher the  amount of resources would be used to establish that the claim was genuine.

The pilots had demonstrated that this type of approach was very effective in both identifying higher levels of fraud and error and reducing overall cost of verifying claims.  It had an immediate impact on work processes and resources were able to be better targeted.  Overall timescales for processing new claims had improved dramatically in the pilots, including for those deemed to be higher risk.

RBV also allowed the Council more flexibility to take into account local issues and build in checks and balances.  Improving the time taken to process claims would help those moving from benefits to work whilst reducing the level of overpayments for example.

It was intended to implement an IT solution for RBV following a service review which clearly highlighted a significantly high percentage of time was used in verifying and requesting documentation.  This would be adopted for new claims only.  Any change in circumstances would follow separate standards.

For the purpose of applying verification on a risk basis, each claim was ranked into one of three categories; these categories were low, medium and high risk.  A schedule was submitted showing the requirement to be upheld dependent on the risk grouping.  A National Insurance number and identity confirmation had to be made in all cases irrespective of the risk grouping, so as to comply with the legislation.  Where photocopies had been supplied, originals could be requested if something on the photocopy did not look right or conflicted with information already held.

In respect of low risk, the only checks to be made were proof of identity, production of a National Insurance number; if they were a student, formal confirmation of status would be required and if they were persons from abroad, formal confirmation of immigration status would be required.

Medium risk cases would be subject to the same checks as outlined above plus, for every type of income or capital declared above the thresholds, documentary proof would be required.  The documentation could be photocopies or electronic versions in this instance.

With regard to high risk, these cases must be subject to the same checks as low risk and documentation provided for each type of income or capital.  However, preferably the documents would be original, although photocopies or electronic versions would be acceptable.  Furthermore, all cases would be subject to a credit reference check (CRA) completed to determine if there were any discrepancies between the information provided by the customer on a claim form and the information available via CRA checks.  The CRA checks would be carried out by assessment officers trained to analyse the information from these checks.

In line with the DWP guidance, it was expected that around 47% of cases would be low risk, 30% medium risk and 23% high risk.  Detailed records of all risk scores would be maintained and reviewed to ensure compliance with the Regulations and that the Council was maintaining proper quality control and fraud interventions.

Cases could not be downgraded at any time by an assessment officer, but they could be increased though with approval from a team leader or senior officer.  Reasons for upgrading a case might include previous fraud, previous late notification of changes in circumstances, or where there was good reason to doubt the veracity of information provided.  All high risk claims would require access to credit reference details and access to the enhanced credit reference agency for 10% of all high risk cases.

To help monitor the effect of fraud and error detection the rates would be compared to the baseline rate.  It was expected that the levels of fraud and error would be a small amount in low risk and increased for medium risk and increased further still for high risk.  Furthermore the Council would undertake a minimum of 4% checks across all assessments to make sure that the guidance was adhered to correctly.  Regular internal monitoring of cases would be carried out to check that requirements were met and improvements to assessment time were achieved.

Training would be provided for all officers using RBV to ensure that the agreed processes, procedures and guidelines were adhered to.  Discussions would take place with all internal and external stakeholders, including investigation staff, housing staff, social landlords and voluntary sector employees so that they were fully aware of the change.

The DWP had confirmed that RBV properly applied would meet audit requirements.  A dialogue would be maintained with the external auditors to ensure that the Council was not at risk through the adoption of the policy.  Internal audit processes would have to be amended and the application of RBV would be a useful internal audit theme for the coming year.  The external auditors had confirmed that they were satisfied that this policy met their requirements.

The business case for the RBV IT solution had been made as part of the benefits service review.  The cost of obtaining a solution had been minimal set against the savings that the review had identified.  It was anticipated that the cost of the RBV IT solution would be £3,000 pa and would contribute to overall savings of £50,000 pa.  The Cabinet report included an evaluation of the risks associated with the implementation of RBV.

RBV would apply to all new claims for housing benefit and council tax benefit.  A mathematical model was used to determine the risk score for any claim.  This model did not take into account any of the protected characteristics dealt with in the Equalities Act.  The course of action to be taken in respect of the risk score was governed by this policy and as such there should be no equalities impact.

It was possible that people with certain protected characteristics may be over represented or under represented in any of the risk groups.  As such monitoring would be carried out to ascertain whether this was the case.  As this was a new approach to verifying benefit claims, there was no baseline monitoring that could be used as a comparison.

There were no direct financial implications of adopting this policy.  The experience of other local authorities which had adopted RBV was that more fraud and error had been identified at the benefits gateway.  This was fraud and error that would otherwise have entered the benefits system.  This could then become the subject of investigative work and result in the need to collect overpayments.  Alternatively it could remain unidentified at an on-going cost to the public purse.  By identifying more fraud and error at the gateway, these costs would be reduced.

The RBV policy proposed complied with the recommendations of the DWP.  This policy would be the basis on which the service would be audited in the future.  The policy had been approved by the Section 151 Officer and required formal Member approval.  The relevant legal framework was also included with the Cabinet report.

RESOLVED –

(1)  That the process of Risk Based Verification (RBV) for verifying housing benefit and council tax reduction claims, as outlined in the Cabinet report be approved and adopted.

(2)  That approval be given to the implementation of RBV in accordance with the policy also set out in the Cabinet report.